The housing market has changed. Even though the inventory of available homes has risen about 2% in the last month or so, your options are still not as plentiful as they would have been a few years ago – and there are strong indications that this “new normal” may be around for a while.
What can you do to improve the odds you’ll find your dream home in this kind of market? You get strategic. To help you on your journey, we’ve compiled a list of tips and tricks that can make the home-buying process easier to navigate:
1. Consider Your Budget
When determining your housing budget, don’t just think about the mortgage payment itself. Consider the additional costs of home ownership, like property taxes, homeowner’s insurance, and maintenance. A realistic approach will keep you oriented toward homes you can afford, and that can keep you from falling in love with something you can’t.
2. Have Cash In Reserve
Everybody thinks about saving for the big down payment they’ll need when they’re buying a home. While it’s smart to put as much money together as possible for that, you also need cash in hand to lay down some “earnest money” when you make your bid on a home. Your earnest money is a good-faith deposit of cash that helps demonstrate the seriousness of your offer. If you go through with the deal, it gets applied to your deposit – but it goes into the seller’s pocket if you don’t. A hefty earnest money deposit can make your offer on a home more competitive.
3. Get Pre-Approved
Getting pre-approved for a mortgage will give you a realistic view of your purchasing power, streamlining your home search – and make you a stronger buyer, since you will already have a preliminary commitment from a bank. A common rule is the 28/36 rule, where your mortgage payment shouldn’t exceed 28% of your gross monthly income, and your total debt-to-income ratio shouldn’t surpass 36%.
4. Research the Real Estate Market
Beyond checking property listings, understand market trends. Are home prices rising or falling? What’s the average time a house stays on the market? Investigate the neighborhood’s growth potential and any upcoming developments. This knowledge will empower you during negotiations and help you make well-informed decisions. Your REALTOR® can be one of the best possible sources of information when it comes to this part of the step, but you can also pick up clues by looking at the news and watching how a few sample listings in your desired area progress.
5. Leverage Technology
Do as much of your search online as possible. These days, you can take virtual tours of many homes on the market, and you can set alerts to be notified about any homes that hit the market with the criteria you want. The more you use tech to explore your options, the less actual legwork you have ahead of you.
6. Carefully Define Your Priorities
Creating a list of priorities ensures that your home search remains focused. Consider factors like location, size, the number of bedrooms and specific amenities. Knowing your “must-haves” (and any deal-breakers) will save you both time and energy, preventing you from being swayed by emotion toward properties that don’t really align with your needs.
7. Be Conscious of Location
Choosing the perfect neighborhood is as important as choosing the right home. Research crime rates, school quality, proximity to essential services and the overall community atmosphere or “vibe” before you put in a bid. Visiting the neighborhood at different times of the day and talking to residents can provide valuable insights into the area’s dynamics. Think about a property’s effect on your commute, and consider the kinds of amenities you enjoy having close by. If you really appreciate a bustling, vibrant social scene, for example, you don’t want to locate yourself way out in the woods.
8. Be Willing To Walk Away
Even though it’s still a bearish real estate market for buyers, it’s no longer so tight that you can’t negotiate a little with a would-be seller. Negotiation is an art, especially in real estate. Work closely with your real estate agent to craft compelling offers and navigate counteroffers. Be prepared to compromise, but also know your limits. A well-negotiated deal ensures that you secure the best terms for your purchase – so be ready to just walk away if a deal doesn’t work for you. Other houses are out there.
9. Plan for Contingencies
Include contingencies in your offer to protect yourself from unforeseen circumstances. Common contingencies involve home inspections, appraisals and financing. These clauses provide an exit strategy or room for renegotiation if issues arise, offering you flexibility and peace of mind. Be conscious of the fact that your seller, too, may want a few contingencies in the contract and be willing to consider any that are reasonable.
10. Don’t Skip the Inspection
Invest in a professional home inspection to uncover potential issues like structural problems, water damage, or faulty wiring. Simultaneously, research the property’s history and any pending legal or zoning concerns. A thorough investigation ensures that you’re fully aware of the property’s condition and any potential challenges.
11. Read the Fine Print
Carefully review all documents associated with the home purchase. If needed, seek legal advice to fully understand the terms and conditions. Pay attention to the specifics of the contract, including contingencies, deadlines and any potential penalties. A clear understanding of the fine print can prevent misunderstandings down the line that could upend your home deal even after you think you have it.
12. Be Patient and Stay Calm
The homebuying process can be emotionally taxing, but patience is key. Rushed decisions may lead to regrets. Take the time to explore different options and weigh the pros and cons of each property. Keeping a calm demeanor helps you navigate challenges with a clear mind, leading to more confident and satisfying decisions.
Buying a home really is a journey, and there are usually a few twists and turns on the road to your goals. Pre-planning and patience (and a good REALTOR®) are largely the keys to achieving the results you want.
