6 Tips for Buying an Affordable Home in the Current Hot Market | Ezine Daddy

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The COVID-19 pandemic has sparked a real estate market frenzy that will continue into 2022. You plan to brave the chaos and try to buy a home this year, but you know it probably won’t be easy.

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There’s some good news — the median home selling price is expected to rise 2.9% in 2022, which is much slower than the 12% realized in 2021, according to Realtor.com. Inventories are also expected to rise by an average of 0.3%, a notable change from negative 18% in 2021.

Are you ready to start your search? Here’s some advice to help you stay calm, competitive, and focused throughout the buying process.

1. Get pre-approval before looking for an apartment

When you start looking for a home, the first thing you should do is get a mortgage pre-approved, said Bill Gassett, a real estate agent with Maximum Real Estate Exposure of Hopkinton, Massachusetts.

“The pre-approval process gives each seller confidence that they can complete the purchase and allows them to know their budget,” he said.

Also, he recommended checking your credit history to make sure there are no mistakes.

“An error on the credit report can significantly affect your score,” he said. “It could mean the difference between a cheaper interest rate.”

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2. Shop under your budget

In theory, it makes sense to look for homes in your price range, but that’s not the best strategy in a crowded market.

Glen Pizzolorusso, a licensed associate real estate agent at Compass in Fairfield County, Connecticut, recommended buying 20% ​​below your pre-approved amount.

“Most properties sell for above list price, so you want buying power when you’re bidding,” he said.

3. Don’t dally on your dream home

Buying a home is probably the biggest purchase you will ever make, so it makes sense to think long and hard about it. However, in this market you shouldn’t think too long about it.

In 2020, homes in the US were on the market an average of 25 days, according to Zillow. However, some cities had much faster sell times, including Columbus, Ohio, at eight days and Denver at nine days.

While you shouldn’t wait to make an offer on a home, you can search for properties that have been on the market for a while to save money. This is because home values ​​tend to decline the longer a home stays on the market, said Ron Wysocarski, a real estate agent based in Port Orange, Fla.

He recommended working with your real estate agent to create a list of homes you like that have been on the market more than 40 days but less than 90 days.

“You can find all the good houses on this list and the price would certainly be very low too,” he said.

4. Improve your earned money

If you’re unfamiliar with the term, buyers are usually required to pay a deposit at the start of the escrow process – ie a good faith deposit – to show the seller they are serious about doing a deal. If the escrow is closed, the money will either count towards your deposit or closing costs, or you can choose to get the money back.

In most markets, wages average 1% to 3% of the home purchase price, according to Chase. However, when multiple buyers are interested in a home, it is not uncommon for the seller to ask for a good faith deposit of up to 10% of the purchase price.

Of course, you can also take it upon yourself to offer more money than necessary to make your offer stand out to the seller. If you don’t currently have enough money to do this, you should pause your search until you’ve saved enough to put this strategy into action.

5. Make your best offer first

As of February 2022, there were an average of nearly five listings for every home sold in the United States, according to the National Association of REALTORS.

Therefore, Lambros Demos, a real estate agent at Greater Toronto-based Royal LePage Realty Plus, advised keeping your listing clean, strong, and simple.

“When sellers have a range of offers to choose from, they don’t want to deal with contingencies or side issues,” he said. “Also go strong with your best price as there may not be a chance to improve.”

He said that’s another reason it’s important to get pre-approval.

“Your chances of success are greatly reduced if you have a funding contingency,” he said.

Vicky Noufal, owner of the Platinum Group real estate team at Pearson Smith Realty, based in Leesburg, Virginia, suggested another way to differentiate and recommended offering the seller flexibility.

“For example, if a seller wants to close the deal quickly and you’re fine with that, then you’re automatically put on the seller’s preference list,” she said. “You can then even negotiate the price based on the flexibility you offer.”

6. Expect to make multiple offers

According to Opendoor, in 2021 more than half — 56% — of first-time home buyers made five or more offers before buying their current home. Even more frustrating, 27% made 10 or more offers.

So it’s important to start the process hoping that you get the first house you bid on, but recognizing that this may not be realistic. Managing your expectations from the start will help you not get too discouraged if you lose some properties before finding the right one.

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