The real estate market is not overheating, it is on fire. Both the pent-up demand for apartments after the pandemic and a shortage of supply have increased the median sales price for existing single-family homes in the first quarter of 2021 compared to the previous year by 16.2%. according to the National Association of Realtors. To navigate a seller’s market, buyers need patience and a willingness to walk away. Here are some tips on how to get a good deal on a new home.
Be ready to wait when shopping in a hot market
If you are a buyer you may want to wait for the housing supply to pick up, or at least be willing to wait as you may not have a choice –64% of active homebuyers In the first quarter of 2021, they had searched for more than three months. 45% of buyers said that overbidding prevented them from buying a home. In less overheated times, the average time it took to find a home was about 56 daysSo that’s the difference.
Additionally, you don’t want to rush into the market of a seller who has to make a purchase. For example, if you sell your existing home while trying to buy a new one, consider a home security plan if the search for a new home takes longer than expected (Bankrate has some great tips on this Here). With no time constraints, simply saying “no for now” will help you find a better deal.
Get a mortgage pre-approval
Get a mortgage pre-approved shows sellers that a lender has checked your creditworthiness and that you are a reputable bidder ready to move the business forward. Setting up a mortgage takes a lot of time and paperwork. So if you do this ahead of time, you will have an advantage over other less organized buyers. This process also provides clarity about what your home buying budget will be: you know how much a potential monthly mortgage payment can be based on your income, down payment, and credit score. You can then use this information to set limits on your final home purchase budget before engaging in a home bidding war.
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Get a good broker
While you are looking for a broker who is a skilled negotiator, you also want someone who is patient, objective, and resourceful. A good realtor should be able to explain the real estate market by comparing apples to apples to similar properties that were recently sold, ideally in the same neighborhood as a potential home. A well-placed nudge from your broker is sometimes required when you have unrealistic expectations, but you should never feel that they are trying to influence your opinion or expedite your decision.
Also, look for homes that are below your spending limit
Don’t just look for homes that are at the top of your budget, as you will likely be outbid on many homes in a seller’s market. Instead, consider making concessions on the type of home you would own. So it’s a good idea List your “needs” and “wants” for a home early in the buying process as it will help you find an acceptable compromise later. These tradeoffs can include finding homes in neighborhoods you’ve never thought of, or finding a home with fewer amenities, like one bathroom instead of two. Depending on your situation, these concessions can feel minor compared to the monthly savings on your mortgage payments.
Keep the home inspection simple
You shouldn’t do without a home inspectionThis could leave you vulnerable to undetected structural damage that would cost a lot of money to repair. Instead, you can offer an “information inspection,” which means that you don’t use an inspection to obtain price concessions from the seller. At the same time, depending on what was revealed during the inspection, you can still exit the transaction.
Consider sweeteners when buying in a hot market
When making a bid, try to look beyond the sticker price and get a feel for what is important to a seller. Perhaps the seller is trying to take advantage of market conditions but is actually reluctant to move: in which case, you could offer one Lease back agreement As part of your offer, the owner can stay in the house for a few months after it closes. Or if the seller has to move in a hurry, offer to buy some of their bulky furniture as part of the deal. Your job as a buyer is to make the sale as painless as possible for the seller.
