Home buying tips you can take to the bank
Home buying can be challenging when facing a seller’s market, and this holds true especially for first-time buyers. So many reasons could be offered for this situation. But in these markets, tight housing inventories have pushed up house prices, and in the process, created bidding wars for properties.
Additionally, homeowners are in a dicey situation because they owe more than their house worth, hence unwilling to sell until prices rise and they gain equity. In other markets, the lack of new home construction is contributing to this problem. Homeowners who want to sell their homes and trade up can’t find a suitable new home, so they stay put — without putting up their property for sale.
It’s important to know that these examples play out not only at the market level, but also vary from one neighborhood to another. With a good eye for the market, real estate agents can always provide the best opportunities for their clients
Residents can make the best of the real estate market if they act on informed knowledge rather than play to the gallery. These tips will help buyers get a leg up in a competitive market:
Make location your top priority
If you buy a house, it’s best to plan to stay there for many years, so location should be the most important thing in your house-hunting effort. When you first see a house that catches your attention, you might discount the fact that it takes an hour to get to work, thinking that “it won’t be so bad.” But on the contrary, you can get tired commuting this far twice a day, especially if you are in a climate where the road is negatively affected during winter.
Furthermore, you can never tell what the gas prices will be next week or even next year. Your place of employment is important to be used as an example of distance, but certainly not the only criterion. Take into consideration how close or far away you are from places like schools, shopping malls, public transportation and all the necessary amenities. Regardless of how much you love a house, if it’s becoming a major inconvenience, you may later have regrets, so do some soul searching up front! Create a list of deal breakers before shopping
What is important to you in a home? Whether you’re single or part of a family, you ought to figure that out before shopping. You won’t be likely to shop unnecessarily for hours if you know what you are looking for in a home, and that’s a good thing. Come up with a list of things that are not negotiable, those that you desire to have and the ones you wish to discard. Before you finish the creation of your list, go through your current home write down pros and cons. These will be an excellent guide to ensure you get what like moving forward and diminish negatives with your next purchase.
Get your research right
Several years ago, potential buyers would either seek out a convenient real estate agent, or would crawl listings for hours only to find that they really need to expertise of professional broker. Many bad deals have been made by uninformed or misinformed buyers. Get your research and evaluations right relating to home sales, including market trends in the area, neighborhood details, home values, etc., and don’t go it alone. You can help yourself with adequate information using the home buy sites, but we recommend using a well-qualified broker, as they have a deeper understanding of market trends, and the relationships needed to take your house hunt to the next level, while keeping you protected.
Get your mortgage approved for your home purchase
Irrespective of how much you cherish your potential home, most of us will never enjoy the ownership without a loan to buy it. If there’s a lender in view, ask about pre-approval for a mortgage, so you know how much you can afford. If there’s no lender, then look for the best deals. A lender will go over your options to determine what is within your reach, as well as the different types of mortgages. The lender will also provide you with a pre-approval letter, which will show that you seller that you are serious and capable of following through on an offer.
Don’t lowball the seller
Too many good homes have been made out of reach to buyers, after an unfair offer to purchase turned the sellers totally off to the idea of making a deal. Never lowball the seller of a fairly-priced property. Even if you think the property is overpriced, the seller is likely reasonable, and you have a slim chance that they will accept your offer, unless the seller is either broke or the home has been on the market for a very long time. Give only fair offers based on solid market research and you’ll ensure that you not only stay in the hunt, but also get taken seriously.
If the home is going to be yours, then it will be. Don’t stalk the home or the listing agent. If you do have to stalk anyone, it should be your Realtor. He/she should show great understanding and be more than willing to answer your questions or discuss concerns to ensure your satisfaction.
Don't slip on bill payments
The number of people late on their bill payment while house-hunting increases by the minute. I have seen people who barely got pre-approved only to see their FICO scores drop, get the house, make an offer and become unqualified for a mortgage simply because their bills were paid late. Always remember, most lenders re-check credit reports to ensure buyers meet mortgage qualifications days before finalizing the loan, so don’t drop make the mistake of slipping up in the days, weeks, or months leading up to your closing.
Keep a list of houses that catch your eye
Don’t waste a lot of time going back and forth looking at homes which don’t match your original criteria. Not only will you become very frustrated, you will also be wasting your valuable time. Keep a “hit list” of homes which caught your eye and give each home a rating. Give priority to your list on the basis of which home interests you the most, and where they are located so you can view them in a specific order to save time.
Make sure you are ready
House-hunting can be such a fun activity to embark on, but if you are not ready to buy a house, the whole process can become stressful. It’s important to stress this point, be prepared to make an offer when you find that dream home.
As a buyer in a competitive market, there is no need to be patient if you want to achieve your goal. Your real estate agent may need to search frantically for your choice of home, maybe for months if need be. Know what you’re looking for and always be on the move to pounce on it when you find it.
The following questions and answers are vital to make help your home buying experience go smoothly:
How do I prepare when buying a home in a competitive market? First, get preapproved for a mortgage so that the seller knows you mean business. And make sure you have a preapproval letter, rather than just saying that you’re “prequalified;” there is a big difference. Prequalification may be based on verbal information from the borrower, while prior approval means that the lender has performed a credit check, verified your earnings, and has approved a loan up to a certain dollar amount.
For areas having extremely low inventories, buyers may be required to go further. In most cases, a home inspection is carried out after an offer has been made and accepted. Contracts usually contain languages that give rights to buyers to negotiate repairs if the inspection uncovers problems. In some tight markets, buyers get a home inspection at their own expense. This can become expensive if the buyer eventually makes multiple offers. Inspections can range from $150 for a standard and run up to $800 or more for a detailed inspection.
How do I make my offer attractive besides the price?
When you deposit a large sum, you’re telling the seller “I’m serious about closing this deal.” And agreeing to requests that gives little or no hassle for the seller can also help. For example, if the seller asks you if they can leave a swing set in the backyard, you may want to agree to the request. When you do small things that make the transaction go as seamless as possible, the seller will be more likely to accept your offer and they will also be less likely to delay.
How interest rates work and what drives them up or down?
In the financial world, mortgages are important. Generally speaking, mortgage interest rates are kept low for homebuyers, when compared to other forms of financing. But you must maximize your credit score to decrease your rate, and be prepared to provide detailed financial information. Your financial picture will make all the difference after reviewing credit, income, and expenses. These requirements have increased since the beginning of the financial crisis in 2008. Keeping delays to a minimum requires that tax returns, pay slips and W2’s are in place when you meet with your lender. Be ready for additional documentation requests and provide as quickly as possible to avoid delays.
How much should I offer?
It can be a cat-and-mouse game when it comes to making an offer. You risk losing the home to someone else if your offer is too low and on the other hand, you risk overpaying if your offer is too high.
It is the duty of your agent find the “sweet spot” by analyzing comparable homes and market trends to decipher a fair asking price. Don’t be afraid to leverage your broker’s knowledge here to ensure that you understand and make a fair offer. If you’re not comfortable with the offer price, discuss in detail with your real estate agent, and be willing to get a second opinion if conversations with your broker don’t lead to reassurance.
Buying a home can be nerve-wracking, most especially for people buying in competitive markets. In fact, home buying is likely the biggest and most potentially rewarding purchase of your life. It is characterized by complicated processes and fraught with unfamiliar lingo, even expenses. But, if you’re house-hunting, don’t fret it! Knowing the process and having the counsel a good real estate agent will make all the difference to ensure that your next home buying experience is a tremendous success!