The housing market is still red hot, and the supply remains low. This means sellers are in a better position to sell their homes and get the highest offers possible. But for potential buyers, the competition, high prices, and bidding wars have made home-buying a difficult process lately.
If you’re keen to buy a new home amid the hot housing market, it’s important to consider the essential factors that may affect your decision and financial state. Of course, buying a home isn’t simply about sending your check to the landlord. You have to check your credit score, save for a down payment and closing costs, shop for the best mortgage company, find the right real estate agent, and the list goes on. You also need to keep your emotions in check in case you get multiple rejections.
The majority of properties in today’s scorching-hot housing market are selling beyond the asking price. The current market is facing multiple offers, properties getting sold faster than ever, and buyers paying a fortune over the list price. Basically, potential buyers are doing whatever it takes to get their offers chosen and lock down their dream homes.
But before submitting offers on properties, you have to decide how much you’re willing to pay to close a deal. With that in mind, here are things to consider before making house offers and building a competitive offer suitable for your budget.
Determine the house price around the area
A smart buyer is someone who does their research before making a final purchase decision. Knowing the price of other homes being sold around the area is a great way to identify how much you should bid based on the list price.
If you have a real estate agent, ask them to provide you with a summary of the comparative market analysis (CMA). The CMA is the tool used by real estate agents to calculate the value of a specific house by assessing similar properties sold within the same area. Knowing the result of the CMA will help you create a more data-driven and factual offer. While these complex reports are tough to navigate, you can seek the help of your agent to understand the data and come up with a figure that is right for your budget and the current market.
Hire a good real estate agent
When we talk about a “good” real estate agent, we mean someone who has an engaging personality, serious attention to detail, and a problem-solver mindset. More importantly, you need an agent who understands the housing market and competition and uses the nuances to create a unique pricing strategy.
Success happens from determining and developing a niche or focus in the local housing market that helps the buyer to distinguish themselves from the competition.
Obviously, a real estate agent is one of the major players in the home buying process. Their role is even more critical once you’re ready to make an offer. For this reason, you need an agent who is familiar with the area and who can support your needs and represent you on your behalf during the negotiation process.
A great agent is something who is aggressive and has the integrity to advocate for the needs of the buyer. They are the ones who will do the market research and identify the most effective approach to make your bid stand out, especially if you got caught in a bidding war.
As the buyer, you need to know the critical factors that can affect your offer, such as the price, timeline, and contingencies. You will need the expertise of an experienced real estate agent to know the right information before presenting a competitive offer. In a tight competition, ask your agent to discuss with the seller how you can close the deal without paying an unjustifiable amount.
Establish financial boundaries
Home buying is an emotional journey in which also requires a hefty investment. That’s why you have to ensure you make a realistic decision that works for yourself and your future finances.
Before making an offer, establish a financial boundary. This means buying a home you can really afford instead of going beyond your means. Consult your lender to estimate the cost of monthly mortgage payments and determine the most feasible offer you can give.
It’s easy to become overwhelmed with all the happenings in a competitive housing market. The key is to choose the path that you feel completely comfortable in terms of that purchase. At the end of the day, you have the freedom to change your mind and walk away.