Competition is fierce for buyers in today’s housing market. When there are more buyers than people ready or willing to sell their home, buyers have to be ready to compete if they want to get the house. But competition can cloud one’s abilities to make reasonable decisions. Below are ten tips to follow so that you don’t keep losing out to other buyers, or on the flip side, you don’t end up with a home that doesn’t fit your needs long-term.
1. Get pre-approved for a mortgage before you start house hunting. Sellers can be more discriminating in multiple-offer situations and they want the buyer who’s able to afford the home. Your pre-approval sets you apart from buyers who have no confirmation on what they can afford through a lender.
2. Stick to your budget. The excitement of wanting to win a bidding war can make buyers bend too far on their budget limits. When more money than planned starts flowing to the mortgage, you’ll realize the pain of that decision later. Even if a deal heats up, stick to the budget that works best for your family.
3. Know what you want. Savvy buyers realize it’s unlikely they’ll get everything on their wish lists. Prioritize what you need and determine which items can be sacrificed if you find the top priorities. This allows you to make quicker decisions when it’s time to make an offer. You might not have the chance to mull things over until the next day.
4. Bid competitively. In areas where the competition is strong, don’t bid too low. You’ll likely lose out to others. If the competition is ultra-fierce, you may even need to make your first offer your best and highest.
5. Don’t make an offer contingent on selling your home. If you’re able to get a bridge loan, it will help win the house you want even if yours isn’t sold yet, assuming you can afford two mortgages. Contingencies involving the sale of your own home in a tight market are unattractive to sellers who have other offers with no such contingency.
6. Don’t ask the seller to pay closing costs. Usually sellers only agree to pay some or all closing costs for a buyer when they urgently need to sell. If there are plenty of other buyers who don’t ask for the extra incentive, why would a seller consider it? Find another way to get the cash.
7. Don’t ask for major appliances if they aren’t included with the home. If certain appliances have already been removed from the home (a refrigerator, washer, dryer, etc.), don’t ask the seller to put it back or replace it. Sure, under other circumstances, the request might be reasonable. But in a seller’s market, it’s not worth making the appliance a deal breaker when competing with others.
8. Ensure your Realtor sets you up to automatically receive new listings. Check daily what comes on the market so that you can have your agent set up an appointment sooner rather than later.
9. Research your market to understand pricing. Have your Realtor provide details on comparable homes so that you know the low, mid, and high ranges for your location. That way, you’ll be better informed on whether a house is priced appropriately when you decide to present an offer.
10. Don’t buy a house sight unseen as a way to beat the competition. Relying on photos only is a risky business. Rooms may appear larger in photos than they actually are or details in finishings may not look as expected once you’re in the home. Also, you need to have a good feel for flow and layout. Visiting a home in person is the best way to determine whether to make an offer.
Real Estate Term of the Week
Bridge Loan: A bank loan intended to cover an interval between two transactions, typically the buying of one house and the selling of another.