How To Compete In A Tight Real Estate Market
With our historically low interest rates, have you considered purchasing a new home? I probably don’t need to tell you, it’s tough out there. So how can you be more competitive when inventory is low, and prices continue to creep upward? Especially, if you’ve been renting and you don’t have equity from a home sale to help fund your down payment.
I have six suggestions that can help you become a homeowner.
1. Establish a budget, including a plan for your down payment.
A big part of the budget process is getting pre-qualified (see step #3) to determine how much you can spend for your new home and then focusing on the down payment challenges and options.
Saving is always good, but you don’t need to wait to save for 20 percent down. The good news is there are many lowdown payment loans and down payment assistance programs available to help you become a homeowner.
It is critical that you have your pre-approval and down payment plan in place so that when you find the home of your dreams you can act quickly. Start by seeing if you may qualify for one of the more than 2,300 homeownership programs available across the country. You can also ask your agent and lender about options in your community. And, don’t forget to check with your employer – some offer Employer Assisted Housing programs as an employee benefit.
2. Get your homebuyer education.
Time to go back to school! Don’t worry, there won’t be a test and you can often do homebuyer education online and complete it at your own pace. Online counseling options, such as eHomeAmerica, cost approximately $75-$100. With that fee, you also get access to planning documents, videos and other valuable resources after the course is completed.
It might feel like you need to get out in the market immediately, but data shows that taking time to complete homebuyer education and counseling builds successful long-term homeowners. Plus, most down payment programs require the recipient participate in homebuyer education, so you’ll be a step ahead.
3. Get pre-approved – and shop your loan.
Oddly, we shop around for everything from appliances to make-up, but we don’t shop diligently for our home loan — one of the biggest financial decisions we’ll ever make. The first step is getting pre-approved for your loan. Without it, your offer is unlikely to be considered.
Then, start your shopping by interviewing at least three lenders – start with the 5 essential questions for your lender and add additional questions you may have.
4. Select your real estate agent.
Buying a home is a major financial decision, and it requires hard work and patience. So be sure you have a good team on your side. Your real estate agent will be your partner, coach, and trusted advocate, so take time in selecting a competent real estate agent that you’re comfortable working with. Finding a real estate agent may feel overwhelming, but there are ways to narrow your search.
Ask your loan officer for a referral and tap into your own network of friends and family who may have recently purchased or sold a home. Or you can always search online for real estate agents in your area. Just make sure to do your research and interview a few candidates. It’s important that your agent has experience with your specific needs, especially if you’re using a down payment program.
5. Use technology to keep up with inventory.
Technology is your friend! You can use it to automate your home search and save a lot of time and energy. Talk to your agent about creating a search, or multiple searches, that include your requirements and the communities in which you are interested. The search will automatically send you new listings and closed sales for that neighborhood. In a tight market, it’s critical that you stay current with changes in your market area so that you can move quickly and confidently.
6. Pack some flexibility.
Firstly, don’t limit your search to only new listings. Consider looking at “stale listings,” those that have been on the market for several weeks, or months.
Secondly, you may want to reconsider your minimum requirements. Consider some alternative neighborhoods and communities, and even how much “fixing up” you are willing to tackle in your new home.