April is National Fair Housing Month, which brings more focus to First United’s efforts to help families find their dream homes. The timing is perfect because spring and summer have traditionally been the most competitive periods for home-buying. That’s primarily due to the onset of warmer weather and because parents don’t want to up-end their kids’ lives by making them change schools during the academic year. By the time early summer arrives, a buyer’s market may have shifted to a seller’s market, and the most appealing homes won’t stay on the market long.
The usual seasonal surge in the housing market may be even greater this year as the roll-out of COVID-19 vaccines likely means that we’ll be transitioning into a much less severe stage of the pandemic. Sellers who have been sitting on the sidelines during the pandemic will be ready to make their move. As a result, some real estate industry analysts forecast an uptick in the residential real estate market.
Now Is the Time to Get Ready
If you’re considering buying a new home this spring or summer, it’s a good idea to start or ramp up your efforts now. If you’re just starting out, be sure to:
- Take steps to boost your credit score
- Save for a down payment and other home-buying expenses
- Research the different types of home loans, including conventional mortgages and government-guaranteed mortgage programs and the differences between fixed-rate and variable-rate loans.
Although it’s not a necessity, many home-buyers choose to use the services of a buyer’s agent. A good agent will take the time to understand what you’re looking for in a home — your must-haves and your deal-breakers — and then search the market for homes that fit your needs. They’ll also keep an eye out for houses that come on the market and may even learn of homes for sale before they’re even announced, giving you a leg-up on the competition.
How to Stand Out As a Buyer
During the competitive spring and summer seasons, presenting yourself to sellers and their agents as an organized, flexible, and well-qualified buyer can make all the difference. Here are some strategies and tips to help you stand out from the crowd of other buyers.
Mortgage prequalification has become an important part of the home-buying process for many prospective home-buyers. Sellers always prefer cash offers, but few buyers have enough funds to offer cash. The next best thing is getting a preapproval letter from a lender. You’ll need to provide lender financial documents to verify your income and other assets, and the lender will run a credit check on you before prequalifying you for a mortgage.
Having a preapproval letter demonstrates to sellers that you’re a serious buyer and assures them that there likely won’t be a lag in the sale. It also gives you an advantage over less-prepared buyers.
Once you’ve found a house that you want to buy, here are other tips that may provide you an edge in highly competitive real estate markets:
- Make a list price offer as quickly as possible. This may scare away other interested buyers.
- Consider adding an escalation clause to your offer. Agreeing to pay a few percentage points above the highest offer is sometimes effective.
- Make a larger earnest money deposit.
- Exclude certain contingency clauses in your offer. Omitting financing contingencies, shortening the inspection period, of other concessions may persuade the seller to accept your offer over another one.
- Offer the seller more convenience, such as an earlier closing date (perhaps paired with a rental agreement to give the seller more time to move).
- Make a personal appeal. A short letter that addresses an issue important to the seller can make a difference. Some sellers will feel nostalgic and protective of their home, so the price may not be the ultimate deciding factor for them, particularly when there are multiple offers. For example, you could write what an honor it would be to live in a historic home and promise to maintain its architecture or discuss how you’ll nurture and cherish the home’s landscaping and perennial garden.
Buying a home can be both exhilarating and intimidating. The most effective way to overcome the challenges you’ll face is to be prepared. For more information about mortgage preapproval and insights on the home-buying process, contact one of our Mortgage Team members today.