The housing market has gone through many changes as a result of the pandemic and its economic consequences. Seemingly gone are the days when home prices were reasonable and buyers had the luxury of taking their time to really weigh the pros and cons of a property and linger with their offer-making efforts.
These days you may be hearing news that home prices continue to skyrocket, inventory is low, most homes sell within a few days, real estate agents are bringing buyers multiple offers– many over asking price with sizable cash down payments, and many contracts are forgoing home inspections. It’s a wild time to be in the market to purchase a home.
It may feel incredibly unnerving to enter into this housing market, but many military-connected families have no choice. Whether you are looking to retire and settle in your forever location or are simply PCSing and find that the rental market is even more sparse than the buying market, below are five tips to get your offer accepted in a competitive market.
1. Find an Agent
If there was ever a time to make sure you have a trained and licensed professional in your corner, it is now. A real estate agent will be able to help you with understanding your options (both with the home itself and the financial aspects) as well as serve as an advocate for your best interests when it’s time to make an offer and get it accepted. Their professional expertise and networking connections may even give you an edge for finding homes that haven’t even hit the MLS yet.
2. Know the Market
A vital aspect of getting an offer accepted quickly is to have a very, very clear picture of the current local market in which you are buying. Details like the average days on market, median sales prices, average days to close, and even the going rate and timeline for home appraisals are essential facts to know. A real estate agent will usually have this kind of data at his/her fingertips and will help you to hone your search for your perfect home.
3. Know What You Can Afford
Browsing and doing preliminary research on your next home doesn’t cost a thing. However, before you begin any serious home shopping, it is very important to get an accurate accounting of your entire financial picture.
For example, if homes in your area are selling over asking price, are you able to qualify for a loan that exceeds the home’s appraised value? If you happen to max out your mortgage loan amount approval, do you have any cash or liquid financial resources to make up the difference? Will the home need any immediate repairs or expensive updates? How will you cover these costs? There is nothing worse than falling madly in love with a home only to get down to the wire and realize that you don’t have the means to adequately cover the total cost of the home.
4. Get Pre Approved
Before you can truly get into the home-buying mode, you should get pre-approved and pre-qualified for a home purchase. By working closely with a mortgage loan specialist you can better understand all of the viable loan product options, get a grasp on current interest rate trends, and have your pre-approval ready to go when it’s time to submit your offer. Most pre-approvals last anywhere from 60-90 days. You will typically need to have access to income and employment documents like W-2s, 1099s, and tax returns, as well as bank, retirement, and brokerage account statements, and any monthly debt payments. Military members may also need proof of orders and a current copy of a leave and earnings statement (LES).
One thing to keep in mind in the current market is that when multiple offers come in on a home, often the time to close (TTC) can factor into a seller’s willingness to accept the offer. Certain loan products like an FHA or VA loan can often take longer to close than a conventional loan.
5. Act Fast
To use a pun, there are a lot of “moving” pieces and parts to buying a home, especially in a competitive market. It can take a fair amount of legwork to get an agent, to do your homework on understanding the market (whether in person or online), to run your financial numbers, and to get all of your personal documents together to get loan approval.
However, by putting forth the extra effort on these fronts, it will be much more likely that when you find the perfect home (or the perfect home finds you), you’ll be able to act quickly with your transaction. Your real estate agent will be able to submit competitive offers on your behalf and often, having done all of these preliminary preparations, these may just be the advantage that sets you apart from other prospective buyers.