It’s a seller’s market out there! Gone are the days of offers thousand of dollars under ask or waiting to see a home linger on the market for a year before making your move. With homes selling inside of three weeks (less in some markets) if you see a home you want and it’s within your budget, holding out may cost you your dream home.
According to a February 2018 report by the National Association of Realtors home prices in close to two-thirds of the housing market are at an all-time high. This means if you want to buy a home in 2018 you are going to want to check the next few items off your list before heading out to see homes with your Realtor and be prepared for some cut-throat competition….
- GET Approved – I feel like a broken record, but I will say it again and again. You must get pre-approved before you start looking at homes. Unlike a pre-qualification which is not as strong, a pre-approval means a lender has actually combed through your credit and has given a thumbs up to the amount of home you can really afford! Having this little document on hand puts you in front of the line when putting an offer in.
- Get your down payment together – I’ve touched upon this in previous articles. You should have spent the previous year getting ready for game day! This means your credit is in shape, you have scraped and saved and have a nice nest egg sitting in your account for at least 2 months. Banks need to see that the money in your account has been there for a minimum of 60 days in order for them to count those funds as part of your down payment. Part of that nest egg you have to cover closing costs needs to be your earnest money deposit. The larger the deposit, the stronger the offer. Sellers see a large earnest money deposit as a serious buyer. For one, people are less likely to walk away from ten thousand dollars than they are for say, three thousand. This doesn’t have to be put up all at once. You can offer a certain amount in one deposit and another after you pass inspections. In a seller’s market it’s important to have a few tricks up your sleeve to keep you both safe and competitive.
- Unload contingencies – in this market, if you have anything that will potentially keep you from making it to the finish line, you are at the back of the line. For example, if you need to see your home to buy a home your offer is less strong than many also bidding on that same home. A clean strong offer always wins.
- mind the “Net Price”- if your offer on its face sounds strong but then you ask for a sellers assist, that’s something that can cost you an offer acceptance. Make sure your offer gives the seller as close to their asking price as possible once all is said and done. The net price is all the matters in the end and in a competitive market where supply is low in desirable areas, the bottom line is literally the bottom line!
- Look for the worst house on the best block! This pulls from the old saying “a diamond in the rough”. Comb through the homes on the market and zero in on your ideal neighborhood. Once you have made that decision, find the home that needs the most updating and go in strong! Yes, it needs work and yes, it might take time to get it up to dream home standards but with a little love and work you have a home right where you want to be for the right price! Often times, if you can find the worst home in the best neighborhood you end up a winner in the end because you bought low and after improvements you have built-in equity. Make sure to do your research and read up on which home improvements garner the best ROI in your area. Knowing that information will keep you from over investing on any one project.
- Find a Realtor you trust – This should go without saying, but finding a Realtor you trust is a must! Date as many as you need in order to find the one. Your Realtor should know your market, be reachable and responsive, be a good teacher and have all the information needed to properly educate you. A great Realtor will play devil’s advocate for you. “This will likely happen if you do that”..for example. Not everyone is comfortable playing that role but being Mr. Nice Guy can cost you your dream home. So while the nicest Realtor you met would be way more fun at your house-warming party, the Realtor with the most accolades and a direct not so warm and fuzzy approach might be the one who guides you to the finish line. Choose wisely. This is business, not match.com! You may not end up being best friends but a good Realtor will be someone you call over and over again for sound advice.
“Housing stock continues to be at record lows across the country,” points out Bobby Montagne, CEO of Walnut Street Finance. “The days of multiple offers are back in many [areas].”
If you have questions or comments let us know!