With unemployment at its lowest rate in 10 years and the previous decade’s recession finally fading in the rearview mirror, you may be thinking of buying a new home. You’re not alone. You have so much company, in fact, that in many parts of the U.S., the housing market is hot. And that competition can make buying a house a challenge. The following tips can help you get an edge on your fellow homebuyers.
1. Get preapproved
In a tight housing market, you need to be prepared to act quickly, or you may see your dream house slip away. So take a look at your credit reports to make sure your credit rating won’t get in the way of a purchase. Some sellers may want to see a preapproval letter or proof of funds before they’ll take an offer seriously. Work with your preferred lender to get preapproved for a loan.
2. Consider loan options
As you work with your lender, explore the loan options available to you. Do your homework early so your house hunt won’t get derailed by a surprise from your lender.
Interest rates on your loan will affect what you can afford. Don’t be spooked by variations in interest rates on a month-to-month basis. By historical standards, rates are still quite low, so consider yourself lucky.
Those fortunate enough to have substantial cash on hand or equity in their current home may be able to offer cash to a seller, which can be an advantage in a tight market over other would-be buyers.
3. Find a good agent
Although the internet has enabled some homebuyers to bypass real estate agents, a good agent can still be an important asset. An agent who knows the market and has solid connections to the community may learn about new or potential listings before they hit the official lists. This head start—even if it’s only a day or two—can be a significant advantage in a tight real estate market. You may be able to make an offer before your competition is even aware of the listing.
4. Don’t hesitate
Once you find the home you want at a price close to what you can afford, it’s time to act. Now! If you wait to find a better bargain, another buyer may snatch the house you want. Don’t make an offer if you have serious doubts, but if you’re confident the house is a good fit, act quickly and be reachable during the negotiation.
5. Eliminate potential obstacles
Are you worried you might be outbid? Make an offer that’s above the asking price. If you’re still worried, you can add an escalation clause, which states how much you’re willing to go up on the price if your initial offer is outbid.
You can also waive your opportunity to make a contingency offer. A contingency offer means that the final sale depends upon certain criteria that must be met, for example, inspections and appraisals of the new home and the sale of your old home. You don’t have to base your offer on these contingencies, but be sure of your decision because these steps exist to protect you, the homebuyer.
6. Consider other options
If your bid is successful, congratulations. If not, you may want to change your approach. Perhaps you need to reconsider what you’re looking for. If you drop or change a requirement, you may be able to find something at a lower price or expand your range of house options. And if you’re having trouble finding exactly what you want, consider building. You can design your own home, and maintenance on a new house should be relatively low for the first few years.
Courtesy of AAA LIVING