As we head into the spring moving market, there are numerous cities across the United States that are suffering from the lack of quality homes for sale. Inventory is tight! People who want to sell their home have to have their new home secured in a contract before they put their house on the market or they could be stuck without a place to live.
Here Are Some Tips From Top Industry Professionals
Have Your Money In-Hand
Make sure you have a pre-approval from a reputable financial institution that clearly states the type of loan you are approved for (FHA, VA or Conventional), the maximum loan amount, and the loan officer’s contact information. A pre-approval carries more weight than a pre-qualification.
Know What You Want In Your Home
Let your real estate agent know EXACTLY what you must have in your new home and don’t compromise. If you really want a ranch house then only search for ranch homes. If you need 4 bedrooms then ONLY search for homes with a minimum of 4 bedrooms. If you need a certain area, then ONLY search within a certain area. In an aggressive real estate market, some homes have more than one offer on the table within hours of going on the market. You don’t want to miss out on your perfect home just because you were sidetracked looking at something you really have no interest in purchasing.
Prepare To Pay The Listing Price Of The Home
People who know me know that I love using analogies to help people understand what they are dealing with. One of my favorite analogies is: You have one apple that you are selling for $1.00. There are 3 hungry people and no one else around selling apples. The first person offers you $.50, the second person offers you $1.25 and the third person offers you $3.00. Who would you sell the apple to? Everyone I have ever talked to has said it’s a no-brainer! You sell it to the person for $3.00 – no questions asked! This is what a seller’s market is like – a lot of hungry people but not a lot of options.
Closing Costs Decrease The Value Of Your Offer
When you ask for closing costs from the seller, you are really asking the seller to subtract the amount that you need to cover your closing cost from the amount that you’re offering. You are really asking the lender to allow you to finance your own closing costs. For example, if a house is listed for $200,000 and you offer them $200,000 with $5,000 in closing cost, you are really offering the seller $195,000 (which is less than the asking price of the home).
My advice is to increase your offer by the amount you need for closing cost. For example, if a house is listed for $200,000 and you would like to use your mortgage to finance your $5,000 closing cost, then you would offer $205,000. In this case, everybody wins! The seller gets the price they need and the buyer gets to have their closing cost added to their mortgage loan.
Don’t Listen To Friends and Family
The biggest mistake that I’ve seen people make time and time again is to listen to friends and family members who have not purchased a home in an aggressive real estate market. To go back to my analogy of a person selling an apple, you are selling an apple for $1.00, and there are 3 hungry people who want your apple. The first person offers you $.75, the second person offers you $.50 and the third person just walks away because there are 5 other people down the street selling apples. Who would you sell the apple to? Naturally, you would take a loss and sell it the person offering you $.75. This what a buyer’s market is like. You don’t know what the exact situation and the market were like when your loved ones bought their home. Focus on today, YOUR current needs and what’s best for YOUR family.
Real Estate Is Not The Same Everywhere
Just like each city is unlike each other so is real estate. The way you would pursue a flat in New York is completely different than the way you would pursue a home in Pennsylvania. In order to have a successful real estate purchase, it is best to rely on your real estate professional that works in that city and/or state. Each state has different rules and regulations as to how real estate transactions should be done. As licensed real estate professionals, it’s imperative that we follow the laws in order to practice in that state. Real estate professionals are required by law to take the state exams and to stay on top of ever-changing local real estate laws. It’s best to follow their guidance so that you can achieve your goal of purchasing your new home.
Written By: Shena Omotola, Dream Home Specialist & Broker Owner of Skyward Realty – Skyward Realty services Chicago, Suburbs, and Northwest Indiana
P.S. Feel free to email me any questions. I’m always here to help. Check out my recent resources for first time home buyers and sellers.
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