How to Buy a Home in a Hot Market
As my first post, I wanted to write about something that hits close to home – buying in a competitive market. When I bought my first house, I was in a multiple offer situation on the two places I put offers on. It can be a really daunting process but with these tips, you can feel confident that you’re ready to play in a hot housing market like Southern California.
1)Get a Mortgage Pre-Approval
This is by far the most important step in being competitive. Getting a mortgage pre-approval can take some time. You need to dig up a lot of financial history and it’s definitely tedious. However, knowing how much home you can buy and including a pre-approval letter in your offer makes you a very strong candidate in a multiple offer situation.
2)Your Pre-Approval Should be the Same Amount as Your Offer
This is good negotiating. Say you are pre-approved for $500,000 and the home you want is listed at $490,000. You can pay that much and a little more but you want to come in at $485,000. Ask your mortgage officer to write your pre-approval for $485,000 so you’re not showing all your cards at once. If you have to come back with a counter offer, just have the mortgage officer write you an updated pre-approval letter. It takes them a few minute but it puts you in a better bargaining position.
3)Have Your Proof of Funds Ready
The down-payment is definitely the key in a real estate transaction and the place a lot of people get hung up. A lot of sellers will want to see that you have the down-payment money you say you will have. Be ready to show bank statements or investment documents that prove you have that cash available. It’s ok to black out any personal information.
4)Be Prepared to Move Fast
According to the California Association of Realtors, 33% of buyers bought their first home without even looking at it. This was 41% for millennials. While this might not be an option for you, the point is that you need to be ready to move quickly. Have your Realtor send you daily updates if any new homes come on the market and be ready to drop everything for a showing or an open house. Inventory of homes for sale in California is at a very low level and you need to be ready to pounce on anything that comes up.
5)Meet with Your Realtor
Last but not least – have a sit down, phone call, or cup of coffee with your Realtor to make sure you are on the same page. The more your Realtor knows about your wants and needs, the better they can help you find your dream home. It might even be a good idea to walk through a draft of a purchase agreement (the form you use to make an offer) so your Realtor knows how what options you prefer when you’re ready to make an offer. This will save a lot of back and forth and help get you in before the competition.
Speaking of Realtors, if you’re looking in the San Diego market, I would love to help. Feel free to check out my website, call, text, or email me. I’m always available for my clients and I would love to see you all find your dream home!