When it comes to buying a house, you’re looking for the perfect place to call home. The problem is that in today’s market there just aren’t that many homes available to purchase. With inventory hovering near record lows and sky-high buyer demand, a multi-offer scenario is the new normal. I work with first-time home buyers everyday so I understand the stress and excitement that arises from the process. But for new clients who are looking to get their toes wet, I always advise them on the following 5 things:
1. Know the Numbers
This is crucial. It might sound simple, but having a complete understanding of your budget and how much you can afford is essential. That’s why you should connect with a lender to get pre-approved for a loan early in the homebuying process. Taking this step not only shows sellers that you’re a serious, qualified buyer but it gives you a competitive edge in a bidding war. It’s also beneficial to keep your expectations at bay. A lot of times new buyers see something they love but it falls above their budget, and they contemplate whether or not they should be the trigger. Your pre-approval is your boundary of logic.
2. Be Prepared to Move Quickly
Today’s market is dynamic and fast-paced. According to the Realtors Confidence Index from the National Association of Realtors (NAR), the average home is on the market for just 17 days – that means from start to finish, a house for sale in today’s climate is active for roughly 2.5 weeks. In the Bay Area, that’s much less. Any agent worth their salt will keep you on top of every possible opportunity so as soon as you find the right home, you need to be ready to draft and submit your best offer as quickly as possible.
3. Have Somebody in Your Corner
While homebuying may seem like a whirlwind process to you, we do this every day, and we know what works. That expertise can be used to give you a significant leg up on your competition. An agent can help you consider what levers you can pull that might be enticing to a seller, like:
– Offering flexible rent-back options to give the seller more time to move out
– Your ability to do a quick close
– An offer with fewer contingencies
It may seem simple, but catering to what a seller may need can make all the difference in a successful offer.
4. Make a Strong but Fair Offer
Let’s face it – we all love a good deal. In the past, offering at (or near) the asking price was enough to make your offer appealing to sellers. In today’s market, that’s often not the case. In such a competitive market, emotions and prices can run high. Use an agent as your trusted advisor to make a strong but fair offer based on market value, recent sales, and demand.
5. Be a Flexible Negotiator
If you followed tip #3, then we draft the offer with the seller’s needs in mind. With that being said, the seller may still counter with their own changes. Be prepared to amend your offer to include flexible move-in dates, a higher price, or minimal contingencies (conditions you set that the seller must meet for the purchase to be finalized). My advice is to approach the situation with some psychological know-how. Meet the seller in their corner to start. Let them know you’re for real and offer some wiggle room. This will set concrete boundaries during negotiations later on. Flexible but firm is the way to go.
Bottom Line
When it’s time to make an offer, it’s important to consider not just what you need, but what the seller may need too. The best deals happen when the seller and buyer meet in the middle to get what they both need. This is especially true for first-time buyers who might let emotions run higher than they need to. If you’re thinking about jumping in as a new homebuyer, let’s connect so we can put your best offer on the table.
