Can You Really Buy the House You Want in a Tight Market?
If you haven’t purchased a home in the last few years, you may be surprised to find that buying a house isn’t as easy as it used to be. Gone are the days of cautiously comparing your top 5 choices and engaging in a prolonged volley of offers and counter-offers. Demand is high, and supply is low. According to a recent Kiplinger report, existing-home sales were down 3.2% in January 2018. The national inventory of listed homes was down 9.5% overall, continuing a downward trend that spans almost 3 years. While these statistics may sound discouraging at first, a tight housing market can actually be a good thing if you’re a prospective homebuyer who knows how to play the game.
Fortune favors the bold.
Whether you’re shopping for your first home or relocating to a new area, it’s important to know exactly what you want in a house. Bedrooms, bathrooms, lot size, neighborhoods, schools—these are the details that drive the search process. But once you find a house, you need to be ready to move. When asked about how quickly an interested buyer should be ready to make an offer, Justin Boyd, a realtor with Keller Williams responded, “In this market, buyers have to be prepared to make an offer immediately!”
When it comes to making a winning offer, speed isn’t the only factor. The strength of your offer plays an important role as well. Drawing on his experience, Boyd shared a few additional tips that will help you submit a strong offer that stands out from the rest. If you’re serious about finding your next home, the following pointers could help you land your new home sooner rather than later:
Pre-approval is key.
In a tight housing market, it’s not uncommon for a seller to receive multiple offers. Since anyone can make an offer and then look for financing, you can dramatically improve your chances of acceptance by being pre-approved by a mortgage lender. Highlighting the importance of being prepared, Boyd points out, “It is important to start with preapproval before looking so that when you walk into the house, you are ready to complete the offer and submit immediately.” When you’re pre-approved for financing, you give the seller confidence that your offer is solid.
Find out what the seller wants.
Every buyer has a list of what they’re looking for in a house, but few consider the fact that the seller has a list of their own. Some sellers are in a hurry, which makes a quick closing date important. Others have had previous contracts fall apart, so they’re in favor of shorter contingency periods. This is an area where it pays to have an experienced buyer’s agent on your side, one who can communicate with the seller’s agent to find out what really matters. Surprisingly, it’s not always money! Over the years, Boyd has seen the benefit of uncovering the one thing that’s most important to the seller. “Finding out what that one thing is could be the difference between getting the home or not. I have had sellers accept an offer for less money because it met more of their goals.”
Go big to go home.
Everyone loves a bargain, but this may not be the time to hold out for one. While it may seem counterintuitive, Boyd suggests being prepared to offer full asking price—or more—on your first offer. “Sometimes you can make a great first impression and skip the multiple offers game with a great first offer! You don’t want to spend time fighting for a home you love only to find out that you didn’t win because the other offer beat you by $500.” Additionally, he suggests submitting an offer with as few add-ons as possible. Removing conditions like seller-paid home warranties and seller paying for buyer closing costs can be a game changer.
It’s time to get started.
If you’re already house hunting, you owe it to yourself to follow the advice listed above as quickly as possible. If you’re planning a home search in the future, preparing ahead of time is a great way to make the process as stress-free as possible. Either way, getting pre-approved is the first step, and Great Meadow FCU is the perfect place to start. A basic conversation about your housing goals and financial situation will help our loan specialists determine how much you can afford to pay for a house. Once those details are in place, they can help secure a pre-approval and position you to make the strongest offer possible when you find the home you want.