Little inventory and lots of demand together with record low interest rates have created a very competitive housing market. House hunting can be a little daunting even at the best of times, but it is especially challenging in such a competitive market, particularly for first-time buyers. With the housing market predicted to remain competitive for the rest of 2022, here are some tips on how to best approach your search and secure your dream home.
Securing a mortgage in-principle is essential before starting any property search, particularly when you have a lot of competition when making offers on homes. First of all, understanding your accurate and realistic budget will mean your search is focused on what you can afford. Secondly, pre-qualification shows sellers that you are a serious buyer ready to negotiate and close on a potential deal. With a mortgage broker, such as Trussle, you can quickly calculate how much you can borrow. As part of the new version of their mortgage in principle, first, you undergo a soft credit check, and then your eligibility is checked with 18 lenders, giving you a very accurate figure of what you can borrow. Having a reputable mortgage broker and a pre-approval letter in your hand is a game-changer when house-hunting in a sellers’ market.
Timing and patience
You need to balance, being ready to act fast, but at the same time not compromising on what is important to you. First, always be available on the phone or by email as negotiations in this type of market happen fast. Have your pre-approval and other documentation already ready so that if you are asked to close quickly, you are ready to go. Try to reduce, or at least be flexible with, contingencies, keeping them to a minimum as they can slow down negotiations significantly. But remember that some contingencies are a must, like having a home inspection and appraisal, so never compromise on this. You can check a property’s value with a free online estimation with ReMax. However, for the most accurate estimate, you will need to get a Comparative Market Analysis, which takes into account market conditions, location and amenities, etc.
Make the right offer
A seller will be approached with multiple bids, so show that you are a serious buyer by starting with a strong offer. Of course, all-cash buyers are often the most attractive players in a competitive market, which less risk or chance of a negotiation falling through. Estate agents will quickly tell you that making a lowball offer in a sellers’ market does not work, and they won’t take you seriously if they are insulted by your first offer. Industry leaders say offers are generally within1.4% of a home’s market value and are considered fair. There is no exact formula, but 15%-20% less than the asking price is considered a low ball. Open biding with a respectable offer, less than the asking price but not so far off that you will put yourself out of the running.
Get a good real estate agent
Build a good relationship with both your mortgage adviser and your real estate agent. Building a good rapport with a reputable estate agent, such as Century21, will give you an advantage over other buyers. They will work for your best interest, not the sellers, and negotiate effectively on your behalf. Unlike a buyer, who can find it hard to separate emotions from negotiations, a professional realtor will see past the superficial finishes and aesthetics and help you secure a good investment for your money.
As well as using the help of professionals, do your research, get to know the market well and be sure of your financial situation, including pre-approval.