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Hot Housing Market: Set Yourself Up for Success

Housing Market: Set Yourself Up for Success

Make sure you are fireproof before jumping into a hot market.

These days, it can be tough to find a new home that fits your needs and budget. This is because prices are up, there is not much inventory available, and mortgage rates are rising. That is why it is important to do your homework before you start looking for a new home. When you do start looking, you will have to move quickly so that you can place an offer on the house. This is because as interest rates continue to go up, more people are trying to lock them in. At the same time, the inventory of homes continues to decline.

Even in a "white-hot" market, where almost every house seems to sell instantly, it is possible to purchase a property. Here are some tips for buying a house in such a market.

Seller’s Market- prepare to pay more

There are many things you can do to make your offer more attractive to the seller. For example, you could send a personal letter explaining why you want to buy the home. You could also offer more money than the asking price.

When you make an offer, include contingencies which will allow you to back out of the deal if certain conditions are not met. This might include selling your current home, completing a satisfactory home inspection, or meeting certain other requirements.

Here are some tips for making your offers competitive:

  • Submit your preapproval letter and proof-of-funds documentation. Match your preapproval letter to your sales price, and date it the same day as your offer.
  • Delay buyer possession. Consider giving the seller extra time to move after closing. The seller may need the extra time to consider your offer.
  • Price: Do not offer list price. You may need to offer more than the amount they are asking for.

In a seller's market, it is important to act fast when you see a home you like. If the house is appealing to you, don't wait until it is convenient to see it. This means that you might have to miss work or school in order to get the property.

Learn the real estate lingo

Knowing and understanding the real estate language is going to be important in being successful and moving quickly. For example, earnest money is the deposit you put down on the house you want to buy. It shows that you are serious about the purchase. The money goes toward the down payment and closing costs. A contingency is a part of your contract that says you can back out if something happens. For example, if the appraisal price comes in lower than the sale price, or if there are issues during the home inspection, you can pull out of the deal. You can also try to negotiate with the seller instead of pulling out of the deal.

Know your financial health

Your credit score is important when you want to get a mortgage. The score decides what type of loan you will get and how much money you need for a down payment. You can check your credit score before applying for a mortgage. This will help you see if you need to make any changes so that your score is higher. You should also get a copy of your credit report to check for any mistakes in it. Your credit report can be checked for free, once every week from the three largest credit reporting companies in the United States. By knowing your credit score you can invest using OPM (Other People’s Money), a mortgage, credit cards, or peer-to-peer. There are so many ways to find capital and use creative financing to buy your property. Even if a mortgage lender approves you for a certain amount of money to spend on a house, which doesn't mean you have to spend that much. Look at your monthly expenses and figure out how much you can afford to pay each month. Do not forget about interest rates. If they continue to go up before you close on the home, your monthly mortgage payments will go up too. If possible, try to find a lower-priced option in another market. And most of all make sure to get pre-approval for a mortgage before you start looking and making offers in a hot market. Homes sell super-fast, and you don’t want to be left behind because you are waiting to be approved.

Expand your location

Since the supply of houses is down in a seller's market, you may not be able to find the house you are looking for in the area you want to live. It can help to broaden the area you're searching in so that there is more for you to choose from. This may cause you to have more expenses overall, such as gas for longer commutes to work, shopping, and amenities, but it increases your chances of success if you're willing to look and live in a larger geographical area.

You can negotiate. However, you will need to have different tactics in a seller’s market. Make sure to have these tools we have shared with you on your tool belt ready for action. Proper preparation is key! Making sure you have the tools and being prepared in anything you do leads you to success. We at Legacy Education strive to provide our students the superior education and prepping for your business. We look forward to collaborating with you in expanding your goals to the next level!

Areas of Review

Takeaway

Big picture takeaway points

  1. No matter the market, don’t overpay for an investment.
  2. If you can’t find what you're looking for expand your search.
  3. Learn the lingo so you know how to talk to brokers and agents.

Reflection

Self-reflection questions to think more about the content

  1. Am I well versed in the terms used in real estate?
  2. What’s my credit score?
  3. Do I know enough to give myself an exit strategy?

Legacy’s Building Wealth Club offers you the financial education needed to pursue your goals. Let our education and experience lead the way!

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