You’ve crunched the numbers, given it a lot of thought and maybe even lost some sleep over it—you’re officially in the market for a house. Congratulations! Whether you’ve decided your renting days are over, it’s time to upgrade to support your growing family or downsize for retirement, house-hunting can be exciting. Unfortunately it may also be stressful—especially if you happen to be a buyer in a seller’s market.
When the inventory of houses for sale is low, those who are selling tend to have the upper hand. With available homes in short supply, sellers may demand more from prospective buyers and can be much pickier when it comes to reviewing and accepting offers.
So what can you, the buyer, do to guarantee that you land that dream home? Well, nothing—there are no guarantees. But here are five tips to consider that may help stack the cards in your favor.
1. Find out what you may be able to afford
One way for you to show sellers that you are a serious buyer is to get prequalified with a lender. Some real estate agents won’t even begin showing their clients houses until they are prequalified. Prequalification essentially provides you with an estimate of how much home you could afford, based on an informal assessment of your income, assets, and expenses.
Prequalification does NOT guarantee a particular loan amount – or that you will receive financing at all. The key with this process is to be honest. This isn’t an online dating profile – there is no benefit to exaggerating or trying to make yourself look like a more attractive borrower to your lender. While your credit may not be pulled at this point, all of the information you provide will eventually be investigated and verified and if you have embellished, it may end up costing you the sale.
Beyond being honest, you need to be realistic with yourself. Your lender will issue a prequalification based on a snapshot of your financial situation. However, you need to consider factors that your lender may be blind to. For instance, are you willing to be ‘house poor,’ or is having extra money to dine out and travel regularly important to you? Be sure to consider the lifestyle you desire and the associated recreational expenses that may affect your monthly mortgage budget.
2. Determine what your deal-breakers and deal-makers are
It is far too easy to overlook a home’s shortcomings once you’ve fallen in love with its best features. It is also easy to get caught up in the fear that if you don’t act fast, you may lose your opportunity. So before you even set foot in a new home, make a list of priorities. Then, take it with you and consult it at every showing. This can seem daunting at first, but it can save you some headache – and heartache – down the road.
Again, you need to be honest and realistic when making these lists. It may be helpful to categorize your deal-breakers and deal-makers into needs versus wants. What must your next home absolutely have (or not have), and what would just be ‘nice?’ This list can be a good starting point and you can refine it and re-calibrate your expectations as you see more properties. Being prepared in this way may help you think rationally if you get caught up in the excitement and anxiety that can come with the home buying process.
3. Be vigilant
Once you’ve done your homework, hit the ground running! In a seller’s market, it is not uncommon for a seller to receive multiple offers on the first day their home is listed. Don’t assume that a home you see listed will still be available the next week – or even the next day.
Great real estate agents will also be watching your home search like a hawk. However, it helps to have extra eyes and ears in the process. After all, you are the only one who knows exactly what you’re looking for. There are a number of websites and mobile applications that may help keep you in the loop as soon as new listings are available.
4. Act fast
Each time you go out to look at properties with your agent, be prepared for the possibility that you may fall in love with a home and ask yourself if you would be prepared to make an offer. In a seller’s market, you may not have the luxury of taking a lot of time to think it over. That being said, buying a home is a significant decision and not one to be rushed into or taken lightly. Don’t ignore any reservations you may have. It may be helpful to ask yourself how devastated you would be if the home were to sell before you could make an offer. Your answer may help you determine if it really could be ‘the one,’ or if you’re just settling for fear of missing out.
5. Make a solid offer
If you are house shopping in a seller’s market, it may not be practical to look above of your price range in the hopes that you can negotiate a better price. Many homes may sell for the asking price, if not very close to it.
Your real estate agent can advise you on crafting a sound offer, but realize that even if you submit a solid offer, you may end up in a bidding war. But with a bit of preparation and a trusted real estate professional on your side, you can approach your decisions with more confidence. And at the end of the day, understand that the seller is simply trying to get the best deal possible—just like you.
Castle & Cooke Mortgage, LLC® (NMLS #1251) is a leading independent mortgage lender headquartered in Draper, Utah, with locations across the United States.
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