When home prices rise, here are some things that buyers can do to hit a deal
Real estate agents Rosa Arrigo (center) and Elisa Rosen (right) work on an open house in West Hempstead, New York on April 18, 2021.
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In this glowing real estate market, it is difficult for buyers to land a deal.
The supply is low, which drives up prices. The average price for an existing home sold in March was $ 329,100. That is an increase of 17.2% compared to March 2020.
Still, there is some good news. According to Realtor.com, there were new offers for the second week in a row, up 40% over the previous year. This is exactly when the pandemic hit.
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“Buyers currently struggling to find a home are likely to see an improvement in the number of choices available to them than the list of more sellers for the spring season,” Realtor.com chief economist Danielle Hale said in a statement.
Even so, the market is still very tense.
“I’ve been in business for over 30 years and have never seen a market this hot,” said Glenn Brunker, president of Ally Home, which provides mortgage services and products.
He recommends that potential buyers take a break and do a bit of searching for souls.
“Look at your income streams, your employers and the location where you want to buy a house, and make sure that the stability of your personal situation justifies home ownership,” said Brunker.
When you’re ready to buy, here is expert advice on how to navigate the market now.
Find out your number
Financial advisor Jacqueline Cooper first asks clients what they are paying as rent and if it is okay with them.
“First, come up with a number,” said Cooper, founder, president, and CEO of Financial Education Associates in Dorchester, Massachusetts. “What you can afford will determine not only your principal and interest payments, but taxes and insurance payments as well.”
Review your existing expenses and debts. There will also be additional costs to consider, such as sewer and trash, possible homeowners association fees, and a likely increase in utility costs.
Get a good real estate agent
Part of your due diligence will include finding a real estate agent who is experienced in both buying and selling homes. You should also have a strong knowledge of the local community and relationships with other realtors in the area.
“They want them to be able to bargain hard and know what makes a competitive proposition in this neighborhood,” said Lexie Holbert, a home and lifestyle expert at Realtor.com.
Do your homework
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Check out deals online, including virtual tours, even if you’re not ready to begin the process. It gives you an idea of neighborhoods that you like and that are within your budget, suggests Holbert.
Setting up notifications from real estate websites will also let you know when new homes are coming in these areas.
When you see houses that you like, a mortgage calculator offered by lenders can help you find your monthly payment based on the down payment and the cost of the house.
A good knowledge base will help you make an informed decision in a short period of time. This is vital if homes haven’t been in the market for long.
Get pre-approved for a mortgage
Pre-approval for a mortgage gives you an idea of how much you can borrow, what your interest rate is likely to be, and what your monthly mortgage payment is.
Just because you’re approved for a certain amount doesn’t mean you should be spending that much money.
“The only person in charge of your budget is you,” said Holbert.
Stand out from the competition
To attract a salesperson, try to develop a relationship with them. This can range from a warm letter to a positive image from your real estate agent of you as a buyer.
“If you can connect with the seller emotionally through the broker or as an individual, it makes a difference,” said Brunker.
First time buyers can benefit from not depending on selling a previous home to buy the new one and having flexibility in when to move in. One option is to rent the home back to the seller while looking for their new home.
While some buyers forego inspections, Brunker does not recommend this tactic because an unexpected repair can get you in financial trouble.