Earlier this summer, a friend of mine put his house up for sale. Two days later, he had three offers on the home, and two potential buyers were in a bidding war. On the third day, one of the bidders won out, and a contract was drawn up.
This summer, housing has been hot. Inventory has been low, and buyers are looking to get a deal now before home prices rise further and before interest rates rise. Yes, there are concerns that mortgage rates will rise soon.
So, with less inventory and more buyers out there, you need to be ready. As summer draws to a close, realize that it’s a seller’s market. And that means you’re going to have to take some steps to avoid some of the issues that come with buying a home right now.
When Buying a Home This Summer:
Secure Financing ASAP
First of all, make sure you secure your financing before you start shopping. You want to be able to make a competitive offer immediately. Get pre-approved by a lender, and make sure you have a pre-approval letter to show. This is different from pre-qualification. In the current environment, pre-qualification won’t be enough.
If you have pre-approval and you can make an offer that the seller can trust, you will have an edge, especially if the alternative is someone who has to line up financing first. The faster you can move, the greater your advantage. In some cases, a seller will accept a little less from someone who already has financing lined up.
Choose a Good Real Estate Agent
Do your research. Your agent is representing you and you should trust them. Plus, a good real estate agent can help you negotiate faster and even help you figure out at which point it’s worth it to continue offering on a house. You also want to find an agent that can help you various clauses and protect you. Things are likely to move relatively fast, and your agent can help you maintain perspective. Ask for referrals from friends and family. You can even get a recommendation from your lender, looking for someone they know can help you close the deal.
Narrow Your List with Online Search
One of the most important things you can do is use online search to narrow your list. Thanks to video tours and other features, it’s possible to get a good idea of what you’re looking at online. Instead of spending a lot of time going from house to house, narrow down your list to a few top choices to visit for a more in-depth review.
Set a Budget and Stick with It
No matter when you buy a home, it’s important to come up with a budget and stick to it. During times like this, it’s easy to get caught up in the excitement. You end up in a bidding war and next thing you know, you’ve gone $10,000 or $15,000 beyond your budget.
Look at your financial situation and estimate what payment you would be comfortable with. Don’t use your pre-approved amount as your total, either. Just because they tell you it’s possible to borrow a large amount of money, it doesn’t mean it’s a good idea to borrow that much. It can be an advantage to have the pre-approval when you’re buying a home, but you don’t need to spend the full amount.
Find a budget level you’re comfortable with and stick to it. If a bidding war will take you above your budgeted amount, disengage and look for a new house.
It can be difficult to pull back when you are caught up in the excitement. However, it’s important to realize that there will be other homes and you might be able to purchase something else. It can be a long process, but eventually, you will find a home that you like at a price that you can truly afford.