The last two years have seen real estate prices fluctuate wildly. Yet, this year, prices are predicted to increase 5% or more nationwide while interest rates are likely to hit a record low. This reality has many who are looking for a home asking themselves whether or not this is a good time to buy. Let’s explore some key ways to approach buying in today’s market successfully.
Position Finances to Qualify for a Lower Mortgage Rate
Obtaining the lowest mortgage rate possible can help offset rising home valuations, but buyers must position themselves financially to qualify for low rates. The key to the best loan rates is to have a solid credit score. This calls for paying down or paying off any big debts and paying off any overdue accounts. If any errors are present on the credit report, be sure to resolve those before seeking mortgage pre-approval. If scores are still low after these efforts, save up for a larger down payment.
Pre-Approval for a Mortgage is a Must
Many sellers and their agents don’t give much consideration to offers coming from potential buyers who aren’t pre-approved for a mortgage. This step not only gives buyers a good idea of how much home they can afford, but pre-approved buyers’ offers typically take priority over non-approved bidders.
Don’t Be Deterred By Stale Listings
When a property sits for more than a couple of weeks, it earns a nickname as a stale listing. Historically, this puts an image in buyers’ minds that something must be defective about the home. There may be something minor amiss that could be easily repaired, the buyer may be asking too much, or a contracted buyer ran into a glitch. Don’t dismiss these homes, but use that status to barter a better buying price.
Get an Experienced Real Estate Professional Involved
An experienced agent can give buyers an upper hand in a seller’s market. Not only can they speed up home searches, but they let their clients know about new listings and sometimes they know about homes before they are even listed. Agents can schedule home tours and even tour them for clients. Most importantly, real estate professionals can negotiate offers that save buyers money.
Prepare to Go High
Getting a deal in a seller’s market is highly unlikely, and buyers need to be ready to compete by making an offer above the asking price. With homes currently routinely selling over their valuation, prepare to pay top dollar. However, most agents recommend that home shoppers look at homes beneath their maximum price, so they have room to work up to bigger offers should a bidding war begin.
Reconsider Waiting to Buy
In times of a buyer’s market, pricing goes up along with the competition. Things in this area tend to ease up a bit towards the end of the year, as sellers who are ‘on the fence’ might list their homes to avoid facing rising taxes. With more homes on the market, the environment for buyers becomes more hospitable as price growth is somewhat tamped down. If the market is brutal, agents recommend that buyers who can wait a bit should do so.
Stand Out From Other Bidders
Buyers willing to make some concessions or put a bit of extra effort into wooing sellers tend to stand out from competitors. Consider waiving a few contingencies in the contract, be flexible with closing dates, and put up a larger earnest money deposit to get sellers’ attention. Some home shoppers even make a personal appeal to sellers with letters and photos of their family.
Anyone considering buying in a hot market, seller’s market or during a shortage of home for sale can use these tips to help push things in the right direction for a successful buying experience.