3 Steps to Buying a Home in a Hot Market
The million-dollar question these days is: how in the heck do you buy a house in a hot seller’s market? Admittedly, the obstacles appear daunting. In many places, and particularly here in the Fox Valley, we sit stoutly in a seller’s market. Prices are rising, interest rates are lowering, and few homes are being built. All of this brings us to the most basic tenant of economics: supply and demand. Simply put, there is a growing demand for homes and a limited supply.
(Update 1/20/22: Prices are expected to rise at a typical annual rate rather than the wild jump in prices during 2020 and 2021. Interest rates are expected to remain relatively low, but to slowly begin their increase. Demand for housing still vastly outmatches the supply, which means we will likely continue to see competition over listings. Source: time.com)
In conditions such as these, how are you going to buy the house of your dreams?
The answer lies in your preparation. By following these three steps, you will have a strategic and organized approach to the home buying process, which gives you a big leg up in the competition. It’s as simple as 1, 2, 3.
Step #1: Write Out A ‘Needs vs. Wants’ List
You want the dream house, and I’m with ya. However, when forced to compete so fiercely with other buyers, you need to get crystal clear on your must-haves. Streamline your vision. Narrow in on the things you need MOST in a home, and let the rest be peripheral.
You want your list to be so clear, that you know upon entry that if a house is a good candidate. The goal is to act quickly and write an offer on the spot, if necessary.
Want some help with your Needs vs. Wants list? Grab a copy of my Workbook for Buyers in a Hot Market. It’s free, it’s fill-in-the-blank, and it’s full of crucial information from local experts!
Step #2: Rally Your Team of Professionals
This isn’t just a shameless plug for my Realtor services. You are going to want to assemble a team of real estate professionals if you are serious about beating the competition and buying a house. (See this post for more details).
First, team up with a Realtor. Ask around. A referral from someone you know and trust is gold. Other ways you can find a Realtor include: calling brokerages, googling, calling the number on for sale signs, etc. The Workbook for Buyers in a Hot Market offers a tree chart to help you select your Realtor.
Next, find your lender. A knowledgeable lender who communicates clearly with both you and your Realtor is ESSENTIAL. We are talking about a major purchase- one the biggest in your lifetime! You want your money to be handled expertly. Often, your Realtor can refer you to various lenders. You are welcome (and encouraged!) to call around and talk to a few different lenders. For more on this, the Workbook includes questions to ask each lender, as well as a checklist of financial documents you should have ready.
And keep in mind your order of operations: You will NEED to be pre-approved before writing an offer on a home. Sellers are far less likely to accept an offer from a buyer who has not been pre-approved. Don’t disqualify yourself before you’ve even had a chance!
Step #3: Be Fierce and Be Resilient
Don’t worry- we haven’t veered into life coaching. Well, maybe a little.
Once you and your Realtor begin touring homes together, you’re going to need to ask yourself one question: “How bad do you want it?” This is not the market for the timid or unsure. Those who go boldly after the house will get the house. Those who don’t, won’t.
Here’s where you can work closely with your Realtor to structure a strong offer. In many cases, you will need to eliminate as many contingencies as possible. (Don’t know what a contingency is? The Workbook provides a definition of the most common contingencies, as well as a decision tree to help you think through structuring your offer).
The hard truth is that even with a strong offer, you might not get the house. Every buyer is writing a strong offer. So that’s where your resiliency comes in. Mentally prepare yourself to write multiple offers. Write them quickly and frequently (although be aware of deadlines, so you don’t accidentally wind up with multiple accepted offers!) And if you don’t win a bid, brush it off and move on to the next.
So, here’s the point…
You CAN buy a house in a hot market! Get clear on what you need, build your team of experts, and stay the course. The right home is out there. Let’s go find it!
For more guidance on this topic, request your copy of The Workbook for Buyers in a Hot Market. Use it to build your strategy. Then, go get the dang house!