Stop Wondering What Your Budget Is & Get Pre-Approved!
In many markets across the country, the number of buyers searching for their dream homes outnumbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show that you are serious about buying your dream home is to get […]
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What You Need to Know About Private Mortgage Insurance (PMI)
Whether it is your first time or your fifth, it is always important to know all the facts when it comes to buying a home. With the large number of mortgage programs available that allow buyers to purchase homes with down payments below 20%, you can never have too much information […]
Why Is So Much Paperwork Required to Get a Mortgage?
When buying a home today, why is there so much paperwork mandated by the lenders for a mortgage loan application? It seems like they need to know everything about you. Furthermore, it requires three separate sources to validate each and every entry on the application form. Many […]
5 Reasons to Sell Your House This Summer
Here are 5 compelling reasons listing your home for sale this summer makes sense. 1. Demand Is Strong The latest Buyer Traffic Index from the National Association of Realtors (NAR) shows that buyer demand remains strong throughout the vast majority of the country. These buyers are ready, willing, […]
Top 4 Renovations for the Greatest Return on Investment! [INFOGRAPHIC]
Some Highlights: If you are planning on listing your house for sale this year, these four home improvement projects will net you the most Return on Investment (ROI). Minor renovations can go a long way toward improving the quality of your everyday life and/or impressing potential buyers. […]
Time for Your Dream Home, Gen X!
During the housing market crash, Gen X homeowners lost more wealth than other generations. However, things are changing now! A strong economy, increasing home prices, and the recovery of the housing market are helping this generation to regain their lost wealth. According to Pew Research Center, […]
By Chuck MacPhee
In my last post, I detailed all the ways to help secure your dream home as a first-time buyer.
But what happens when you do everything right—work with a competent agent, get your preapproval and go through the full mortgage underwriting process—and still don’t get your dream house?
I’d like to say this scenario will never happen but the reality is that it’s actually very common and often no one’s fault beyond the market. A lot of places across the country are experiencing strong seller markets, with homes often receiving multiple offers within the first few days (or hours) they are listed.
This type of market can be frustrating to say the least. Here are some ways to handle a tough seller’s market as a first-time buyer:
1. Keep it simple, especially if there are multiple offers.
Even though you may absolutely love those custom drapes or want that little handmade coffee table in the corner of the living room, sellers may be reluctant to part with their personal items (and there’s no rule that says they have to). I highly suggest keeping an offer very clean and straightforward without too many requests of a seller. Another way to consider strengthening an offer is to remove some of the cookie-cutter contingencies that every other buyer is going to have in their offer. For example, if you have already been through your lender underwriting processes and all you are waiting on is that dream home, do you really need a financing contingency? If financing isn’t an issue with the bank, let the seller know you have your act together and are strong buyer. Of course, each market is different and your local REALTOR® is the best source for advice on this topic. Be sure to discuss this issue with him or her to make sure your best interests are taken care of. My advice: Come prepared with just an appraisal contingency if the “financing” piece is no issue. It’s one less thing the seller has to worry about. Again, this goes back to my initial concept: The cleaner the offer—with less strings attached—the more likely it is that a seller will choose you over the other buyers vying for the property.
2. Don’t lose your home over a latte.
Now, don’t get me wrong, I’m not downplaying the significance of buying a home. I know in many cases we are talking about the largest financial investment you may ever make in your life and every penny counts … sometimes. With most of the country seeing pretty steady price appreciation, if you are in a “hot” market it’s not uncommon to see prices push beyond the comparable sales in the area, which may make it feel like you are paying “too much” for the home. I know paying an additional $5,000 for your first home house sounds like a lot, but when you really break it down, you may be losing your dream home over the price of a latte. How do I justify a $5,000 latte, you ask? Well, let’s assume the scenario is this: Your offer on a home is $300,000 with 20% down at 4% interest. Not factoring any additional expenses (such as insurance, taxes and so on), the difference in payment per week is actually $4.32, or about the price of a latte.
|Monthly Payment (20% down)*:||$1,038||$1,055|
|Difference in Payment per week||$4.32|
*Assuming 4% interest rate with 20% down. No additional expenses factored in. For illustration only.
Now, let’s say the market continues to improve and you lost the home at $300,000. Prices rise and interest rates climb. The difference in the monthly payment from “B” in Scenario 1 above to the new reality in Scenario 2 below is approximately $186 per month or $46.52 per week. Personally, I’d much rather give up a latte per week than almost $50. Wouldn’t you agree?
|Monthly Payment (20% down)#:||$1,241|
|Difference in Payment per week||$46.52|
#Assuming 5% interest rate with 20% down. No additional expenses factored in. For illustration only.
3. When all else fails … get creative!
Despite you and your agent’s best efforts, there are still times when it’s just not meant to be and you lose the home. When this scenario occurs, it’s time to get creative. Send a personal letter to homeowners in the area or community you want to live in. Tell the homeowner their home is just the kind of property you’re looking for and ask if they know of anyone in the neighborhood who may be thinking of selling their home. You’ll be amazed at the response you get when you make things personal and let homeowners know you’re serious about buying. You can also have your agent reach out to any homes that may have been on the market in the past and did not sell. With prices up in most markets, it may be the perfect time to reach out to potential sellers and give them that nudge they need to list the home. Whatever you do, remember creativity in real estate can go a long way, and help you land your dream home. So if you’re feeling frustrated, hang in there! Your dream home may be just around the corner … all you’ve got to do is ask.
CHUCK MACPHEE is a licensed REALTOR® with Berkshire Hathaway HomeServices Georgia Properties. He’s also a luxury homes specialist and member of the REthink Council. Visit his website: www.macpheerealty.comor find him on Twitter @ChuckMacPhee.