In a surprise twist given worldwide Covid concerns, the American housing market surged in 2020. By November, year-over-year reports from Realtor.com showed that homes sales had skyrocketed by 25.8%, and median prices by 14.6%. These figures provide an exciting snapshot for homeowners looking to sell. But what do they mean for people eager to own a first home?
Prospective home buyers have their work cut out for them. Inventory’s low and decent properties aren’t on the market long. This means it’s imperative for individuals and couples to have their acts together. Otherwise, they might miss out on a dream bungalow in the suburbs or historic townhome in the city.
If you’ve designated 2021 as the “Year of the Move,” do a little homework before hitting up the listings on Zillow. Learn your market. Talk to realtors. Get a sense of your target area’s hottest zip codes and neighborhoods. You’ll be a smarter consumer. At the same time, keep these tips in mind to avoid being blindsided by a fast-paced home shopping experience.
- Check the pulse of your financial snapshot.
Now is the time to download at least one free credit report from Experian, TransUnion, or Equifax. Though your credit report probably won’t offer you a FICO score, you’ll at least get a glimpse of how you look on paper. Notice something amiss? Get the problem taken care of pronto so it doesn’t come back to haunt you.
Next, check out the going home loan rates at your local or national preferred lender. As a Time article points out, economists expect mortgage loan rates to settle between 3.0% and 4.0% for 2021. Rates that low may be a bit higher than in the past year, yet they’re still favorable. You can always consider refinancing down the road if they dip again.
After finding an attractive mortgage rate, go through the paperwork to get pre-approved for the highest amount you’d be comfortable borrowing. Pre-approval ensures you confidently can make an offer without delay on a house you love. And that’s important in a market where inventory moves from “for sale” to “sold” in a flash.
- Weigh seller deals carefully.
Home sellers frequently try to sweeten the pot by holding out carrots to buyers. They may throw in appliances like a fridge in the garage, or offer to install some new carpeting before closing. They might even pay neighborhood association fees. To be sure, a huge perk regularly offered is a home warranty.
Home warranties benefit both parties. The seller reduces the risk of buying. Conversely, the buyer enjoys a blanket of protection against system and appliance breakdown. Be sure to look at all of the different home warranty options, as they’re all unique. In fact, home warranties from the same companies can vary widely between states.
How will you know which seller deals fall into the “sweet” category and which lean more “sour”? You’ll have to examine them carefully and determine if they matter to you. If you’re never going to use the deal, it’s merely something that looks good on paper. You may even want to ask the seller to take it off the table in exchange for a reduced price.
- Give the process ridiculous amounts of attention.
In a seller’s market, buyers can’t afford to be feet-draggers. In other words, to “win it”, you have to stay in it. The good news is that with homes being snatched up, you may not be looking for long. However, you probably won’t enjoy the process if you’re unwilling to make it a priority.
You can’t consume house-hunting day and night, of course. Still, block off your calendar each week to attend as many socially distanced open houses, one-on-one private showings, or Zoom e-tours as possible. Additionally, set aside hours to drive through neighborhoods you like, keeping an eye out for “coming soon” signs.
Will you feel a bit exhausted or overwhelmed? Maybe. Yet you need to be ready to act quickly. Otherwise, you could find yourself being outbid again and again. Remain flexible with your free time and be prepared for tons of texts, video chats, and e-signature contract emails. It’s all part of the quick real estate cycles expected in 2021, especially when you find a home you like.
- Stay open to making concessions.
When inventory is at a premium, you’ll discover soon enough that you can’t necessarily get the home you imagine. At least, you can’t find one with all the amenities on your “must-have” list. This leaves you with two options: Wait it out or concede a little.
Many serious home seekers choose to make concessions instead of extending their property browsing by months. That doesn’t mean you can’t get everything on your list, but you should be ready to significantly pare down the list. For instance, you might exchange having a master bedroom ensuite for an outdoor pool and patio. Or you might pick a home with less square footage than you originally wanted because of its open-air layout.
Of course, concessions can come in other forms. Part of your negotiation table dealings might be allowing the sellers to stay in the house temporarily post-closing. In essence, the sellers would pay the new owners rent to remain onsite for a specific amount of time. While not for everyone, this type of unconventional arrangement called a “rent-back” can make your offer more attractive than another. Consumer Reports noted in 2019 that rent-backs have become common practice. Most of these leases usually last less than 60 days.
The pandemic held down many industries, but the real estate field seemed to hold its own against all odds. If you’re itching to own your first home or relocate from your current property, you can expect competition. Nevertheless, with some foresight and planning, you can improve your chances of netting your next nest.
