Buying a House | In my last video in this series, I discussed how competitive our spring market can be. As a buyer, now is the time to get ready. Let’s talk about how you can do that.
1. You need to get pre-approved from a local lender. This is important – I have an entire series dedicated to financing and a specific video to explain why. The more high-quality your letter, the better. In order to compete with cash buyers and win in multiple offers, you will need the best letter you can get! Don’t get a pre-qualification letter; an underwritten pre-approval letter is the best letter. Get all your documents in to your lender. Have your funds sourced. Get underwritten.
2. Talk to your real estate agent now. You will want to do a buyer’s consultation early. Not only does this help the agent understand your real estate goals, but it means you can learn about how to win in a competitive market. For example, we can talk about pre-inspections (where you do your home inspection before you put in your offer), and contingencies you will need in your offer (and which ones you should try to skip). When you find the right house, we will need to get your written offer in quickly. If you do your preparation upfront, you will be able to work quickly because we have already talked through the offer and terms.
3. Do your neighborhood research upfront. Spend some time driving through neighborhoods, looking for features that you want and need, and looking at commute times. This will help you feel comfortable about your search and narrow your focus.
4. Get yourself in the right mindset. Check in with your lender, your agent, your family and get yourself ready to buy a house. Have your “must have” list done and make sure everyone in the family is on the same page. You won’t have time to sit and think about it. In competitive neighborhoods, you will likely see the house on a weekend and have to write the offer immediately. Houses in competitive markets often have an “offers due by” date and time, e.g., “all offers due by Tuesday at noon.”
Furthermore, you have to be prepared for the reality of the real estate market in our area. Houses in our area typically go for 98% of the list price or more. And there are markets where you will need to go over list price! Many offers in the spring market contain escalation clauses, which ratchet up your offer price to beat other offers (much like in an eBay auction). You will need to be prepared to go above list price to win in a multiple offer situation.
This is another reason why you need to narrow your neighborhood search; you and your agent can talk about current market stats and trends in the neighborhood you have chosen – How much do homes typically sell for? How fast do they sell? How much inventory is in that market?
If you do these 4 things, you will be a great position to buy your new house!