So you’re thinking of buying a home! We understand you’re probably excited about it, but maybe you’re a little anxious, too. Just know that it’s completely normal to feel stressed or experience a rollercoaster of emotions, whether you’re a first-time home buyer or an experienced homebuyer. This is a big step in your life. Buying a house isn’t like other purchases, it takes a solid plan and a bit of luck – especially right now. The housing market is currently pretty intense, as we’ve been in the midst of a seller’s market. So in this blog, we’d like to share some helpful information and tips on how to buy a house.
But before we move any further, we ought to give you a breakdown of the current state of the housing market. This way you can make plans strategically!
Housing Market 101
As we mention earlier, we are currently in a seller’s market. This happens when demand exceeds supply; when there are many interested buyers, but the real estate inventory is low. Because fewer homes are available right now, sellers have the upper hand. In this type of market, houses sell faster which causes homebuyers to compete with each other to purchase and own property. Based on recent trends, experts predict that the market will remain a seller’s market, however, it’s believed that more inventory will be coming into the market in the near future. In order for equilibrium to occur (a.k.a the balance where the demand and supply for property are equal), the United States would need much more inventory to become available.
You may be wondering why we are experiencing this imbalance. A report from Freddie Mac shows that there are currently 18 percent more individuals aged 25 to 34 than there were in 2006. This represents an increase of 6.6 million prospective first-time homebuyers, from 39.5 million in 2006 to 46.1 million today. Additionally, the number of people who can afford to buy and are of prime first-time homebuyer age has also been growing. So understandably, buying in the current market may seem daunting. It may be more difficult compared to buying in a buyer’s market, which is when the supply of properties exceeds demand (meaning buyers have the advantage). But it is possible!
This is why it’s important to approach wisely. Here’s how to do just that!
5 Tips for Buying a House in a Seller’s Market
Find a Realtor You Trust with Experience
One of the first things you should do is to use a realtor that you trust and feel comfortable working with. You’ll want to find an experienced realtor who can help you navigate the market and score your new home at the best price. Going with a more experienced agent can save you time, money, and frustration, in the long run. Seasoned agents have connections to other real estate agents in the area as well as working vendors, so they can offer the best referrals and even expedite home sales! Furthermore, experienced agents can efficiently identify and predict trends and provide you with advice on when you should and shouldn’t act.
You can gauge agents’ experience by asking them how many times they’ve renewed their real estate license. Knowing how many times they have renewed their license will allow you to determine how long they’ve been working, and their track record. Realtors who have renewed their licenses multiple times are more likely to have a history of consistently closing deals.
Clean Up Your Finances
Before you go to open houses and try to find a real estate agent, you should talk with your mortgage lender. They can steer you in the right direction and help you have a better understanding of what home mortgage loans are available to you. Also, this will make you more attractive to sellers and real estate agents.
Experts say that getting pre-approved for a mortgage is a crucial first step you should take if you are serious about buying a home. This sometimes seems intimidating to folks, so they often end up putting it off. But it’s so important to prioritize this step because it will give you more bargaining power. Typically sellers want to see a preapproval letter before accepting an offer on homes. If you didn’t get pre-approved, you would have to apply for a mortgage loan before making your offer which could potentially cause you to lose the opportunity to bid on the home.
If you aren’t approved, you may want to make a cash offer to improve your odds of securing your new house. A cash offer entails submitting an offer to purchase it outright using funds from savings, a sale of another home, or gift money. Your bank could provide you with a Proof of Funds letter if you have enough money in your account, or job stability and good credit history. This letter is just as it sounds: evidence that you have enough liquid cash to buy a property.
Expand Your Search
We suggest expanding your search area to increase the odds you find a place that fits your needs. By looking in other neighborhoods, you could come across better prices and more choices. Who knows, you might find your dream home!
Know the Market
Keep tabs on the housing market in whatever area you’re hoping to settle down in. You can consult with your real estate agent and even do some research on the trends in your prospective neighborhood to see what is available.
Be Ready to Bid
To ensure that you come across as a serious buyer, you should try to act quickly and make sure you’ve taken appropriate actions ahead of time. This includes:
- Getting pre-approved for a mortgage if you require financing to purchase the home
- Waiving the contingencies to present a clean offer (which makes the offer safer for the seller)
- Make a high earnest money deposit
Trust in Highlands Community Bank When It’s Time to Buy
Having a good lender in your corner will help you tremendously. The team at Highlands Community Bank would love to assist you in buying your home. Together, we’ll get your finances squared away and our staff can provide you with advice throughout the buying process. We will make sure you are prepared and confident to buy your home! Contact us today.