For several seasons now, we have witnessed a continual trend of fewer homes on the market and more people vying for those properties. The pandemic, fires raging on the west coast, an election year – all unpredictable times to buy a home and all the more reason for you to be prepared. Age-old supply and demand principles hold true in this scenario and buyers are feeling the brunt of it. If you’ve decided the time is now to move (up) or downsize, here are some key essentials to consider before embarking on the shopping spree that will put you on the map to success:
Get Pre-Qualified, Not Pre-Approved
The difference between being pre-qualified vs. pre-approved is how much a lender has delved into your finances. When a seller sees a pre-qualification letter along with your offer, they know your lender has done the important legwork to support your strength as a buyer. Before speaking with your lender be sure to take all the necessary documentation they’ll need to fully process the first stop of a loan application (that includes running your credit).
Step 1: Arm yourself with a pre-qualification from a good lender
Be Prepared to Spend Cash
These days, homebuyers face a lot of hurdles. With so few homes on the market and a lot of buyer competition, they have no choice but to pull out all stops and sellers tend to accept the highest bid on their home. While stronger offers translate to a higher acceptance rate there is one caveat – they must be done within an acceptable property value range. Offering an unrealistic amount only to find that a home will not appraise can backfire, resulting in savvy sellers foreseeing an appraisal problem and turning down your offer. Shop for homes without maxing out your pre-qualified budget so you have fewer closing costs and be prepared to shell out extra cash to be the winning bid.
Step 2: Aim lower than your maximum pre-qualified budget plus have extra cash on hand
Strengthen That Credibility
Now, more than ever, your credit profile is essential in yielding the best rates, under the best terms and in the most hassle free process possible. If you need to spend a few months beefing up that score – your diligence will likely pay for itself in money saved at the closing table. The better your credit score, the better interest rate you will get, the less money you’ll have to pay at closing and the easier it will be for you to be taken seriously as a homebuyer. Sellers love strong buyers and one of the key elements of a strong buyer is having a solid credit score.
Step 3: Pay attention to your financial reputation.
When you are up against several other buyers that also want the same property as you do, most people believe the only thing they can do is to submit their best offer and wait. But if they are willing to be flexible and let the seller know it, there is a much better chance of them getting the call with good news. Being flexible with the non-deal breaker items on your list, being willing to accommodate the seller with closing times and being prepared to adjust to circumstances as they come – will definitely increase your chances of success!
Step 4: Be willing to give up some things
Rely on Your Realtor
Even though most people realize the value of having a trusted Realtor in your corner, walking you through each step of the home buying process, there are some who feel circumventing this step offers them a financial shortcut. The truth is when a professional Realtor with experience dealing with the ins and outs of the real estate world is on your team, you can focus on the less arduous tasks of the process, rely on your realtor and actually enjoy the buying. In a market so tight with such few available properties, not having a good realtor on your team can result in missed opportunities, numerous rejected offers, paying too much for a property, delays in closing or worse – ending up in a money pit!
Step 5: Build a strong team with an experienced Realtor on your side
Following through with these five essential steps help guide you toward a smoother transaction. It doesn’t take much other than a strong Realtor by your side, an equally strong lender and buyer-savvy to make the best home buying experience happen.