While doing a little research, I came across a (financial guru) Dave Ramsey blog on buying a home in a seller’s market – which is what we are experiencing here in the Boise area right now. It reads as though it could have been written for our local buyers, so I thought I would share much of it here:
If you’re on the hunt for your next home, you’ve likely hit a few obstacles. Maybe every home you like is already under contract. Or you keep running into bidding wars and losing.
Whatever your trouble, one thing’s for sure: The prices keep going up. We’ve all seen the news stories about rising home prices all across the Treasure Valley.
Yep. It’s a hard-knock life for home buyers these days.
So we thought we’d share a bit of encouragement—and advice—from folks who survived the home-buying frenzy and lived to tell it.
Get a Financial Leg Up
In a seller’s market, cash is definitely king. Sarah M. just bought her first home with cash and admits it gave her an advantage over other buyers.
Of course, an all-cash offer may not be an option for you. If that’s the case, then do the next best thing: “Get pre-approved with a lender that offers legitimate, credit-underwritten pre-approvals,” Steve B. suggests.
Mortgage pre-approval goes further than prequalification because you submit all the required paperwork up front. The bank then verifies the amount you can afford to pay for your next home. It takes the guesswork out of your home search and shows sellers you can back your offer up with real money.
Steve says that puts you in a much more competitive position as a buyer. “You can close faster, with less loan-oriented stress,” he adds.
Don’t Let Impatience Wreck Your Budget
If one pain point topped the list, it was this: “Finding exactly what we wanted in our price range,” Salina R. says.
Kathy S. wrestled with the temptation to bite off a bigger chunk of mortgage debt just to land a home. She bid on a home that was $10,000 over budget and lost to another buyer. “We know it wasn’t meant to be,” she says.
As fate would have it, they found—and successfully offered on—a home that was $10,000 under their budget! “We just made our first house payment, and knowing it isn't a stretch to our pocketbook is a great feeling,” Kathy says.
Patience can be hard to come by when you feel pressure to beat buyers to the punch. But try not to get so carried away you forget the financial goals you’re working toward. Remember, Dave recommends keeping your mortgage payment to no more than 25% of your monthly take-home pay on a 15-year fixed-rate mortgage.
Keep Your Options Open
Dave always says if you keep doing the same thing you’ll keep getting the same results. So why not shake things up a bit?
If existing homes aren’t working out for you, give new construction a try! That’s what Debby G. did. “We were able to get into new construction for much cheaper with a one-year warranty and no worries of major system failures,” she says.
Derek D. kept running into roadblocks, so he adjusted his expectations. “We ran into our right place by accident by broadening our search,” he says.
Katie N. realized she would have to offer over asking price to get a home in her area. Sound familiar? Then limit your search to homes with a healthy margin between list price and your max budget. That way you can up the ante without breaking the bank. “We were blessed to get a good deal on a foreclosure,” Katie says.
Selling a Home? Prepare a Backup Plan
In many markets today, buyers with a home to sell are running into an interesting problem. “We close on our sale Monday,” Shea S. says. “However, we do not have a place to call our own yet.”
That’s why it’s smart to research temporary living options before listing your home. That way, if your home goes quickly, you’re not stuck with no place to land.
Here are a few ideas to consider:
- Rent your home back from your buyers until you find a new place.
- Move into an apartment or other short-term rental.
- Crash with family (and save extra money in the process!).
Moving twice may be no fun. But it’s better than rushing into a home purchase you (and your budget) will regret down the road.
Though it can be frustrating to be out-bid on homes, just know that you are not alone, and that by having a little patience and using some of the tips above, you will find your perfect home soon!
Zillow CEO On Housing: It's A Seller's Market | CNBC
We’d love to help if we can. Call Templeton Real Estate Group today – whether buying or selling. We offer free consultations and would be happy to talk with you about your wants and needs and offer strategies to achieve them – 208.473.2203.
By Bonnie Way Snider, Licensed Realtor® and Blogger