Buying A Home In A Sellers Market
Buying a home is probably the biggest investment you will make and biggest debt you will incur. The home buying process can be a very exciting time for first time buyers and even seasoned investors. But, it can also be one of the most stressful experiences you go through. Today's real estate market can offer more opportunities, but yet can be filled with even more risks. Experts say, the best time to buy is during a Buyer's Market. Definition of a Buyer's Market ,this is when the supply of homes exceed the demand of buyer's looking for property. During this time, buyers have a greater selection of homes to look at, and often at times have a good opportunity to get a home at a great price. But, what about when it's a SELLERS MARKET? Now the definition of a seller's market is when the supply of homes on the market is less than the demand for those looking. So whether you're a first time buyer, or seasoned investor, how do you find the perfect home without having to leverage all your life savings or hard earned money? Well I've compiled my Top 6 tips on Buying a home in a Seller's Market.
CREATE YOUR WISH LIST:
NO, I'm not talking about your Christmas list, when you were growing up. I mean your must haves in a home that you are searching for. Now, it's important when you are making this list, do a Top 10 list, and make sure the most important items be at the top. Ex. Granite counters in Kitchen, or 4 bedrooms, or must have a pool, etc. Keep in mind, most of the time, you won't get everything on that wish list, just like when we were kids during Christmas. That's why you make the list of the most important stuff that you can't live without or must have in a home. Ex. Located to a specific school district, or for the guys, must have a 3+ car garage. Because, often times during a Seller's market, the best homes, that have all the bells and whistle, will be swooped up right away, or have multiple offers. That's why Pool homes during summer times, go quick as well as single story homes. So just keep that in mind when your making your list. Also, remember, just because a home is not painted the color you like, or doesn't have the type of floors you like, all of that can be updated or upgraded down the road. Yes, it will cost more money, but if your able to get the floor plan you like, in the neighborhood you like, isn't it worth buying the home, and doing the work later on?
START YOUR RESEARCH ONLINE:
I know this seems pretty obvious, since most buyer's begin their home search online. But, it's important that you you are using an online search tool, that not only gives you access to available homes, but a site that can provide you information on neighborhood information, like schools, parks, but also allows you to do a map search, so you can search specific homes in a specific school district, or specific area of a neighborhood. This can come handy, if you're trying to avoid certain areas, ex. close to busy streets, or schools, or if you want to be in area that is close to a park or community clubhouse or pool. You also, want to make sure when you find the online search tool that you like, that it allows you to not only choose basic options like city, price, bedrooms and bathroom count, but allows you to do a more in depth search. Ex. Pool, 55+, fixer uppers, single story, views, etc.
Now you are probably wondering, why is this important in helping you find a home in a Seller's Market? It's simple, the more research your able to do on a specific neighborhood or town you want to live in, it makes it easier for your Real estate Agent/Broker to zone in that specific area, and find the home that you want right away. Because, in a Seller's market, time is of the essence, you don't have as much time as during a Buyer's market, to look at several properties first and then make an offer. Most times, if you see a home that you like that meets the majority of your wish list, the time to act is NOW! So if you already did your due diligence upfront, you can be confident in putting in an offer, and beat other offers before they come in.
SPEAK TO YOUR CPA/ACCOUNTANT:
I know you're probably wondering, CPA? I'm buying a home, not filing my taxes. But, don't you think if you are looking to buy a home, that you know if you possibly qualify or if it makes sense to buy a home. Now, I don't suggest you ask your CPA if you can qualify to buy a home, we will leave that to your loan officer. What I do want you to do is, when you know you are planning to buy a home in the next 3-6 months, or even in the next year. That you schedule an appointment to speak to your CPA or tax guy/girl and let them know you are planning to buy a home. Because, they will be able to tell you some of the tax benefits of owning a home, and things you will now be able to write off. But, more importantly, if you are Self-employed or have been writing off everything in the past, guest what, this may and will affect how much you qualify for. So I recommend you have a discussion with them, so they can coordinate with your lender/loan officer, so they know when it's time to file your taxes, or maybe you may need to amend your previous year's taxes, to qualify for a higher amount. Also, if you haven't filed your taxes, wouldn't it be a good idea to know how much refund you will get? Which can also help out with down payment or closing costs on a new home,when it's time to purchase.
TALK TO YOUR BANK/LENDER:
At this point, since you're already talking to your CPA, I guess it makes sense to be talking to a loan officer as well to get pre-qualified. I highly recommend you work with a Direct lender as opposed to a mortgage broker or bank. Not to say that they aren't reputable, or will be able to close your loan. But, when you deal with a mortgage broker, they still have to find a direct lender or bank to do the loan for you, so it makes sense to go directly to the lender that will be providing the financing, and not with a mortgage broker. Also, most of the time, a listing agent will prefer a pre-approval letter from a Direct lender or bank versus one coming form a Mortgage broker. You will also want to make sure that you find a lender that close in less 30 days, regardless the type of financing you are attaining. In a seller's market, a seller wants the most solid offer, and will most often choose a buyer, based on their type of financing, as well as how quickly they can close on their loan. I know you're probably saying, I'm already pre-approved with my local bank or credit union, will this work? Most of times, I will say YES, but when you're dealing with buying a home in a Seller's market, keep in mind, the listing agent may or has experienced in the past with previous banks, and lots of times, the bigger banks, may not have left a favorable taste in the Agents mouth. Keep in mind, most of these banks, don't just do mortgage loans, they also have different divisions in their banking industry, which means, they might not close in 30 days or less, or may take longer, than a lender who just focuses on doing Mortgage loans.
Another thing to consider as well when dealing with the loan pre-approval process, that you know the lenders/bank closing costs upfront. Because, lots of time during a competitive market or hot property, regardless if it's a seller's or buyer's market, 9x out of 10, the seller will not offer any closing costs concessions. Which means you will have to cover all the loan costs as well as your down payment. So if you speak to your lender, make sure they give you an estimate upfront, also find out if they are able to give you a rebate or credit at closing to cover some of your closing costs. Now, when you are speaking to your loan officer, make sure they can provide you a complete DU approval, as opposed to just a pre-aprpoval letter. A DU or Desktop Underwriter approval, is a more solid approval, since that means, the lender has already reviewed not only your credit, but have reviewed your income documentation as well, and are pretty confident that they can get you approved for the loan you are qualifying for. Lots of times, during a Seller's market, most seller's will request this or will have you cross qualify with their preferred lender. So if you have this upfront for the seller and listing agent, then you will have a higher probably of your offer being strongly considered over one that just has a basic Pre-qualification letter.
If you need a list of my preferred lenders, feel free to email me at [email protected]
WRITE A LETTER TO SELLER
I can't tell you how important this is. No matter what market you are in, I highly recommend my buyer's to write a letter to the Seller. You will be surprised that seller's do read these letters, and often this letter could be the difference in getting your offer accepted vs. another offer. So what should you write on this letter? Don't worry if you weren't an A student in your English class during High School, the seller will not be grading you on your spelling or punctuation. (Unless the seller is an English teacher) What they will be grading you on is on your authenticity and honesty. So if you're a military family and you know the seller comes from a military family as well, you want to make sure to include that. If you have kids, it's good to mention how buying this home, will offer your kids a great opportunity to be at the school district and grow up in a great neighborhood. Also, if there are certain parts of the home, that you fell in love with during your tour, make sure to include that in your letter. Ex. I immediately fell in love with your hardwood floors and the open floor plan of the home. The granite countertops and stainless steel appliances, will make cooking for my family less of a chore. Whatever you write, keep in mind, there is no right or wrong, you know why you are buying the home and why you fell in love with it. So it's time to write your Home Love Letter to the seller. Just keep it short and sweet. No need to write a novel or a blog like this.
HIRE MENDOZA REALTY GROUP
Now my last and final tip, is the most important one of all. And that is, to hire Mendoza Realty Group to help you with the home buying process. No matter, if it's a Seller's Market or Buyer's Market, majority of the time, the main reason a Buyer's offer is accepted vs. another competing offer is the Selling Agent representing the Buyer. Not only will your Agent especially if you hire ME, be able to help you navigate to the home buying process like a seasoned pro, but when you hire Mendoza Realty Group, I will be able to connect you to my team of local Business Owners, from CPA/Accountant, Lender, Home inspector, Insurance broker, House cleaner, contractors, etc., that will help you in the home buying process, but can also help you after you purchase your home. Also, my experience of 13+ years in the Mortgage industry as well as experience in the home buying process as an investor myself, and my positive relationships with other Real estate professionals and business owners in the community, gives me the edge during the negotiation process. Unlike other Agents or companies out there, when you hire Me, you will have complete access to me throughout the home buying process. You will have access to my network of business professionals, but more important you will have access to my expertise. Because, during any market, the difference in buying a home and not buying one you want comes down to who you hire. So call me today 951-319-2218 for any real estate questions you may have, or comments on this blog.
Let me help you "Make Realty a Reality." - AVM
Author: ANTONIO MENDOZA
April 4th 2017
About ANTONIO: I have been in the real estate services business in the Murrieta, Temecula, Menifee, Lake Elsinore, ...