The current market condition is a seller’s market. What does it mean? It means that there are a lot more active buyers than inventory. As of January 2018, there was 8% less inventory than January 2017.
Sellers control the market so buyers must do their due diligence and educate themselves so they don’t end up with buyer’s remorse. Ask for help with understanding the inspection reports, market comparables, resale value, the age and condition of utilities (HVAC, roof, septic, and such) and educate yourself about school districts (greatschools.org is a great place to start) & crime levels (contact the local police and ask questions).
Buying a home during a seller’s market is for those who NEED to move rather than for those who WANT to move. Who are those who NEED to move?
* Renters who are looking for the stability of their own place and are sick & tired of paying other people’s mortgage, no be allowed to have pets, or make changes in the property.
* Relocation/move due to a change of job, schools, high taxes, etc.
* Life events – those who need to find other accommodations due to a divorce, death or marriage.
* Downsizing – why pay so much when you don’t use over 50% of the house but pay for it.
* Upsizing – when the current home is just way to small and they need more space ASAP.
What other obstacles do buyers have to take into consideration these days? Interest rates are going up. I know, we heard that since 2011 but unfortunately, it is truly happening. Interest rates went up from 4.1% to 4.5% and higher in the last 3 months. That means that you need to shop around for lenders that might offer you a great deal. A difference of 0.25% doesn’t sound like a lot but over a period of 30 years, it is!. However, just because interest rates are going up and you want to try and get a good deal doesn’t mean you need to compromise on the house you buy.
Before you start looking for a home know your purchasing power by getting pre-approved for a mortgage. Remember that just because you are pre-approved for a million dollars home does not mean you need to buy one. Decide on a monthly payment that you are comfortable with and work with your real estate professional to stay within that number. The reason I am mentioning this is that most current buyers will end up in a multiple offer situation at least once. When you get into a bidding war the emotions start controlling the situation so you must have a plan ahead of time.
- Just because other people want that house doesn’t mean it is the house for you.
- Before putting an offer, discuss with your real estate professional the following:
- How much do you truly want the house (if you find out tomorrow that you lost it to another buyer, how will that make you feel?)
- What is the highest you are willing to go and stick to it.
- What are the pros & cons of buying this house.
- Remember that it is JUST a house and if you lose the bidding war you WILL find another home.
At the end, if you know what you need vs. want, willing to compromise a bit and understand your purchase power, you will find a home you love. It might take longer than you thought, hoped or planned but you will get there.
Happy house hunting 🙂