While all real estate is local, there’s no question that inventory issues are plaguing housing markets around the country. The number of homes on the market nationwide in June was a staggering 7.1 percent below June 2016 levels, which were fairly low themselves, according the National Association of Realtors.
If you plan to buy a home this fall, you should prepare for the challenge of finding a property you like and potentially having to compete against other purchasers. Pent-up demand over the summer sometimes leads to a flurry of real estate sales activity among buyers who hoped that more homes would come on the market after the end of vacation season.
Here are three ways buyers can prepare:
Have airtight financing. While it’s recommended that all buyers get preapproved for a mortgage before shopping for a house, it’s even more important in a market with limited homes for sale. You need to have your lender and loan program ready to go the moment you make an offer, with all paperwork in place and all deposits fully verified. Prosperity Home Mortgage, a subsidiary of The Long & Foster Companies, offers a program called Prosperity Buyer Advantage, which gives qualified buyers a commitment letter upfront (subject to appraisal).
Going through a preapproval process like Buyer Advantage helps the buyer determine how much home they might be able to purchase, and it strengthens their position when bargaining with sellers.
You also need to have cash ready for an earnest money deposit when you make an offer and have the down payment funds in an accessible account. The key is to stay in close communication with your lender and real estate agent to avoid a financing hiccup.
Know what you want. Buyers must move quickly to make offers when competition for homes heats up. Your agent can show you a variety of properties that are for sale in your preferred neighborhood, so you can better understand the values there.
Refine your list of wants and needs, so you are certain of your priorities. As buyers see more homes and spend more time learning about the opportunities in their area, their desires and requirements sometimes change. While it’s important to see what’s available and refine what you want in a new home, make sure you’re doing so in an expeditious way.
Know your maximum budget. A common issue for buyers, particularly if they have lost a bidding war on a previous home, is the desire to increase their price range. While there’s nothing wrong with slightly upping your preferred spending cap to get the home you want, you need to stay in control of your budget.
Consult your lender so you know the upper limit you can borrow. Do the calculation to ensure you will be comfortable with the difference in your monthly payment with a higher home price.
Although a low-inventory market presents challenges, working with a professional real estate agent can make your home search go more smoothly. Your Long & Foster agent can help you enter the market with the knowledge and preparation you need to end up with the house you want.
Next week, we’ll share tips for sellers in a tight-inventory market.