For many Americans looking to purchase a home this year, options are slim. Inventory has been sparse in recent months, resulting in rising home prices and bidding wars becoming a normal part of the homebuying process, according to the National Association of Realtors.
«Newly listed properties are being snatched up quickly so far this year and leaving behind minimal choices for buyers trying to reach the market,» explained Lawrence Yun, NAR’s chief economist, in a press release.
Today’s homebuyers must enter the market fully prepared. Here are five homebuying tips to beat out the competition and secure the home of your dreams.
1. Get preapproved.
Buyers commonly include a financing contingency in their home offer. Basically, this tells the seller, «I want to buy this home, but only if I can get a mortgage.»
For many sellers, this contingency is good reason to pause before agreeing to a sale. Should the buyer fail to obtain a mortgage, the seller would have to start all over. But, if you’re already preapproved for a mortgage, the seller may feel more confident in accepting your offer and moving forward with the sale.
2. Write a letter.
According to the NAR, the average seller is 54 years old and has lived in the home for about a decade. It’s likely that this person has made many happy memories in the home, and selling it might be an emotional endeavor. As such, appealing to that emotion could be a strategy for success.
U.S. News & World Report noted that most sellers and buyers never meet, so the best way to reach the current homeowner on a personal level is through a cover letter. Even better is one that includes a family photo.
«Sometimes sellers make decisions not based on financial issues,» Southern California agent Victor Quiroz told U.S. News & World Report. «Sometimes they make decisions for emotional reasons … I’m actually seeing sellers accept less money and turn down fast closings because they resonated with the buyers.»
3. Do the seller a favor.
A commonly overlooked fact about many home sellers is that they’re buyers as well. This means they’re experiencing the harsh realities of a competitive market.
If you find out the seller doesn’t have a purchase lined up yet, offer to rent the home back to the seller for a month or two after the sale goes through, Time magazine suggested. This way, the seller can spend some time focusing on his or her home purchase, once the chaos of selling is out of the way.
4. Make a bigger down payment.
With the way the real estate market is heading, few buyers can afford to pay all cash for a home. In fact, just getting to the 20 percent down payment is challenging enough, according to NAR. However, increasing your down payment a bit—within your means, of course—can make your offer an attractive one for the seller.
5. Utilize The Federal Savings Bank’s Express Loan Approval Program.
Our Express Loan Approval program allows you to get your loan underwritten early in the loan process and puts you steps ahead of the competition. Having your loan fully underwritten before you find your home gives you the security of knowing if you qualify for the loan and can afford the home. After finding your home, the only items we require to fully execute the loan will be the title, appraisal, flood certificate and a fully executed sales contract. Using the Express Loan Approval program makes you as effective as a cash buyer and gets you in your home faster.
To learn more about the homebuying process, get preapproved for a mortgage or learn about our Express Loan Approval program, reach out to The Federal Savings Bank.
By Shaun Meller