If you’re getting ready to buy a home, there are many strategic steps you can take to ensure you’re attractive to sellers and optimize your skills as a savvy buyer. Though there have been some recent fluctuations in housing, it is still largely a seller’s market as it has been for the past several years.
A seller’s market means that for every home on the market, there are often many interested and qualified buyers. Because there are so few homes available, it intensifies the competition among buyers, which can result in bidding wars and higher purchase prices. It can also mean the buyers lose homes they may love to other buyers who either outbid them or looked more attractive to the sellers.
How can a buyer compete in this sales climate?
Below are six steps you can take to make sure you are ready for any eventuality when you find that “perfect home.”
1. Get preapproved for a home loan.
This is the most important step you can take to optimize your bargaining strength as a buyer. Speak to a lender before you even begin the serious shopping process. Once you have provided all your financial information to your lender, he or she can calculate exactly what you can qualify for, at what rate, an estimated monthly payment and a breakdown of the numbers for various loans.
From there, you’ll know what you can afford. Just because you qualify for a certain amount doesn’t mean you should commit that much from your budget each month. Decide what you feel comfortable paying and set a price range for properties you’ll target.
2. Find a knowledgeable Real Estate Agent.
If you don’t already have one, ask your Loan Officer who he or she recommends in the region where you plan to live. Loan Officers often work closely with Real Estate Agents and they know who is very thorough, familiar with the area, a strong negotiator and a proven advocate for their clients. A Real Estate Agent’s ability to negotiate on your behalf can be key to successful bidding.
3. Create a personal profile.
People get very attached to their homes and even when they know it’s time to leave, they still want to ensure that their place will go to people who will care for it. Many Real Estate Agents recommend creating a personal profile that can be provided to sellers who may be on the fence about the offer they want to accept. It can be a short, sweet family (or purchasing partners) story. Describe yourself, those who will be living in the house, pets, hobbies, etc., and provide a nice photo.
4. Start shopping.
Utilize all the tools offered to you by your Real Estate Agent. Shop the online sites, which usually have great details and descriptions of homes. Proprietary apps such as GoGo Home can help you access the most-recent listings so you can come up with a game plan. Depending on your timeline, it can be a good practice to devote a few solid days of seeing every home in your area in your price range. This way you can really get a sense of what’s out there and the true condition of the homes.
5. Be agreeable but don’t be a pushover.
If a home has recently been rehabbed by flippers, make sure the seller or seller’s agent is forthcoming with necessary permits for the work recently done. Make sure to note issues you know will likely be expensive repairs in the future. (Your home inspection will give better insight into this.) But you can see an aged roof or damaged floors with your own eyes. Have your agent ask about any questionable issues and discuss reducing your bid accordingly.
6. Craft a bid.
When you’ve found a home you love, or at least think is a great fit, work with your Real Estate Agent to craft a bid. Again, this is where a skilled and knowledgeable agent can be invaluable. He or she will know what homes are going for in the area, weighing many factors, including the home’s condition. Your agent can advise on how close to the asking price you should offer.
When you find the home you truly connect with, it’s often hard to remain objective. Additionally, it’s easy to get caught up in a bidding war because it becomes a competition. Keep a cool head and don’t start upping your bid just to “win.” If you don’t get this home, there may be an even better fit waiting literally around the corner. Your best advocate is a skilled, knowledgeable Real Estate Agent who can be your adviser, expert and negotiator.
Don’t forget, getting preapproved for your home loan before you begin shopping is your best first step to getting a home in a timely manner with terms to fit your needs.