As a buyer you may be feeling panicked. A house shows up on-line, you are sure it is “the one”. You excitedly dial the number, you get a live voice, you ask if you can set up a showing and then you hear those very, very sad words: “Sorry that house has an accepted offer”. You may have already sold your home or your lease is soon to be up and you NEED a place to live.
This is the craziest market I have seen in my 12 years of real estate. Homes are getting multiple offers, sometimes in a matter of hours of going “live” on the market. According to my brokers, who have been in the business for 30 years, this may be the lowest amount of inventory they have ever seen.
What can you do as a buyer to navigate this current housing market?
- Get your pre-approval. You will need to know your pre-approval amount prior to making an offer. If you are putting an offer in on a home and you know there are other offers coming in it would be wise to submit the pre-approval with the offer.
- Don’t trust the on-line real estate sites. Zillow, Trulia, Realtor.com are liars. They don’t mean to, but they do. These websites will continue to show properties as active even though they have offers. They will show them as active/available until they close. Why? Because in our multiple listing service agents don’t mark their listings as “pending”. We mark them as “Active with Bump”(has an accepted offer but buyer has a home to sell) or “Active without Bump”(has an accepted offer and buyer DOES not have a home to sell). The labels we use do not translate to the labels the on-line sites use.
- Find one agent you trust and work exclusively with that agent. Why? Agents have the ability to see the new listings as soon as they come live on the multiple listing service. In fact, we can set you up to receive those new listings as well…even before Zillow knows about them. Most real estate offices also have a board of new listings. An agent who is working hard for you will be checking the board daily. I have even been known to knock on a few doors to see if people are interested in selling.
- Be prepared to pay full asking price or possibly even over list price. Many homes are getting multiple offers with-in hours of listing. I have written offers for buyers for $5000 over asking price, strong buyers with 40% down, and they did not get the home. If you want a “deal” on a house this may not be the right time for you to be attempting to purchase a home.
- Keep in mind every $1000 of offer price equals about $5 per month in your mortgage payment. For example the difference in your mortgage payment if you pay $100,000 for the home versus $105,000 is $25 per month. My advice to buyers when writing offers when multiple offers are coming in for the property is to decide what price you will offer that if you DON’T get the home you won’t be sad in the morning. You won’t be saying: “ if we had only offered $1000 more”.
- However don’t get into an auction mentality and overpay for a home. Make sure you have a highest and best amount in mind that you will pay for that home when you start the offer process. I always ask my buyers to think about re-sale. How long do you plan to own the home? If you pay top dollar for a home today and have to sell it in 2 years you may not re-coup your investment.
- You will have to list your home and most likely have an offer on it before you can write an offer on another home. I know that is a scary thought, what if there are no homes for you once you have an offer?? But with the amount of offers coming in on properties most sellers will not accept an offer contingent on the sale of your home. If you have an offer on your current home you are contingent on a successful closing. They are a few other creative ideas that I use when listing homes- call me and I would be happy to discuss them with you.
If you are thinking of selling there has not been a better market in years. If you are trying to buy…hang in there, you will find one.
What are your home-buying criteria? In Real Estate you always hear location, location, location! While location is important the truth of the matter is maybe location isn’t even in your top 10.
I like to use the slot machine analogy
Think of how many windows you want to come up with double cherries to get your dream house. Every must have adds another layer of complexity and means one more window on the slot machine. Is a finished lower level a want or need? Is a fireplace in the family room a must, vaulted ceiling, cul-de-sac, 2-acre yard? You get the idea.
I had a buyer who said he had to have a home on a cul-de-sac. He grew up on one and had fond memories as a child. This feature was a big need for him until he realized how few homes are on a Cul-de-sac. This quickly went from a high need to a bonus if he could find it
Maybe you don’t even know what you want. You are just hoping to pull the arm and see what comes up. Making a list of what your
and would be nice but not necessary,
features are is an important part of the process. The list may change 6 times. We (real estate agents) have a saying: “Buyers are liars”. You don’t do it intentionally but often what you initially say you need and what you end up purchasing can look very different. (I was a lying buyer at one point in my life –see The First Time is Special)
This is why it is important to be transparent with your Realtor. Give me your list. Tell me if/when it changes. As you go through the process your needs / Must haves will become clear.
You may look at 1 house, you may look at 30, but sooner or later you will walk into THE HOUSE! It has enough of your needs / Must haves, has a lot of your wants and maybe even a few “cherries” of your would be nice but not necessary!
Do you know who Chip and Joanna are? If you answered yes then it is possible you have thought how fun it might be to buy a fixer upper! It is amazing the amount of work they can get done in 60 minutes. That is of course with a crew of 20+ and someone else’s checkbook.
They make it look so easy and beautiful. Before you fall for the smoke and mirrors of “realty TV” there are some things to consider.
Do you have to occupy the house during renovation? It is a dirty job. It will take double the time you expect it to. How long can you really cook on a camp stove?
Have you done this type of work before or do you have family/friends in the trades? A lot of decent houses get ruined through HGTV wannabes. You can build a lot of equity in a house with updates/repairs, if you know what you are doing. However, if you don’t know what you are doing you can also decrease the overall value with shoddy workmanship.
Do you know about permits, inspections, codes and approvals?
How much is it going to cost? You can’t mortgage 2×4’s and drywall (there is one way under a specific loan type-,click here for more information).
Is this the right time in your life for an all-consuming project?
Can your relationships survive it?
My husband and I recently did purchase and completely gut a home. We are much older and wiser than when we purchased our first home (See: The First Time is Special). My husband is good at repairs, we do know a lot of tradesmen, we do know about all the permits, we had enough cash, we are empty nesters…so we decided this is the time. We thought it would only take us a few months and we had somewhere else to live during the renovation. It turned out better than we imagined. However it took us 8 months versus the 3 ½ we expected; required many, many, many more hours than we ever imagined and cost about 1/3 more than we estimated.
Some day the world is going to need another Chip and Joanna, it just might be you… Or you can plan on watching them Fix up another home while you sit on the couch in your move in ready home!
Buying a house for the first time is very exciting. I remember feeling like I had finally reached “real” adulthood. I also remember feeling overwhelmed, confused and slightly freaked out!
At the time my husband was working in the corporate world. We were being relocated from one state to another. We were given a 5-day house-hunting trip. This is where the slightly freaked out part happened! 5 days to find the most expensive item I had ever purchased. ARE YOU KIDDING ME?? It can take me longer than that to pick out my outfit for the day. Adding to the fun; I was 5 months pregnant with our second son.
So many choices: what style of home, how many bedrooms/baths, size of garage, what community, what school district, how big of yard, old/new, updated, fixer-upper????? The options were overwhelming.
The confusion came after looking at 12 homes in one day. Which one had the kitchen that I liked? Was it the blue one with vinyl siding or the yellow one with wood siding that had the yard of my dreams. One smelled like a cat but I think that was the one with great finished basement. How do I choose!!
DON’T LET FOREVER FREAK YOU OUT
Here is what I learned from that experience.
- Find a real estate agent you trust and who really listens to your needs/wants. Even if you have more time than I did, you don’t want to waste precious time looking at homes that don’t match your criteria.
- Find a lender you trust as well. He/She is going to be one of your best friends during this process. They will be able to provide a pre-approval letter with minimal information. After that they will need to know more about your financial life than you could even imagine. Ask them what they will need from you once you have an accepted offer and start to gather that information NOW!
- You don’t always get what you want…but you usually get what you need! My husband and I started out thinking we wanted a fixer upper character home. We purchased a 1970’s bi-level. As we discussed our life with our Realtor, he suggested a fixer-upper might not be the answer for that season. We had a 2 year old with another on the way, demanding career and we were moving to a new community.
- This is most likely not your forever home. Think of what’s important to you over the next 5 years. How do you live? Are you a gardener or do you want to be close to the farmer’s market downtown. Do you want to maintain a soccer size yard or spend time at your kid’s soccer games? Am I a handy person or do I need move-in ready? Do I like to entertain or rather be alone reading a book?
- Remember no matter if it’s your first home, or the 5th home you have purchased, it is always a little stressful and overwhelming, but also exciting and fun!