This spring, the U.S. housing market has reached recognition as one of the strongest seller’s markets ever. As a result, buyers have a lot of competition over not a lot of inventory. So how are you supposed find your dream home when you’ve got countless others trying for the same thing? Here are five tips and tricks for the homebuyer looking to achieve just that.
- First and foremost, set your budget. Setting a budget includes knowing what you have, what you can borrow, and additional costs involved in ownership. You must verify the amount of money you are able to borrow by getting preapproval from a lender. Then you must take into account additional costs of ownership such as taxes, utilities, and insurance. All of these things come together to determine a final budget you can comfortably afford. Next, you must stick to this budget. In this seller’s market, bidding wars over a property may drive up prices. You set your budget for a reason. If the asking price surpasses your budget, be ready to walk away.
- Identify wants versus needs. Differentiating a want from a need is all about realizing what you can compromise on. Certain things you believe you want are not necessary immediately. Hardwood floors, granite countertops, and stainless steal appliances are all wants that can be added later; however, things like safe neighborhoods, school districts, and yard size are all things that cannot be compromised on and qualify as a need.
- Jump on opportunity. This is a tight market with lots of competition. If you hesitate, you may risk missing out on an opportunity altogether. If you find a house that is within your budget and meets all your needs, make your decision quickly!
- Put forward your best offer, upfront and with few contingencies. It is tempting to submit a low bid to try and get a better price, but remember we are in a seller’s market. It is imperative that you lead with your best offer for the best chance at securing your home. Your best offer is your highest offer, and the one with fewest contingencies. Contingencies are frequently unattractive to the seller because you’re asking him/her to take a gamble on your contract. According to Jean Folger, author of award winning book Make Money Trading, if you include a home sale contingency in your offer, the seller will investigate your current home to determine if it is already on the market, if it is listed at the correct price, how long it has been there, and what the average time on the market is for homes in the neighborhood. Be prepared to present a good case on this respect if you want your contingency to go through.
- Work with a realtor. Because all real estate is local, it is important to work with an agent who is familiar with the areas and neighborhoods you are considering. This realtor’s knowledge can give you the competitive advantage you need to find your dream home in this tight market.
Using these 5 tips and tricks, you’re bound to be more successful in your search for the perfect home. For more information about home buying in a tight housing market, or to learn more about home financing, contact one of our mortgage specialists.