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Historic low interest rates that lasted through the end of 2021 made it very attractive for first time home buyers to finally go after their dream home. By now, you probably have heard that the pandemic wreaked havoc for first time home buyers due to the ongoing lack of inventory and the competitiveness of the market.
As of the end of February of 2022, property inventory levels in Connecticut continue to linger under 2 month supply. Interest rates have started to increase, but they still remain near historic lows. Don’t get discouraged, as having a realistic plan, and using a knowledgeable real estate professional can save you some time, money, and heartache.
Here are 6 tips that will help you get started:
1. Talk to a local lender
Before you start your home search, reach out to a local lender. With a quick phone call, and a short application, they can get you pre-approved and you will be able to figure out how much home you can afford.
What is the importance of using a local lender?
They now the area, and they can give you a competitive advantage once you find a home you would like to make an offer on. During the home buying process, timely responses from your lender are key to ensure a smooth transaction and a timely closing. In fact, this is so important that some sellers will not consider offers in which the buyer is not using a local lender.
2. Work with a local Realtor®
Having an agent to represent you during your purchase, will make all the difference in the world. A real estate agent will advise you on the process, how to make your offer stand out, they will prepare your offer and negotiate the best possible terms on your behalf.
3. Have your agent concentrate their search in the lower end of your budget.
Under the current market conditions, your Realtor® should concentrate their search in the lower end of your budget. This is important because most homes are selling under multiple offer conditions. If you concentrate your home search at the higher end of your budget, you will most likely find yourself in a situation in which you will not have a lot of room to make your offer more appealing to the seller.
4. Ask your agent to schedule showings as soon as a home hits the market.
A good agent, will keep an eye on new listings and reach out to you as soon as something that matches your criteria hits the market. It is essential for you ask your agent to schedule a showing immediately after a house becomes available to see. The longer you wait, the higher the chances that the seller is already considering other offers.
5. Make a competitive offer.
You never know when you are going to walk into a house and say “this is it”. I’m sure you’ve heard multiple times from other people that you will know you found the house of your dreams as soon as you walk in. In a lot of cases this is a reality, so do yourself a favor, and have your numbers lined up ahead of time. That way when you find the home of your dreams, you are prepared to ask your agent to get an offer ready right away.
Everyday we are seeing that winning bids include less contingencies, higher deposits, and a higher offer price. A good agent will walk you through all the the options you may have to make your offer standout from the crowd.
6. Don’t ask for closing costs.
If you can afford to pay for your closing costs, don’t ask the seller to pay for them as part of the conditions of your offer. This is so important that we’ve had clients win multiple offer situations because they didn’t ask for closing costs, even though their offer may not have been the highest. Not asking for closing costs, will probably give the seller the idea that you have more flexibility in your budget and price range, even though that may not necessarily the case. Again, winning a multiple offer situation is all about competitive advantage.
In real estate every buyer and seller have their own personal motivation and their very particular scenarios, you need to be as prepared as you can for all the challenges that can possibly come up during the home buying process.
According to economists, interest rates will continue to rise this year. If you are thinking about buying a home, the sooner you start your search and the sooner you can lock in your interest rate and avoid paying more for your dream home. Reach out to your local agent so they can properly advise you on your unique situation.
