A first-time home buyer may need to be educated about the realities of the housing market before they fall in love with a home and then quickly lose out to another bid. To prevent heartache, real estate professionals can have frank conversations with their buyers about the realities of the competition and the amount of money it takes to become a home buyer in today’s heated market.
No home will be perfect.
Housing inventories are ultra-low. Any home viewed as “perfect” will have many buyers lined up, thus likely instigating a bidding war. Buyers may need to be willing to accept some cosmetic changes or a home farther from their preferred destination, realtor.com® says.
Buyers also can’t expect sellers to fix everything after a home inspection. In a seller’s market, many sellers have backup offers, including those buyers who may be willing to waive a home inspection. “Expecting a seller in a competitive market to address every line item [from an inspection report] is a delusion that could cost you the house,” realtor.com® says.
You can set up a mortgage after you find a home.
Successful house hunting today is done at a quick pace. That means lining up everything for financing before you even look. A mortgage preapproval is critical, agents say.
“Your first call when even thinking about maybe purchasing should be your bank,” Haden Riggs, a team leader with Keller Williams in Tyler, Texas, told realtor.com®. “They will line everything out and put you in the best position to purchase.” Buyers will be unable to submit a competitive offer without proof of funds.
You’ll likely pay more than the asking price.
Bidding wars have been driving up prices. Even as some signs of cooling appear in the market, buyers in today’s market are less likely to pay less than the asking price, and often they’re still paying more. Read more: Where Homes Are Selling for $100K Over Asking
If the price of a home looks too good to be true, it probably is. Some seller’s agents are using a bargain basement starting price in the hopes of a bidding war that drives up the price. Buyers will need to be ready with a competitive offer to triumph in buying a home in the current market.