Right now, the market under $300,000, maybe under $350,000, is cray. Homes are selling immediately if they are decent and priced right. There are so few listings, and so many buyers; we are in a very serious seller’s market for the lower-priced homes — not that I think $350,000 is a low-priced home.
A seller’s market is, of course, great when you are a seller, but as a buyer — it sucks.
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Buyers and their real estate agents have to watch the market like a hawk, try to see a house as soon as it comes on the market. And if buyers like it, they have to be ready to make an offer.
This is a stressful situation for sure; buyers don’t have the luxury of sleeping on it or bringing family members by to get their opinions, which might be for the better anyway.
As an agent, I try to prepare buyers when the market is like this. Often, though, I don’t get through to them until they have lost a home (or sometimes two).
Believe me, buyers don’t want to lose a home in this kind of market if you can help it. Especially a good home.
Buyers can make mistakes, though, that will cause sellers to go with another buyer. Homebuyers can also feel panicked and make mistakes they will regret even if they do get the house. Both mistakes are costly.
Below you will find three tips for homebuyers to help them navigate a strong seller’s market.
1. Buyers should know what they want
Be ready. By that I mean: Be completely ready.
Buyers must have their pre-qualification completely filled out. Buyers must have gotten the lender all of their important documents. Buyers might have a pre-qualification, but if it says the lender only pulled their credit, then really, it is worthless.
Not all listing agents will notice this, but most will. So buyers should get the lender everything before they start looking. Things like pay stubs, taxes, W-2s — whatever the lender requests.
Also, buyers should be ready to put down earnest money. There is no set amount for this, but most listing agents will like to see at least 1 percent of the purchase price of the house, so buyers should have that available.
If they need to borrow that amount, they should talk to the lender and follow the lender’s directions on how to borrow that money so it won’t mess up the loan.
But homebuyers should do this before shopping — because if they don’t, it could cost them their dream home.
This isn’t fun, and I understand that completing financing tasks isn’t sexy, either. But if buyers do it upfront, house shopping can be a blast.
2. Make sure homebuyer are looking at all costs
Buyers should take some time to go through what they want before they buy.
Homebuyers should talk to the lender about monthly payments and know what their total payment will look like using more than a mortgage calculator online.
Those often don’t have PMI (private mortgage insurance) included, and if buyers are putting down less than 20 percent of the home’s value, they will have PMI in their payment.
Know what the payment will look like with property tax and HOA included. Make sure buyers are really comfortable with that number, even if they are approved for more.
Also, buyers should know where they want to be and in what type of house. In a frenzied market like we are experiencing, buyers might get swept up in the craziness and not have firm boundaries.
I’m here to tell you not every house is wonderful for every buyer. Not if it is too far from the highway or work. Not if the payment makes buyers house-poor; not if the buyer has bad knees and buys a two-story; not if there are annoying kids on a trampoline that talk to you every time you are in the backyard trying to garden in peace.
Buyers shouldn’t buy an adverse situation that will be difficult to sell and unpleasant to live in. Just because the market is crazy today, it might not be when buyers are ready to sell.
Don’t widen parameters more than what homebuyers really want. They’re buying a home and must choose wisely.
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3. Make an ugly house home
Homebuyers should keep in mind that cosmetic changes can easily be made.
I know it isn’t fun at first, but buyers can buy an ugly home. They will find that updating a home in their own tastes and styles can be a lot of fun.
I am working with clients now who have the cash to pay all of their own closing costs, but they got the seller to pay some of them so they could use that cash for a few upgrades they want before they move in. Like new carpet, new window blinds and new bathroom faucets.
They hope to replace the kitchen countertops in a year or so, but just the kitchen faucet will make the home livable.
They love the floor plan and the location. Being right next to the park will be perfect for their two-year-old.
Homebuyers need not be too picky about the things that can be changed. If they are in a tight market, they might lose the perfect house just because they don’t love the green walls and they want grass in the backyard, not desert landscaping.
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Buyers can find their perfect next home even in a crazy seller’s market.
Just make sure they are ready for the craziness — and make sure you, their real estate agent, are on the same page as they are. It’s part of your job to help buyers communicate their must-haves and would-be-nice features.
Buyers should also communicate their readiness. Sometimes agents come across a listing before it hits the market.
If agents know it’s a good fit for their buyers, they can jump to get it for their buyers — without the fight. If buyers do the work, they will soon be in their dream home
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Mary McIntosh is a real estate agent with Re/Max Infinity. Follow her on Facebook.