“Inventories of homes for sale are dropping in areas where they’ve recently been high like in Oakland, Calif., Phoenix and Miami. Interest rates are approximately 0.75 percent lower than they were a year ago. It seems like a good time to get off the fence and into the action if you can find a house that reasonably matches your wish list and you don’t find yourself bucking other buyers who have the same idea.

Months’ supply of inventory is an estimate of how long it would take to sell all of the homes in a given market at the current sales pace. A six-month supply of unsold inventory is thought to represent a balanced market.

In California, there was a 4.2-month supply of inventory in April 2012, down from 5.6 months a year ago. When buyer demand increases, the unsold inventory drops, and multiple offers often enter the picture — sometimes in a big way.

In the hills above Berkeley, Calif., buyers are chasing too few homes for sale. But not all homes are coveted. The best homes that are priced right for the market are drawing attention. The multiple-offer activity can be fierce. Recently, a home that was perhaps underpriced for the market was bid up significantly with 17 offers. Four of the top offers included no contingencies.

The first step to successfully compete in a sizzling market is to know the inventory. Pricing low to generate multiple offers is a strategy commonly used in a low-inventory, high-demand market. You need to be familiar with how much listings in your area are selling for in order to determine if a listing is priced at, above or below market value.

HOUSE HUNTING TIP: You might have only one opportunity to grab the sellers’ attention, which means that your first offer may need to be your best. You need to feel confident that the price you’re offering — particularly if it’s significantly over the list price — is reasonable in terms of your long-term housing needs and in light of the fact that the current uptick in many segments of the market may not be a sustained recovery.

Before writing an offer, find out…”

Please read the rest of this article by Dian Hymer here: “4 ways buyers can compete in today’s market”.

Dian Hymer, a real estate broker with more than 30 years’ experience, is a nationally syndicated real estate columnist and author of “House Hunting: The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide.”