July 10th, 2017 4:14 AM by Jackie A. Graves, President
It’s the never-ending saga of homebuyers
everywhere: just when you start looking for homes for sale in Austin, TX, or Boston, MA, prices seem to be booming
and you’re stuck trying to buy in a seller’s market. House-hunting is hard to
time perfectly, and sometimes it’s impossible to avoid buying in a hot market.
But don’t let the fear of tough competition
send you into a panic. Avoid falling into one of these traps when shopping in a
hot real estate market, and you’ll likely save yourself some money (and a few
It’s hard not to be let down when attractive
homes are taken from “new” to “pending” before you even have the chance to look
at them, but remember: Desperation has no place in a home-buying transaction.
Once desperation sets in, you risk making an
impulsive and otherwise unwise decision, such as talking yourself into a home
that isn’t quite what you really want or paying more than you can afford. Even
if you can’t or don’t want to make an offer, every home you research and
visit will give you a better insight into the home-buying process and the
market and allow you to refine exactly what amenities you want in your future
Once you know exactly what you want, let others know
too. Give your contact information to the listing agents
at open houses and ask them to drop you a note if they get similar
What’s worse than seeing great properties
come and go before you can get out to view them? Seeing them placed under
contract before you make an offer.
Before you walk into an open house, make sure
your paperwork is up to date and your loan approval hasn’t expired so you’re in
position to make an offer that day. If you haven’t already gotten a loan
approval, it’s time to start the loan
approval process, stat.
It’s nearly impossible to time the market and
make your real estate decisions based on current trends. A better plan is
to make your buying decisions based on what’s currently happening in your
family, your career, and your life (and what you envision will happen in the
next five to 10 years). That said, when it comes time to execute your decision
to buy, it’s foolhardy not to pay attention to the market.
You need to be able to play both sides and
avoid the panic-inducing fluctuations of the market while staying informed. Ask
your real estate agent to
help you pay attention to neighborhood-specific
information, such as which types of properties move quickly, how
many days they generally stay on the market, whether multiple offers are a
reality you will face, and how much over asking price homes like the one you
want are selling for.
Then use this information to make strategic
decisions, covering everything from which properties and areas you’ll focus on
to how quickly you’ll need to get out to see listings to — most importantly —
what price range you should focus your search on.
Don’t run the numbers in your
head. Don’t ballpark your income, loan payments, and bills, stick your
finger in the wind, and guess at how much you can spend on a home. Financially
speaking, home buying is the big leagues, so you need to be sparkling, crystal
clear on precisely what you can
In a hot market, you may be faced with
decisions about whether to increase your price range or your offer price on
relatively short notice. If you need help, don’t hesitate to bring your tax
adviser or financial planner into the home-budget
discussion — especially if you’re a new homebuyer.
They can help you understand tax breaks for
new homeowners, which can free up some extra money for your
mortgage, property taxes, insurance, and HOA dues or private mortgage
insurance, if applicable.
Also, make sure you include line items for
your savings, retirement investing, gifts, school tuition, travel, and recreation
— the sort of things that lenders will not account for when they tell you what
their guidelines say you can afford.
Hot markets mean multiple offers on the same
home, which often result in a bidding war. And once you’ve had one too many
homes pulled out from under you after a bidding war, it can be tempting to pay more
than you budgeted for.
To avoid overpaying for a home just because
it’s in a bidding war, be sure to go through comparable homes with your agent
before you even look at the house.
Bonus: If your agent
includes active and pending sales in their pull of the comparable data set, you
may find out useful information such as whether other competitive properties
have just hit the market, or that all of the competition is now under contract
— things that might also inform your motivation levels or price strategy.
Tara-Nicholle Nelson - To view the
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