Home Buying In a Fast Market
If you’re a homebuyer in a hot housing market, you may be frustrated by lack of inventory, competition from other homebuyers, and rising prices. You may have already lost out on several homes already. How can you get the upper hand and move to the front of the line?
Get preapproved by a lender. Share financial information your lender requests and that will help get you preapproved. You’ll know the limits on how much home you can afford, how much money to put down, and what your interest rate will be. A preapproval letter will assure the seller that you’re ready to buy.
Fix any derogatory in your credit. Sometimes an old debt can crop up or you could have a dispute with a credit company resulting in a derogatory blemish on your credit report. Whatever the problem is, your lender will require you to take care of it and provide proof of resolution from the credit bureau that’s reporting the derogatory. While it’s possible to get credit with less-than-perfect credit, you’ll pay a higher interest rate, have fewer loan options, and your lender will prioritize loans they know they can close quickly.
Get your down payment together. Whether you’re using savings, the proceeds from another home sale, a gift from your parents or other assistance, your lender can’t calculate your loan until you have your down payment ready.
Have a family meeting. Once you’ve been preapproved, it’s time to tell your family about your reasons for buying a home – more space, better schools, etc. Ask each member, even the littlest child, to give their number one feature they’d like in a new home, such as a yard to play in or a room of their own.
Make a realistic must-have list. Pick a neighborhood, house type and price range with a limited number of features. Be prepared to make compromises – location, less space, smaller yard, fewer bedrooms or baths.
Start previewing online. There’s a reason this step is further down the list. If you start shopping on the Internet without being in a position to make a solid offer, you’ll only frustrate yourself and your family more. Homes you view online may sell quickly, but you can at least get an idea of prices, neighborhoods, amenities, public transportation, schools, and more. Drive and research the areas that interest you so you can narrow your search.
Consider less-than-perfect homes. Buying the worst house on the best block is a proven strategy. A home that needs repairs and updates will sell at a discount to other homes. Bringing your home up to the neighborhood standards is a quick route to building equity.
Shop slightly under your means. Many homes will sell above list price in a fast market, so it’s smart to keep your cool because you know you can go up if you need to. If you get into a bidding war, you’ll need a little wiggle room so you can compete. Also, it’s a good strategy to make sure you can comfortably afford to buy the home.
Trust your real estate professional. While it’s fine to shop for homes online, your Berkshire Hathaway HomeServices network professional knows the market, can feed you new listings that fit your criteria, and has many contacts to learn about homes coming onto the market which you wouldn’t know about otherwise.
Once you’ve identified your target area and price range, he or she will go to work finding you the right home.