This Summer’s Homebuying Season Is Stacked Against You. Here Are 3 Ways to Compete
When it’s the right time in your life to buy a home, you can’t get hung up on trying to time the market. “The timing is yours,” Sandoval says. “It’s your personal timing.” Right now interest rates are low and prices are rising. If you wait for prices to come down or level off, that better price could be offset by higher mortgage rates.
So regardless of where the real estate market is going, you should focus on finding a home with a monthly payment that’s affordable for you. “What I tell my clients is math doesn’t lie,” Sandoval says.
If you’re shopping for a home right now, it will take patience to find the right house for you. But you can take steps to increase your chances of success.
1. Be ready to move quickly
Before you begin your house search or put in an offer for a home, you should be prepared. That means getting preapproved for a mortgage ahead of time and knowing how much house you can afford. A loan preapproval shouldn’t be just a cursory prequalification, you need to make sure “…the banker reviewed and approved [your] financials,” Sandoval says.
You’ll also want to ensure you have adequate documentation showing that you have the money for the down payment or closing costs. “We need to show that seller and that agent that we have the financial ability to make this offer,” she says.
2. Make the best offer you can afford When you’re putting in a bid on a home you want to make the best offer you can — without committing to a deal you can’t afford. You should also plan to have some wiggle room to negotiate. Sandoval advises the homebuyers she works with to start by looking for homes less than the price you are preapproved for. “We’re starting off at about $25,000 below [the preapproved loan amount], because then I have leverage to negotiate,” she says.
Sellers can be selective in today’s market, so the less a buyer is asking for the better. But you need to understand the risks to waiving contingencies. If you waive an appraisal contingency and the appraisal comes in lower than your offer, you could have to pay the difference or risk losing your earnest money deposit.
3. Expand your search To increase your chances of eventually having an offer accepted you may want to cast a wide net and should expect that you’ll need to make multiple offers before one is accepted. It’s also helpful to expand your housing search to areas you hadn’t previously considered.
And with the increase in remote work, you may be able to find a home in a more affordable area without having to sacrifice your ideal morning commute. “People can live further out [from the city], and from a homebuyers perspective they can get more affordability … home prices tend to be cheaper,” Yun says.