Low inventory and high demand is creating a challenge for buyers. Here are 7 strategies to use in this competitive market
Get a Mortgage Pre approval
Preparation is key! Buyers need to be pre approved for a loan before they begin searching for a home. Homes are selling in days, not weeks. Without a pre approval, you won’t be able to submit an offer in time for your dream home. A pre approval shows sellers a lender has verified your finances and credit and you are ready to move forward. It also tells you the amount of a loan you are qualified to receive.
You Will Need Cash On Hand
Your loan amount is for your mortgage. You will need cash on hand for:
- Down payment. This can be anywhere between 3% – 20% of the purchase price of the home.
- Closing Costs. These include lender fees, an appraisal, and transfer taxes. These fees are typically 3% – 4% of the sales price of the home.
- Option & Earnest. Option money allows you to cancel the transaction during a specified period of time, usually 5 – 10 days, This allows time to have the home and property inspected by a licensed inspector. Option money is typically not refundable and rarely exceeds $500. Earnest money is an amount agreed to in the real estate contract as a show of good faith that you intend to purchase the property. It is paid to the Title Company and kept in an escrow account. Earnest money is typically refunded if the sale falls through. Both option and earnest money are applied to the down payment of the home upon closing, so it really isn’t an “extra fee”.
- Home Inspection. Typically $350 – $600 depending on the size of the home.
Look for Homes Under Your Budget So You Can Present a Strong Offer
In this competitive market, sellers are receiving multiple offers, with many over asking price. Finding a home under your budget allows you to bid up without going into your savings or going above your budget.
Don’t Fall in Love With Just One House
We all want our dream home. However, falling in love with one home can set you up for major disappointment if you are outbid. It can also set you up for bad financial decisions made out of desperation. Being prepared for these possibilities can save you a lot of heartache. The good news is, deals fall through every day. If you are outbid, you can be set up as the second choice. It’s not over until the closing.
Offer the Seller Something Extra
Our agents are trained to make your offer as tantalizing as possible. Does the seller need extra time to move? Offer them a leaseback, extended time after the closing to stay in the home to relieve their stress. Do you have extra cash on hand? Offer to pay their closing costs. Your agent will discuss other possibilities with you to give you a “leg up” on the competition.
Expand Your Search
Location, location, location. We’ve all heard this saying in relation to Real Estate. The most sought-after neighborhoods come with a price. Right now, you need to be flexible if you want to be a homeowner. Think about what your dream neighborhood looks like. Are there local stores and restaurants nearby? Parks and green spaces? Whatever features you care about, try to find them in areas you haven’t explored before.
Find a Great Real Estate Agent
A great agent is the key to finding and obtaining your goal of home ownership. At All Cities Realty, our agents are extensively trained to help you achieve your goals. You will be matched with an agent that is knowledgeable of the area that you are interested in. They are trained negotiators and know how to make your offer stand out in a competitive market. We work as a team and have agents that specialize in residential, commercial, farm and land, and new construction. We would love to help you make your dream of home ownership a reality.