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If you've decided to buy a home this spring, good luck to you. Your challenge will be not just finding a home you like, but also beating out all the other homebuyers who like it and want to make an offer on it, too.
The number of homes for sale is low nationwide, particularly in the price ranges desired by first-time homebuyers. The latest figures from the National Association of Realtors show that that there was only a 4.4-month supply of homes for sale in February, which is lower than the six-month supply that indicates a balanced market. One-quarter of February's transactions were all-cash sales, according to the NAR, and investors bought 18 percent of the homes that were sold.
That means that if you want to end up with a nice home, you need to be strategic. Knowing what's most important to the sellers can be key to creating a winning offer. Here are 13 tips to help you get the house you want this spring:
1. Get your finances in order
When the inventory of homes for sale is low, you can be sure that other buyers are looking at the same house you are. At least two months before you intend to start looking, get copies of your credit reports to make sure you're in a financial position to buy. And unless you buy cash, shop for mortgage financing before you start looking. Many Realtors will not take buyers to showings unless they provide a pre-approval letter or proof of funds.
2. Know your priorities
Carefully analyze your requirements for a home. Write down what you want and need, and put the essential features at the top of the list. No home is perfect, and it's unrealistic to expect to find all the features you desire in one property. You'll have to compromise.
3. Commit to an experienced real estate agent
Find and commit to an active real estate professional who specializes in the area or the type of property you want to buy. Many sales today occur because the agent brings buyers and sellers together on unlisted homes or those which just hit the market.
4. Don't make snap judgments based on listing photos
A house that doesn't look appealing in photos could still be a great house. Estate sale or homes with tenants inside often yield particularly poor photos. Plus, photos fail to convey the feeling of a home or the floor plan.
5. Do some homework yourself
Browse sources such as realtor.com and local real estate listing sites. Set up alerts for the neighborhoods and characteristics you’re looking for. Drive through your target neighborhoods. If you see a home for sale you like, send the address to your agent, who can schedule a showing for you.
6. Stay in close contact with your real estate agent, and be ready to move quickly
Your agent will be on the lookout for the newest listings that meet your criteria. Be ready to see a house as soon as it goes on the market — if it’s a great home, it will go fast. That often means rushing out to see new homes within hours of them being listed and writing up an offer immediately if you like the house.
7. Review your priorities from time to time
If you can't find the right home in 30 to 60 days, take another look at your priority list. You may have to consider different ideas. Buyers who are willing to look at homes in a different location or make cosmetic improvements increase their odds of buying a home in a tight market.
8. When you find “It”
A well-priced property in good condition will draw many interested buyers the first few days on the market. So, when you find the right home, sign an offer right away. If you have to think about it overnight, you may as well forget about it. Out-of-town buyers, or those who have to travel, are at a real disadvantage. They take the chance of missing out on the right home every time they leave town. To prevent frustration and disappointment, make sure that a close friend or family member knows exactly what you're looking for. Then, if the right property comes on the market, someone can preview it for you, and if it sounds right you can make a "blind offer" with an opt-out clause through your agent.
9. Start with your best offer
A competitive market is not the right environment to negotiate a bargain. You may get only one chance to make an offer, and your offer may be one of several the seller can choose from. Consider an escalation clause, offering to pay up to a certain amount in cash if the appraisal comes in lower than the purchase price. Another type of escalation clause offers a specified amount above the highest offer received, usually with a cap.
10. Write a personal letter to the sellers
Some sellers are interested only in how much money their home sale will yield, but others love their home want it to go to a new family that will love it just as much. If you really like a house, include a personal letter and a family photo with your offer. This is not for everyone, but for some buyers it works like a charm.
11. Make a big earnest money deposit
The expected size of the earnest money deposit, and the rules about when you get it back, vary by locality. But sellers often see a larger deposit as a sign that you're serious about the deal.
12. Be realistic about the inspection and repairs
The more competitive the market, the less likely a seller will be to make repairs, though some sellers may lower the price if the inspection reveals expensive defects. The purpose of the inspection isn't to get the seller to repair every small problem but to find out for sure that the house does not have major defects.
13. Make your offer as clean as possible
Most offers are made contingent on the buyer getting a mortgage, the appraisal being equal to the purchase price and the buyer approving the inspection. Waiving any one of those contingencies can be risky, but may be the right move in some circumstances. Include as few contingencies as possible: you want the offer to excite the seller and listing agent and still protect yourself.
Questions or additional tips? Please email me any time!
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compiled from Realtor.com and yahoo finance, April 2016
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