Housing prices continue to climb, inventories remain low, there is plenty of demand for housing without a ton of relief in sight. Being a homebuyer can be a challenge in these times. Despite that, you still have the ability to find a home you love that might need a little extra polish and shine as you head into your next homebuying adventure. Cash is still king, but there are a few ways to be more competitive with your offers.
Bring a Pre-Approval Letter from Your Lender
In a market like this, you need to know for certain that you will be approved for a loan, rather than to think you will and the sellers will not want to wonder when they are comparing your offer to another. They will want to be sure that the offer they sign can make it to the closing table. Especially when sellers have multiple offers in a short period, they want to be sure that they are choosing an offer that not only looks good on the surface but can perform as well.
Going to your bank or lender and making it as far as your loan approval process can go without the house gives the seller confidence that they won’t be back in the same place trying to sell their home again in a month after a contract fell through. For them, it could mean delaying their own purchase or even having to sell their home at a discounted price since buyers can get nervous when contracts fall through.
Although many buyers can get into homes faster with FHA loans, especially with the lower down payment requirements, sellers know that FHA and other loan programs can carry additional requirements for the home itself. Although these items are typically already in homes that have occupants, (for example heat in every room) there are horror stories that exist that sellers may have heard and they are unlikely to want to deal with the unknown.
Rather than using an FHA program, take the time to work on your credit and choose a conventional loan. They have far fewer requirements on the property itself making an easy transaction for the seller. If you have the time and patience for house hunting, there is nothing wrong with using an FHA loan, but nothing says “smooth and easy” like a conventional loan (except cash.)
Bring Your Best Offer
Your best offer is the highest amount you are willing to pay for the property in question, not necessarily an ideal price that you’d like to pay. In a different market where buyers get their pick of the litter, you can feel out a seller to see where the low end of their pricing is. In this competitive market like most of the country is facing, you’re far more likely to compete with several offers at once so the seller will probably accept or reject yours rather than take the time to negotiate.
In addition to bringing your best offer, keep your request list as short as possible. You can (and should) absolutely ask for any repairs to major items you noted when you viewed the home, or had it inspected, but now is not a great time to sweat the small stuff. The longer that list is, even before your inspection, the less likely it is that the seller will want to work with you.
Go Forth Boldly in Your Offer
Putting in an offer on a home in this breakneck speed real estate market can be intimidating but you don’t have to face it alone. We are here to work on your behalf with our expert negotiating skills, our network of friends and partners to help you to the pre-purchase items as well as get your new home feeling like yours, whether its patching up, painting or even moving in.
Give us a call when you are ready to dive into this market and we would love to help you get into your next place. We are here to be your real estate resource for life.