6 hacks to buying a home in a competitive market

 



 

 

 

 

 

Tips to purchasing a home in a tight housing market 

  • Get preapproved for a mortgage.
  • Identify where you can compromise.
  • Work with your agent.
  • Don’t make lowball offers; consider an escalator clause.
  • Avoid contingencies.
  • Write to the sellers or offer a large earnest money deposit.

 

“The greatest victory is that which requires no battle,” reads the ancient Chinese tome, “The Art of War.” Indeed, buying a home in a tight market — when houses sell within weeks instead of months — can feel like combat. Avoid the battle and keep a cool head with these six strategies to make your strongest offer and close as quickly as possible.

 

1. Get pre-approved for a mortgage

Sellers in hot markets care about two things: money and speed. Pre-qualification gives buyers an idea of how much financing they can obtain and, because mortgage pre-approval is a conditional agreement to lend, it sends a powerful message to sellers that your financing is ready to go. It is wise to compare mortgage lenders in any situation, but in tight markets many sellers and listing agents will not even work with buyers who are not pre-approved. If you are having trouble getting pre-approved for the size loan you need, take the time to improve your credit score, pay off debts and save more money for the down payment. These actions will help you obtain better loan conditions.

2. Identify home needs and compromises

In competitive markets, expect to make a decision rapidly. Homes can literally sell the day they get listed on the market. Establish a clear idea of the home you are looking for early on to make the decision process easier. Which features of the neighborhood and home are absolute necessities, nice-to-haves and deal breakers? Agree on what can be compromised so you don’t waste time discussing when you should be making an offer. Moreover, don’t disregard properties that don’t look perfect in the listing. Photos and descriptions can vary widely from reality, and you don’t want to miss a great home that was presented poorly.

3. Work alongside your real estate agent

Getting a real estate agent to help you search for homes and present offers is typically a good idea, and not just because the seller usually pays their commission, giving you extra professional help at no cost. Good realtors understand the local market, so they know what’s available, what is coming available, and what will sell fast. In competitive markets, however, it is useful to scout properties yourself as well, instead of relying solely on the agent. Tour neighborhoods you’re interested in and search online listings to share with your agent.

4. Escalate, don’t bargain

If you’ve found a great home in a tight market, this is not the time for tough negotiations. In hot markets, lowball offers can be rejected outright with no further opportunity for discussion. Understand your maximum budget — including budgeting for closing costs— but don’t be determined to strictly adhere to a fair market value.  Houses often sell above asking price in hot markets, so expect to pay more. Instead, present your highest offer from the start or consider using an escalation clause, which increases your offer over other bids, usually by $1,000, until it reaches your set maximum. If a home has a pending offer with contingencies attached, consider making a back-up offer in case the other buyer’s contingencies nullify the deal.

5. Avoid contingencies

Contingencies provide important buyer protections, allowing buyers to back out if an inspection finds major problems or the appraisal values the house too low for the buyer’s financing. Reducing contingencies will make your offer far more appealing to the seller, however, because it gives them less responsibility and can shorten the purchase timeline. If you aren’t comfortable waiving a home inspection, consider a pre-inspection — which allows the seller to keep the home on the market while your inspection is pending — or offer to arrange the home inspection within a week of making the offer. Financing contingencies are another potentially time-consuming clause. Waiving this contingency is extremely risky because it commits you to purchasing the home in cash should your lender back out. Only remove a financing contingency if you have a concrete pre-approval and are completely confident in your mortgage and the appraised value of the home.

6. Tug at the seller’s heart or purse strings

Sellers in a tight market will likely receive multiple offers on their property. Set yours apart and demonstrate your seriousness with a personal letter and/or a large earnest money deposit. A letter sharing a sentimental narrative and passion for the home may sway a seller to accept your offer over a similar one, particularly if they have cherished memories of the home. Likewise, a large earnest money deposit can boost the chances of your offer being accepted because it indicates you are committed to buying the house and closing quickly. If you are able and willing, consider offering to split the cost of the Realtor commissions — or use a buyer’s agent who you are paying — to sweeten the deal.

 

Jasmine Whiting  –   Ask A Lender  September 2017

 

Posted on March 26, 2018 at 6:50 pm
Jana Ace R Wunderlich | Category: Buyers

What to Know About Title Insurance

 

Title insurance protects your ownership right to your home, both from fraudulent claims against your ownership and from mistakes made in earlier sales, such as misspellings of a person’s name or an inaccurate description of the property. In some states it is customary for the seller to purchase the policy on your behalf.

 

 

 

 

Your mortgage lender will require it.

Title insurance protects the lender (and the secondary markets to which they sell loans) from defects in the title to your home—which could include mistakes made in the local property office, forged documents, and claims from unknown parties. It ensures the validity and enforceability of the mortgage document. The amount of the policy is equal to the amount of your mortgage at its inception. The fee is typically a one-time payment rolled into closing costs.

 

There are two different policies to consider purchasing.

The first policy, the one your lender will require, protects the lenders investment. You may also purchase an owner’s policy that provides coverage up to the purchase price of the home you are buying.

 

You have the right to choose your provider.

You can shop around for a lower insurance premium rate at a wide variety of sites online. You should first request quotes from a few companies and then reach out and speak to them. Ask about hidden fees and charges that could make one quote seem more attractive than another. Also, find out if you’re eligible for any discounts. Discounts are sometimes available if the home has been bought within only a few years since the last purchase as not as much work is required to check the title. You can also ask your lender or real estate professional for advice or help with getting quotes. Make sure the title insurance company you choose has a favorable Financial Stability Rating with Demotech Inc.

 

Even new construction needs coverage.

Even if your home is brand-new, the land isn’t. There may be claims to the land or liens that were placed during construction that could negatively impact your title.

 

 

NAR – REALTOR magazine

Posted on February 19, 2018 at 6:26 pm
Jana Ace R Wunderlich | Category: Buyers, Buying and Selling

How To Prepare for House-Hunting

 

Know that there’s no “right” time to buy.

If you find the perfect home now, don’t risk losing it because you’re trying to guess where the housing market and interest rates are going. Those factors usually don’t change fast enough to make a difference in an individual home’s price.

Don’t ask for too many opinions.

It’s natural to want reassurance for such a big decision, but too many ideas from too many people will make it much harder to make a decision. Focus on the wants and needs of the people who will actually be living in the home.

 

 

Accept that no house is ever perfect.

If it’s in the right location, the yard may be a bit smaller than you had hoped. The kitchen may be perfect, but the roof needs repair. Make a list of your top priorities and focus in on things that are most important to you. Let the minor ones go. Also, accept that a little buyer’s remorse is inevitable and will most likely pass.

 

Don’t try to be a killer negotiator.

Negotiation is definitely a part of the real estate process, but trying to “win” by getting an extra-low price or refusing to budge may cost you the home you love.

 

Remember your home doesn’t exist in a vacuum.

Don’t get so caught up in the physical aspects of the house itself that you forget about important issues such as noise level, access to amenities, and other aspects that also have a big impact on your quality of life.

 

Plan ahead.

Don’t wait until you’ve found a home to get approved for a mortgage, investigate insurance, or consider a moving schedule. Being prepared will make your bid more attractive to sellers.

 

Choose a home first because you love it; then think about appreciation.

A home is still considered a great investment, but its most important role is as a comfortable, safe place to live.

 

REALTOR magazine, National Association of Realtors    January 2018

Posted on January 5, 2018 at 8:26 pm
Jana Ace R Wunderlich | Category: Buyers

Home-Buying in 2018: Purchase in the Winter or Wait Until Spring?

 

 

 

There are only a few weeks left in 2017, and if you’re looking for a house, you might be down to the wire. Should you go all in and purchase now or wait until the spring?

There are multiple things to consider before purchasing a house; location, square footage and style are just three of the many factors. Whether or not to buy a home during the winter or wait until the spring is something to consider, as well. Here are six reasons why it might be beneficial to buy before the flowers start to bloom.

 

 

 

 

You Face Less Competition in the Winter

Most Americans look for houses in the spring and buy in the summer. Approximately 50 percent of all homes are sold during the summer months. Why? Well, many people prefer to close on a home purchase and move when the children are out of school. That way, they’re established in the new house by the time the new school year starts. Many people also prefer to look when the weather is warmer and there is more daylight in the evening.

As a result, if you purchase in the winter, there will be less competition. Fewer buyers will be out there looking, so you’ll likely face less of a bidding war. Many people also want to close during the winter, as the spring market starts very early in the year.

Sellers Are Likely to Be Motivated

Because the majority of buyers purchase in the summer, sellers may be more motivated in the winter. This is especially true if they need to be out of the house due to a job relocation or other consideration with a specific time frame. A motivated seller is good news for a buyer. You can get them to sweeten the deal, either by coming down on the asking price or throwing in some goodies.

Does it look like the stove or refrigerator may need replacing soon, for example? You can ask the seller to purchase a new one as a condition of your purchase. The same goes for a number of other things you might have to upgrade or replace soon.

Interest Rates Are Likely to Rise Next Year

Interest rates, of course, have a large impact on your house payments. The higher the interest rate, the higher the payment will be. While the direction of interest rates is never certain, many observers think that interest rates will rise some time next year. The U.S. Federal Reserve, the government body that sets interest rates, meets several times per year. Not only that, but they meet multiple times a year and tend to hike interest rates in a strong economy to prevent inflation. They could raise interest rates several times next year. In other words, the sooner you buy, the lower the interest rate you can lock in is likely to be.

Housing Prices Are Climbing

In general, housing prices have been climbing steadily over the past several years in most areas of the country. That trend is expected to continue, fueled by the strong economy. If it does, housing prices are likely to be higher by the spring.

Each region and area varies, of course. It’s always wise to check the direction of housing prices in the location you want to buy in by contacting your real estate agent.

Inventory Shrinks in the Winter

Because fewer people look in the winter, many real estate agents and sellers act accordingly. They remove houses from the listing market in the winter, waiting for spring to come. There are approximately 10 percent fewer houses on the market in the winter.

You may have fewer housing options if you’re looking in the winter, but you can ask your real estate agent if they know of any homes that were on the market but withdrawn by sellers. If the sellers are planning on putting their homes on the market as spring approaches, you could be the early bird.

Should you purchase a home now or wait until it starts to get warmer outside? There are many things to think about. The decision depends on what is best for you and the home of your dreams. Happy hunting, in whatever year you choose!

 

Megan Wild      Dec 11, 2017 –  Housecall
Posted on December 16, 2017 at 5:53 pm
Jana Ace R Wunderlich | Category: Buyers

How to Find Your Perfect First Home

 

 iStock-837781910.jpg

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Buying your first family home can be a monumental event, but it can also be stressful. After all, you may be focused on finding the perfect home to move into that is affordable for your budget. With many factors at play, it may seem challenging to find the ideal new space to call home; however, by using these tips, you could more easily locate the perfect starter home to move into.

 

Determine Your Budget
Your budget is a critical element that you do not want to overlook. There are two primary aspects of your budget to focus on: your down payment  amount and your monthly housing payment. Both factors should be comfortable for you to manage without stressing your finances. Remember that you may want to estimate on the higher end and shoot for keeping expenses as low as possible. In many cases, expenses and payments may be higher than anticipated, so always aim for a lower figure when possible.

 

Define Needs and Wants
It is easy to let your mind wander as you imagine how grand your new home may be; however, when buying a starter home on a budget, you may need to carefully define the features that you absolutely need versus those that you want. This can help you to more quickly and easily find homes that meet your absolute needs within the budget you have in mind, and you may even benefit from having a few bonus items included in the home you firmly settle on.

 

Think About Suburban Communities
Many homebuyers who are looking for their first home may be turned off by homes located in the heart of urban areas or in otherwise expensive and high-end communities. If you are having trouble finding a desirable home that meets your needs in the confined search area you selected, consider expanding your search area to different suburban communities. In some cases, suburbs are much more affordable to live in.

 

Consider All Types of Properties
As beneficial as homeownership can be, remember that you do not necessarily have to buy a single-family home to enjoy these benefits. Another idea is to buy a condo. These may provide you with the space and features you need, but the cost may be much more affordable. In addition, maintenance on the outside of the condo and in your yard may be provided by your condo association.

The quest to find your family’s first home can be exciting, but it can also be demanding in many ways. Rather than get frustrated with your current situation, use these tips to more quickly and easily find the ideal property to move into.

 

By Hannah Whittenly – Housecall      Oct 31, 2017

Posted on November 13, 2017 at 4:12 pm
Jana Ace R Wunderlich | Category: Buyers

Buying in a Seller’s Market: Who’s the Winner?

For sale sign in yard of house

 

 

 

The change of season often brings a shift in real estate market conditions. Inventory tends to decline and buyers may become more aggressive in their home search. This change can affect real estate transactions in a variety of ways.

Here’s what you need to know about buying or selling a home in a seller’s market:

 

 

Time is valuable.
Buyers don’t have as many options as during the peak purchasing months. This means more competition because there aren’t as many homes to look at in their price points. Buyers need to know what they want. If they absolutely need three bedrooms, then they’ll have to ignore that two-bedroom house or risk losing out on better opportunities.

They will also need to be prepared to make offers quickly. Buyers without a preapproval will not be considered and will likely miss out on highest and best deadlines by the time they obtain one. On the other hand, sellers will have an easier time selling their home. If in good condition, their home will likely be the cream of the crop during low-inventory months.

Offers are aggressive.
In a seller’s market, buyers will often have to deal with multiple-offer situations. If they don’t bring their best offer to the table, they will most likely lose out. Sellers can also prioritize stronger terms. They may decide to go with a lower offer if the buyer can close faster or is putting more money down.

A combination of the highest purchase price with a 20 percent down payment and a reliable lender is usually the winner. Of course, you can’t forget that cash is king. An all-cash offer will likely trump any others on the table.

Negotiations are a game changer.
Unfortunately, buyers may lose some negotiating power in a seller’s market. Unless the seller is incredibly motivated to get rid of their property, they may take advantage by refusing to take care of some inspection items. Buyers should be wary of asking for too much, as even big-ticket items may not be taken care of. Unless something is a safety or health hazard, it shouldn’t even be brought up.

Sellers may also decide to be more selective about what they are leaving with the house. They may decide not to include appliances such as a refrigerator, dishwasher or washer and dryer.

Even small things like tone in a negotiation email should be taken into consideration. Alienating the sellers this early in the game can force them to go with a backup offer.

Real estate agents are essential.
Even though a seller’s market clearly tips the scale in one direction, buyers are more likely to lose out if they are not working with an experienced agent. Likewise, sellers may not even be aware of their advantage without the help of a real estate professional. Agents will advocate for their clients—whether they are buyers or sellers—by helping them get as much as possible during sale price and inspection negotiations.

Things that may not seem significant—such as getting all of the paperwork submitted correctly, sending emails to the opposing agent and doing due diligence on the property—can make a huge difference in a seller’s market.

Liz Dominguez – RISmedia’s Housecall     Oct 10, 2017

 

 

 

Posted on October 16, 2017 at 5:29 pm
Jana Ace R Wunderlich | Category: Buyers

Homeownership Rate Rebounds from 50-Year Low

The U.S. homeownership rate may have finally bottomed out, as the share of Americans who own homes is steadily climbing. The ownership rate posted an increase in the second quarter, reversing a sharp downward trend that begun in the Great Recession.

 

 

 

The homeownership rate was 63.7 percent in the second quarter, the U.S. Census Bureau reported Thursday. That marks nearly a full percentage point increase from a year ago.

Last year, the homeownership rate had plunged to a 50-year low of 62.9 percent.

“The addition of 1.2 million households being homeowners is clearly good news, as more households are participating in housing equity gains,” says Lawrence Yun, chief economist for the National Association of REALTORS®. “But let’s keep it in perspective: There are fewer homeowners today compared to a decade ago, while renter households have risen by 8 million. So it is still the case that the massive $7 trillion in housing wealth gains from the cyclical low point has been accumulated by a fewer number of families in America. Further advances in homeownership are required to strengthen and broaden the middle class.”

 

 

Source:  The Wall Street Journal (July 27, 2017) and National Association of REALTORS

 

Posted on July 31, 2017 at 8:34 pm
Jana Ace R Wunderlich | Category: Buyers, Market Stats

What to Look for in a House if You Love to Entertain

These 10 things will smooth the way for bringing guests into your home and ensuring a good time

 

Feeling overwhelmed by the home-buying process? Don’t get swamped, get focused. Beyond the basics of location, price and condition, what do you really want from your home? In this series, we’re zeroing in on the top items to look for in a house based on your personal passions and lifestyle. Consider adding these 10 items to your home-buying wish list if you love entertaining.
Posted on July 17, 2017 at 9:21 pm
Jana Ace R Wunderlich | Category: Buyers

5 Tips for Buyers in a Tight Housing Market

 

 

 

WASHINGTON (May 12, 2017) – When inventory is low, home prices tend to go up. Attempting to purchase a house in this type of market can make the already complex process of buying a home even more overwhelming. To help buyers successfully get through the buying process in a tight inventory market with as little stress and difficulty as possible, the National Association of Realtors® has these five suggestions:

 

 

1. Determine and stick to a budget. Before beginning the house hunting process, prospective homebuyers should receive preapproval from one or more lenders to verify the amount of money they are qualified to borrow. Then, after taking into account additional costs of ownership such as taxes, utilities and insurance, buyers should determine a final budget they can comfortably afford. When listings are scarce, bidding wars can drive up prices, so buyers must be prepared to walk away if the asking price surpasses their budget.

 

2. Identify desired neighborhoods and home wants versus needs. When housing inventory is tight, buyers may need to compromise on what they believe they want from a home. Certain wants, such as stainless appliances or hardwood floors, can be added later. However, if a buyer wants to be in a specific school district or have a decent sized backyard, those cannot be addressed later and must be taken into account during the house hunting process.

 

3. Be ready to make a decision quickly. In a seller’s market, homes rarely stay on the market long, so when a house that is in their budget and checks off all of their needs come along, buyers should not hesitate. Buyers should be ready to submit an offer quickly, or they may risk missing out on the home altogether.

 

4. Bid competitively and limit contingencies. It is tempting to submit a low offer as a starting bid, but in a seller’s market buyers need to put forward their highest offer from the very beginning or they are likely to lose out on the home. It is also important to remember that in multiple bidding situations it is not always the highest offer that is most attractive to the seller but the one with the fewest contingencies. Removing restrictions related to the sale of a current home and being flexible with things like the move-in date can make a bid stand out to a seller.

 

5. Work with a Realtor®. All real estate is local, so it is important to work with an agent who is a Realtor®, a member of the National Association of Realtors®, and who is familiar with the areas and neighborhoods the homebuyers are considering. Realtors® are the most trusted resource for real estate information and have unparalleled knowledge of their communities; they can give buyers the competitive advantage needed in a tight market.

 

 

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

Posted on June 12, 2017 at 3:37 pm
Jana Ace R Wunderlich | Category: Buyers

New Homeowners: Ready to Knock Down Walls? 3 Projects to Knock Out Instead

new homeowners

 

 

You just became a homeowner—congratulations!  In between the oh-my-gosh-I-have-a-mortgage feeling and the pile of empty pizza boxes (you have yet to unpack your cookware), new homeowners may be making a mental list of all the things you’re going to do to make your home YOUR home —projects you plan to knock out the first few weeks as king (or queen!) of your castle.

But tackling too much, too soon is a recipe for regret for new homeowners. The fact is, even though all of those projects seem necessary (they seemed necessary when you walked the home, too!), many of them aren’t.

A full-blown kitchen remodel, for instance, is a wise investment—but only after you’ve determined your needs as a homeowner (and how long you plan to stay in the house, as well). Ditto for the bathrooms—both projects are disruptive, expensive and time-consuming.

So, what should be addressed right out of the gate?

Appliances

You may be one of the select new homeowners who gets to inherit the former owner’s appliances—another congratulations is in order! Head to Home Depot sooner rather than later for new, ENERGY STAR®-rated appliances. Replacing even just one with an energy-efficient and/or smart alternative, according to the Association of Home Appliance Manufacturers (AHAM), can save you $50 and 100 hours each year.

 

Insulation

Make it a priority to check the insulation in the attic—installing more where needed can cut costs your first year as a homeowner (and every year after). It’s well worth the expense: according to Remodeling magazine’s Cost vs. Value Report, fiberglass attic insulation recoups over 100 percent of its cost at resale.

Landscape

Money doesn’t grow on trees…but home value does. If your new landscape’s lacking, start planting trees as soon as possible—you’ll not only see lower energy costs over the long term, but also an average 18 percent boost in value, according to the Arbor Day Foundation.

That’s it—just three tasks. If you’re in your forever home, you’ll have more than enough time to finish these, and the rest on your list.

 

 

Suzanne DeVita – Real Estate magazine,  Nov 21 2016 

 

 

Posted on May 2, 2017 at 4:25 pm
Jana Ace R Wunderlich | Category: Buyers