If you’ve decided you’re ready to buy a new home, you may be concerned about what you’ve heard about the low home inventory in today’s housing market. As a matter of fact, according to The Real Deal, there are more real estate agents than there are homes currently for sale. In addition to the limited available homes for sale, the increased home prices and competition with other buyers may make it seem overwhelming to try to find your dream home in today’s “seller’s market.”
Whether you’re buying your first home or you’re a seasoned buyer, don’t let the current competitive market discourage you from finding your next home. With preparation, flexibility, and creativity, your journey to homeownership is possible, even in today’s market.
To help you prepare to buy a home in today’s market, we asked Bryce Boyd, our Vice President of Lending, to share a few ways to increase your chances of successfully buying a new home in the current market.
In today’s housing market, we’re seeing historically low mortgage rates with various mortgage options available that make it affordable for you to purchase a home. “Before you do anything, shop around for the best interest rate and mortgage loan term. All mortgages are not created equal so find the one that makes the most financial sense for you and your family,” said Bryce.
For example, we offer 30, 15, and 10 year fixed rate mortgages (where your rate is the same for the life of the loan) and we also offer a 5/5 Adjustable Rate Mortgage (ARM) that gives you the advantage of an exceptionally low rate for the first five years.* After that, a rate change could occur every five years. Knowing your budget will help you decide which option would be best.
Closing cost is another factor to consider when you’re comparing financing options. “Most people don’t realize that closing cost may differ with each financial institution. Therefore, take notice and make sure it’s within range when comparing this cost to other financial institutions,” said Bryce.
Once you’ve found the best interest rate and loan term that meets your needs and before you start searching for your new home, you’ll want to get pre-approved. The pre-approval will tell you how much you can borrow and you'll be approved for a certain amount of time. A pre-approval letter could work to your advantage because it shows the real estate agent and seller that you’re a serious buyer and in a good financial position to follow through with the home purchase.
“Houses are selling quickly in today’s market, and you have to be ready to move when the opportunity comes. Having a pre-approval letter is a good indication to the real estate agent that you’re ready to buy a home. Also, it’s important to have because most real estate agents will not show you a home unless you’ve been pre-approved first,” said Bryce.
There’s no need to make an extra trip to the bank to get pre-approved. Most financial institutions offer the convenience of getting pre-approved online.
Don’t try to go through this process without hiring an experienced real estate agent. Choose your real estate agent carefully. Hire an agent you can trust and who has a proven track record. You’ll most likely have a better chance of finding a home with someone who knows the ins and outs of the home buying process and who will be on your side during the entire process. They’ll also know as soon as new properties come on the market which is important in a market where offers can be made the same day as a home is listed.
Are you willing to compromise? In a competitive market, you’ll want to prepare yourself to be flexible with your expectations. For example, you may have to compromise on your must-haves. Be open-minded because you may not be able to get everything you dream of having. Focus on what’s important and be willing to adjust on the things you can go without.
You’ll want to prepare yourself if the seller of the home is unwilling to provide any repairs, warranties, or closing costs. “Getting a home inspection is always important, even in this competitive market. However, you may have to be flexible in addressing some issues found during the inspection. For example, don’t let a broken lock or window be a deal-breaker for you getting the home,” said Bryce.
Also, you may have to be accommodating to the seller’s timeframe on a closing date or other circumstances they may be facing at the time.
Are you prepared to pay more than the list price? In this highly competitive market, it’s imperative that you’re prepared to compete against other potential buyers. It’s possible that there could be multiple offers on a home at the same time. There may be buyers who are willing to pay cash or pay more than the asking price to win the deal.
“There’s very little room for negotiating (if any) compared to previous years. Not making your best offer could cost you the home you really want,” said Bryce. In a seller’s market, typically, the sellers aren’t motivated to make a counteroffer because of the attractive offers by potential buyers. So be ready to be aggressive with your offer.
With many buyers bidding on the same property in this competitive market, think about what you can do to stand out from the crowd. A seller’s connection and sentiments with their home may be strong and hard to let go of. Writing a heartfelt letter or sending a picture or video expressing your excitement about how much you’re looking forward to taking care of the home may be the breaking point for the seller choosing your offer over other offers.
Consider the pros and cons of buying a home now versus waiting until later to buy. If you don’t have an immediate need to buy a home or are concerned you’re not finding what you want, it might be worth waiting. According to Realtor.com, it’s predicted that the housing market will be much more favorable to buyers in the second half of the year as more sellers list their homes and inventory increases. You may have a better chance of getting your dream home if you’re willing to wait a few months to make your purchase.
Today’s housing market is highly competitive. However, it’s still possible to find a home you can afford and love. All it takes is time to prepare, being flexible, and positioning yourself to take action when the opportunity comes. Happy house hunting!
Ready to purchase your new home but don't know where to start? Download our Homebuyer's Checklist to help you with your homebuying journey.
*Available on primary residences located in the state of South Carolina. Qualification is subject to creditworthiness. Interest rates vary by product and are subject to change.