How to be a competitive buyer in a seller’s market.
Buying a house in a sellers market.
Buying a house is a huge decision, probably one of the largest financial decisions of your life. We are currently in a hot sellers market. Houses are receiving multiple offers and dozens of walk throughs as soon as the listing goes live. As an agent, one of my responsibilities is to ensure that my client knows how to be competitive in every market. As a buyer, it is important to do your due diligence and make sure you’re choosing an agent who will be working hard for you.
As a buyer in this climate, you need to be informed and prepared. Knowing what you want, being ready to make an offer, and choosing the right agent and lender will be the key to getting your dream home.
Get specific on criteria.
Take some time an really get to know what you need in a house. Think of the big things, kitchen size, house layout, location, and price point.
Start with three buckets, physical features of the house, location, and price point.
Now go back and look at houses sold in the neighborhoods you want to live in. Are you able to find houses in your price point that fit your criteria?
Soon, I’ll write a post on how to breakdown your housing needs. For now, give me a call. I’d love to talk.
Get pre-approved.
Choosing a lender is more important than you may think. Different lenders can specialize in different loan products. There loan origination fees can also vary greatly. A rockstar lender will be your advisor on which loan to choose, what down payment amount is right for your situation, and will be able to break down the jargon into easily digestible information. If up front, they are not willing to sit down with you and explain how loans work, what they would recommend for your specific situation, and answer all your questions, then keep looking.
Choosing the wrong lender can cost you thousands of dollars extra in origination fees, slow the process, or make your offer to purchase less desirable to the selling agent. Ask me which lender I would recommend and why.
The type of mortgage you choose matters.
The mortgages that are available to you are determined by your credit score, they amount of down payment you are able or willing to afford, and your debt to income ratio (DTI). You may have heard the term “Cash is King”, an all cash offer will most likely be the winner, but for most people, this is not an option. Conventional financing with a large down payment also makes for an attractive offer.
FHA with a low down payment is going to be a little less attractive. FHA loans have stricter standards for the home in question, so if there is pealing paint, or sinks missing, etc, the repairs must be made before the approval of the mortgage. Sellers in a hot market don’t want to deal with this, so they are drawn to conventional offers.
If your lender is pushing you towards FHA, ask them why they recommend FHA and what you can do to qualify for conventional. The combination of your credit score, down payment, and DTI determine the interest rate for each loan type. It is balancing act, so working closely with a seasoned and service orientated lender is a must. Check out this breakdown of lending requirements per mortgage type.
Stay in or below your budget.
In such a strong sellers market, there isn’t much wiggle room to move down on a sellers asking price. As of today (3/10/2021), homes in Muskegon County are selling for and average of 98% of the listing price. If you’re looking at houses above you’re price range, you’re going to have a very hard time getting a lower offer accepted unless you plan to bring extra cash to the table.
Be ready to make an offer.
With the current market conditions, you need to get into the house the first of second day that it goes on the market and be ready to make an offer that day. Sellers are getting so many offers that they are able to have the pick of the litter after just 2 days of showings.
If the house is listed on a Monday and you can’t make it to a showing till a Saturday, there is a good chance the listing agent will close showings and the seller will have selected an offer before you even get a chance to see the property.
Questions to ask your agent.
“When you submit an offer on my behalf, what is your process?” If they look bewildered, prod further. You can follow with, “Do you communicate with the listing agent when you submit an offer?" and “If so, what sorts of questions do you ask them?”
What they should be asking the agent: “Other than price, what is important to your seller? Have you received any other offers yet? If my client made a full price offer with 3% seller paid concessions, do you think your buyer will accept?”
I am here to help.
Whether you’re ready to start your search for a new home, or just have some questions about real estate, I’m here to help.
Let me reach out to you.
Contact Me
Trisha Witte
616-795-9989
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