The pandemic has drastically changed the face of the housing market. Gone are the days of leisurely taking one’s time to explore their options. In-person open houses are frequently replaced with one-on-one showings and virtual home tours. And houses selling at an incredibly fast-paced rate. This has resulted in an extreme imbalance of supply and demand, causing home prices to sky-rocket. We’re here to lay out the key tips for buying in a seller’s market.
In times such as this, home buying can seem like an almost impossible task. So, what can you do as a buyer to better your chances of getting that deal closed? Here are some of our recommended strategies for home buying in a seller’s market.
Set Your Expectations
You may have your sights set on a particular home, neighborhood or price range. But today’s market is one that unfortunately leaves few options for buyers. And putting all your eggs in one basket will ultimately leave you walking away homeless. Instead, consider alternatives such as a different location or a home that could use a bit of work. And most especially, be flexible with how much you’re willing to pay. In today’s market, it’s guaranteed a home will have multiple bidders.
Get Pre-Approved For Your Mortgage
The strongest competitors are ones who offer the best guarantee of a sale. As a buyer, you will stand little chance against other bidders if you aren’t already approved for a mortgage. In fact, most experts agree that before you even begin house hunting, you need to already have your mortgage squared away. Which leads us to our next tip:
Determine How Much You Can Afford
This is determined in two ways: how much you can get approved for and how much of a down payment you can offer. It is important to get your credit score and finances in the best condition possible before applying for a mortgage. Your creditworthiness and income will set the standard of what you can actually afford. They will also establish the interest rate of your mortgage.
Additionally, you can strengthen your chances by saving up as much as possible for that down-payment. While some mortgages (such as a VA loan) don’t necessitate a down-payment, most others will require it. And when home buying in a seller’s market, a larger down-payment is always an advantage. How much should you save? Typically, lenders want you to have 20% of the total price set aside. Anything less may require you to also get private mortgage interest (PMI).
Existing Home Vs. New Construction
If you haven’t already, it may be worth it to consider purchasing a newly built home. Though new builds have their own sets of challenges, you may have better chances of getting that house sooner rather than later. This can be a good option for those who don’t necessarily want to deal with a bidding war.
However, with the costs of materials sky-rocketing, keep in mind that you will more than likely still pay at a higher price point. In addition, the timeline for new builds may get extended or delayed as contractors struggle with lowered supplies of these materials.
Get Yourself A Stellar Real Estate Agent
When it comes to home buying in a seller’s market, it’s best to have a real estate agent on board. Navigating the choppy waters of the housing market on your own would be challenging on its own. But today’s market almost demands the presence of a real estate agent. You want someone who is familiar with your desired locations. Additionally, your agent can help to get you the best deal possible when putting in an offer for a home. In addition to price negotiations, a quality agent also assists with closing and handling the associated paperwork involved.
Consider Waiting On That Home Purchase
Sometimes, in an extreme market such as this, it may be smarter to wait until the tides turn back in your favor as a buyer. If homes are out of your price range and/or the stress and difficulties of losing out on a deal repeatedly is too much, it may not be the right time to buy. The pressure of home buying in a seller’s market can cause many to make rash, poor decisions. And while it can be hard to know when to try again, you may be surprised at what you come across when the craze has died down.
But whenever you are ready to take the journey into home buying, our experts are guaranteed to get you quick quotes, low rates, and fast closings. Contact us today to get started!