You’re aware, no doubt, that there is a shortage of listings right now and pretty strong competition to buy a home so you may be wondering if you should wait to buy a house.
The reason there’s more buyers is because interest rates are very low, historically low, giving buyers lots more purchasing power. but these interest rates aren’t going to remain this low forever. The mortgage bankers association predict an increase in 2022. so waiting till then will probably mean a higher house payment and something else this competition for homes is doing is driving up home prices.
So prices are going to be higher in the coming months. So waiting to buy will likely mean higher interest rate and higher home prices.
But those two things will also have a cooling effect on the market. So competition won’t be as strong among buyers. Right now, competition is fierce and buying is stressful. But in spite of that, it is a good time to buy.
The Process of Buying a Home
But you need to be prepared and armed with knowledge about the process and about the market. The process is the same as it’s always been, roughly six steps. #1 find a realtor, #2 – get pre approved with a lender, #3 go home shopping #4 – put an offer on a home – then home goes under contract and then everything’s finalized at the settlement table and the home becomes yours.
Where It’s Different
But the fourth step – putting an offer on a home – that’s where things are different in buying a home right now. And if you haven’t gotten far enough into the process where you submit an offer, you’ll be surprised at how competitive it is. If a home is in good shape and it’s price well, you’ll see multiple offers with the sales price very often ending up above what the home was listed for.
And that tends to make people wonder if they should wait to buy a house because it’s so different than what we’re all used to here in this part of the country. but if you can make the transition in expectations and be prepared to submit an offer that is in line with the current reality, then you’re likely looking at a lower monthly payment and a lower purchase price than you would be if buying a home in 2022 or 2023.
How To Buy In This Market
So here’s some things to do to get ready and tackle this market if you decide you want to be in on these low interest rates. first- stay on top of coming soon and new listings and be prepared to preview a home pretty quick and then be ready to put in an offer on a home you like because it very well may be on a market just a few days.
So have your a preapproval letter ready to go. and when you find a home you like, consider including an escalation clause in your offer as well as some other sweeteners that will make your offerr stand out.
And an escalation clause just states that you’ll go x amount of dollars above any other offer up to a certain point. so, other sweeteners to make your offer standout could include offering to pay part of the broker’s fee.
We just closed a deal where the buyer offered that and got the house because of it. and what is becoming more common is buyers doing “as is” home inspections meaning the home inspection is for information purposes only, no repairs will be requested, but if the buyer doesn’t like what they see, they can avoid the contract based on the home inspection.
In a lot of cases right now, buyers are fore going home inspections altogether, although that’s not something that we advise. another thing buyers are coming in with is to offer to pay the difference if the home doesn’t appraise for their offer. and if you are a cash buyer, that will very likely put you ahead of the pack, if all those things are fairly equal.
So bottom line, buying a home is not as easy as it used to be, and buyers need to be prepared to be in a competitive situation. I think it’s a good idea to hang in there. I know it’s very stressful, especially if you put in three offers and have not a secured a contract on a home, but waiting will likely mean higher interest rates and higher prices.
Okay, those are my thoughts on the current housing market and i’m here. if you have any questions about it, you can call or text 304 -264-2828. I did a video on escalation clauses, which I think it’s very good and it’s good to understand escalation clauses because many offers contain them right now. Here’s a link to that video: https://www.youtube.com/watch?v=FLejGesH7Hw
And be sure to let us know if you have any questions. 304-264-2828