Tips When Buying a Home

Buying a home is stressful, whether you are buying a starter home, upgrading, or downsizing.  In a sellers’ market this can be extra stressful.  During that cycle, buyers compete in a multi-offer environment.  For some buyers it may be advisable to wait for the market to cool off. On the other hand, there may opportunities where buyers can purchase a home that meets their needs and desires.  Now let us define types of real estate markets:  a balance market is where supply of houses available to purchase is equal to the demand for homes.  Housing prices are stable, and houses sell in a reasonable period-of-time.  Buyers’ market exists when there are greater number of houses available for sale than there are active home buyers.  During this market, buyers are often able to negotiate lower prices, terms of sale, and concessions.  Finally, sellers’ market creates an environment where sellers will ask buyers for their best offer which leads to bidding wars that drives up the sales price and allows the seller to choose the best offer that meets their needs.  At the same time, buyers will drop contingencies.  When you decide to purchase a home in a sellers’ market, start early unless money is no object, and be prepared to act quickly when a house meets your needs and desires.  Also, stick to your previous defined buying plan which means: 

Define housing needs and desires: Do not have a long list, which will restrict your search and limit your chances of buying a home that will satisfy your needs.  Rank your needs, this will help you decide faster and govern your offer when facing multiple offers.     

Prepare yourself financially: This will take some time, start early.  First, talk to 2 or 3 lenders and get pre-approved.  Doing this will help you determine how much home you can comfortably afford.  In many situations, do not go along with the highest amount the lender will approve.  Avoid looking at houses that are at the top of your budget, this gives no room to bid up in a multi-offer situation.  Consider your financial goals and determine a mortgage amount you are comfortable with understanding in the future you will experience emergency and maintenance expenses.  Estimate your upfront out-of-pocket expenses: earnest, down payment, and inspection cost.  This is money you must have in your financial account prior to making an offer on a house. Then determine where your funds will come from for prepaid and closing cost you will incur on closing date.  Finally, work with a real estate agent, tell your family, friends, and colleagues that you are looking for new home.  These people can provide new insights to consider in your home search.

Buying action:  After completing above tasks, realize you may have to compromise especially in a sellers’ market.  At this point in time, your realtor provides you with listings per your home search criteria.  At the same time, you can be viewing houses on-line from Zillow, Trulia and/or Realtor.com. Also, make yourself available to view homes and be ready to make an offer when you locate a property that meets your needs and desires.  Before making an offer, your realtor should check with listing agent to determine if the listing agent has received any offers.  This will put the buyers’ agent in better position to advise their client what to offer.  When making an offer, always keep your offer simple with no contingencies.  How to improve your offer, more earnest money and/or quick closing date will improve your chances of winning.  In addition, write a letter why you desire to purchase the property, this can have a positive impression on some sellers.  Be honest, state what attracted you to the property, mention personal touches, and how you plan to create memories of your new home.  Keep in mind, sometimes a lower offer with no contingencies will be the winning offer.  When operating within a sellers’ market, be prepared for multiple offers and focus on sticking to your budget.  Also, this is not a suitable time to ask for anything extra from seller.  Do this after you have a signed contract if you desire to purchase furnishing or appliances.  Hot market requires you to be patient.  It means you are in a marathon, and it requires fast reaction.  If you do not get the home, review your financial preparation for any changes, needs and desires.  Also, remember this is not the end of the world, there will be another home that will come available that meets your wishes.  If you currently own a home, it might not be necessary to compete in a hot market, wait until there is less competition.  Also, remodeling your current home may satisfy your needs and staying close to people that mean the most is important.  Eventually you will find your new home.