Home Buyers’ Guide To Surviving a Seller’s Market » Audio Archive » MoneyWise

Home Buyers’ Guide To Surviving a Seller’s Market

MoneyWise

Christian talk radio with Rob West

April 22, 2022

Sellers are loving the surge in home prices, but it’s quite a different story for folks trying to buy a home in this crazy real estate market. Today on MoneyWise, a few ideas to help homebuyers survive in a seller’s market. It’s hard to believe that home values soared nearly 20% in 2021! Houses stayed on the market for days, not weeks, and they often sold for more than the asking price. Usually, that kind of spike is short-lived and is often followed by a market crash as the bubble bursts. But analysts are predicting that’s very unlikely given our present circumstances. Those conditions are a continuing high demand for housing that far exceeds the available supply of homes. We learn in Economics 101 that when demand is high and supply is low, prices rise. So how can you best prepare to first, successfully purchase a home this year and second, keep it within your budget? BUYING IN A SELLER’S MARKET Start by not going it alone. This is not a D-I-Y market for buyers. Interview at least three real estate agents and pick the sharpest one. You want someone with a track record of helping folks buy homes in the neighborhood of your choice and who’ll stay on top of new listings. You or your agent may want to make a list of the other real estate agencies in your area and make frequent calls to them, checking to see if they’re working on potential houses that haven’t been entered into the Multiple Listing Service yet. You might be able to make an offer before a house hits the market. But be ready to make a quick decision. You also want to get pre-approved for a mortgage before you set foot in the first house on your list. That’ll give you a leg up over the competition that hasn’t bothered to look into financing. But understand that the lender will likely approve you for a bigger mortgage than you’ll be comfortable with. Work up an estimated budget that allows 25% or less of your take home pay for housing expenses. Also, you have to realize that in this market, buyers can’t be choosers. The goal is to find an affordable home that meets your needs, not your dream house. Be flexible with your must haves and be willing to make changes. Location is probably the most important thing to hold out for. You can finish that unfinished basement later. And due to the high demand for houses, there’s a construction boom going on right now. You might find more availability and better pricing in a new home, even though it probably means you’ll have to wait longer to move into your home. BIDDING FOR A HOUSE Don’t bother trying to lowball a seller in this market. With many homes selling above the asking price these days, making an offer below that won’t get you anywhere. To be competitive, you’ll have to come in very close to the asking price, if not a little above. Here again, your agent can help you come up with a realistic opening offer. You may find yourself in a bidding war where emotions can run high. You’ll need to keep your wits about you or you’ll find yourself with a fat mortgage payment and eating a lot of peanut butter. Know the absolute upper limit of what you can spend and have the discipline to stop there. And don’t try to put a lot of conditions on your offer. Sellers aren’t in the mood to throw in a major appliance or give you a new roof allowance if you feel the house might need one. You have to keep the seller’s interests in mind. For example, agree to a closing date of the seller’s choice, not yours. CONSIDER WAITING And one final thought: You might consider doing nothing. That means waiting until the market moderates somewhat. When inventory catches up with demand, you’ll have less competition. You definitely should wait if you haven’t saved up 20% for a down-payment yet. There’s no sense in adding the cost of private mortgage insurance to your mortgage payment which is likely to be high to begin with. PMI is required if you can’t put 20% down, and it could run as high as $70 a month for every $100, 000 you borrow. It only protects the lender in case you default. It has no value for you at all. So those are some tips for surviving a seller’s market. We hope you find them useful. If you’re looking to buy a house this summer let us know how it works out. On today’s program, Rob also answers listener questions: ●Will your heirs have to deal with probate upon your passing? ●What is the best way to invest $80, 000 to earn a good return but be able to access it within 5-10 years? ●When does it make sense for both spouses to invest for retirement? ●How do being a generous giver fit within being a good steward? RESOURCES MENTIONED ●Sound Mind Investing ●Find a Certified Kingdom Advisor

Loading the player...

You Might Also Like