Right now, there are more people searching for a home than there are people selling a home. That means that home inventory levels are low. A classic principle of Economics is that when something is scarce, its value rises. This is a simple explanation of why the current real estate market is a market favoring sellers.
What can you do if you find yourself in a disadvantaged position of being a real estate market buyer? We’ve identified 4 main steps to take to minimize the disadvantage.
Getting pre-qualified for a loan provides more credibility. Pre-qualification is an indicator that your credit score and financial status will enable you to get mortgage approval. This pre-qualification is a valuable step in establishing a budget. In many areas, real estate agents will not work with you unless you’ve already obtained a pre-qualification.
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Recognize Inventory Limitations
When inventory is tight, as it is right now, it is even harder to find a dream home than in a neutral market. Hence, you will need to make some challenging decisions regarding your “must have” features. This situation is also closely related to your budget: since inventory is low, many regions are seeing homes sell fast, and above asking price. If such is the case in your area of interest, you are likely going to need to compensate for that factor by planning for a potentially-needed increase of your offering budget.
Another option some people have is to buy land and build a dream home. Vacant land is not easy to find in a lot of areas; however, if you can find vacant land and it is well priced, building becomes a more viable option. One advantage of building a home is that it typically means making fewer compromises on the features of the home itself. It also has the potential to be more affordable, and available in certain areas. And while building a home can be a challenging process – requiring much more time and personal attention – ultimately, it can also be more rewarding.
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Be Active
This is not the time to a be a casual searcher. With homes selling quickly, you’ll need to be more diligent than usual in monitoring the market. You’ll also need to act fast when you see a desirable buying opportunity.
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Hire a Good Real Estate Agent
The question is often raised as to just how valuable real estate agents are – and the answer is “very.” Real estate agents can be valuable because the home-buying process is always complex, regardless of market conditions. So, having an experienced, knowledgeable agent who is a skilled negotiator is now more valuable than ever on the buyer’s side. While it might be more challenging in a seller’s market to get a good deal, a skilled agent can help a buyer save money in the long run. They can also help buyers avoid a less-than-ideal value proposition for what is typically the biggest purchase of their lifetime.
If you apply these 4 steps to your home purchase process, you’ll be ahead of the game. A Guardian Mortgage professional can help you through every step of the lending process. We’ll help put you in the best possible position to have a successful home search.