Tips for Buying a Home in a Hot Market
Buying a home in a hot market can be a challenge. Inventory is low, prices are high, and it feels like everyone is going into bidding wars to try to beat out the competition – leaving everyone stressed and frustrated with the process and results. If you’re a seller, this can all be great news, but even a hot market for sellers can come with its own headaches. Buyers needing additional approvals for financing, bidding above their budget, and having sales fall through are also still a reality making the real estate housing market more volatile than ever. If you’re looking to purchase, we’ve got some tips for buying a home in a hot market. Read on for more!
Traditionally, you’d want to get a sense of what price range you are comfortable with and then start shopping and get full approval after you’ve already found your dream home. However, that’s no longer the case. In a hot home buying market, before a seller accepts an offer, it’s increasingly common to request proof of funding at even the earlier stages. In some cases, agents won’t even show potential buyers a home without proof of preliminary funding – or in some cases even more concrete proof of a lender backing a purchase.
With the home buying market hot and inventory low, especially across Ulster County, it’s important to have more than just a price range in mind before you go shopping. In addition to having your mortgage pre-approval done, anything else you can do to help your lender provide proof that they will back you through the purchase is key in giving you an edge over other buyers. Also remember that once you do get all the financing and paperwork in order, don’t go making any major purchases or putting anything big on your credit cards. Even financing something like a used car or a vacation via credit card can impact your credit score in the short term and reduce the chances of final mortgage approval. That means you can get nearly all the way through to the final stages of the buying process and end up losing the home you want.
Of course it goes without saying, but cash deals are always best. Though the reality of the matter is that isn’t something most of us can afford. That’s why getting all of your finances in order first is the #1 priority when it comes to home shopping!
Adjust Expectations of What You Can Afford
You may have an idea of budget, but in a hot market that frequently sees properties go into bidding wars, it’s a good idea to look at property under your budget rather than at or even slightly over it. This will give you some breathing room in case the property you want has multipole offers. Getting your finances in order first, and then reviewing what you actually are able to spend will definitely help you navigate the market. It also can reduce the chances of you putting an offer in on a home and being outbid b because it goes above your budget. Some wiggle room in today’s market is an important strategy on your home buying journey.
Change Your Timeline
While finding a house can take weeks or months, timelines are adjusting within the hot market. It’s important that you take time to focus your search in the area you want to live in and if you find a home you like, act quickly! Unlike in precious years when a buyer could take time to browse, see properties, compare multiple options, and think on it for a few days before making a decision, in a hot market if you see a property you love, make an offer as soon as you can. This is also part of why it’s so important to have your financing and budget in order before you start the home search!
With solid financing ready to go and shopping within to below your target max budget, you are more likely to get the home you really want. The goal isn’t to rush – still make sure you take your time and that the house you put an offer in on, is one you truly want. But when you do find that home, don’t wait too long as offers come and houses are selling more quickly than ever.
Make A Higher Offer First
Contrary to past traditions where home offers would start lower, wait for a counter from the seller, and negotiate until everyone agrees on a price, in today’s hot market presenting a strong offer first is incredibly important. With houses usually having multiple offers before a seller accepts one, by putting a strong offer front and center you are more likely to beat out any competition. That offer is also more than just dollars and cents. You can also use other items for negotiation such as inspections, home conditions, fast closings, and other such points can help make the entire process easier for the seller and make your offer more attractive.
Above all, don’t get discouraged. In today’s hot market, it may take multiple offers on multiple properties before you end up buying a home. This isn’t something to be concerned about and is more common than ever before. Due to high competition and homes selling quickly, often above asking price, it’s actually a good idea to keep your eye out on the market even after you’ve submitted an offer in case it is not accepted or you are outbid. Be aware of the market and the neighborhood for the immediate area you are hoping to purchase a home in and be prepared to keep trying if the first home or homes you make offers on don’t go your way. Eventually it will all work out!