Everyone loves low rates, especially if you are looking to buy a home. It’s also a great thing that our economy is doing so well that the unemployment rate is really low – 3.6%; With so many people having a job and interest rates as low as they are, that means there are more people who can qualify to buy a home. The problem is that inventory is already low and with more people being able to qualify, this is a recipe for more frustrations for more people as buyers will likely often be involved in multiple offer situations. While this is great for sellers helping to push home prices even higher and basically ensure that they will get the highest price for their home at the time of sale, it’s obviously not great for buyers, at least those whose offers are not accepted. Losing out on several homes to what sellers perceive as better offers means a lot of time wasted and that they will wind up paying more for a similar home as time passes until they have the winning bid with homes having appreciated during that time. Some buyers may drop out of the market altogether and delay their purchase for a year or so, practically guaranteeing they will pay 4% or more than they would have if they had been able to buy a home when they first set out on their journey.
What’s the solution?
First of all, it’s important to have a great Realtor representing you who can provide you with good advice as to the reasonable value of the home you are interested in along with strategies to help get your offer accepted. I’ve spoken with lots of Realtors and have seen a number of buyers make low-ball offers and the Realtors’ advice along with the results I’ve seen on the low-ball offers is they will absolutely not work in a market where inventory is tight – make a legitimate offer or don’t bother wasting the time of the Realtors and seller. Having a strong pre-approval is an absolute must. Being flexible with the seller can also go a long way – find out if the seller has any special needs that you could accommodate like needing to stay in their home for a month or two while waiting to close on their new home; even if the seller doesn’t have any special needs, the fact that you thought to ask will earn bonus points. Submit a letter with your offer with a compelling story as to why you want/need the home (it’s in the school district you want to be in, close to work, near friends, whatever). Having a loan officer who is willing to call the listing agent to instill confidence in your ability to close on the home and keep them in the loop every time a milestone is reached is a plus as well. Thinking outside the box could be helpful, either with a home that is on the market or having your agent approach a homeowner in the neighborhood you are interested in to see if they would be willing to sell. With the proper information, a homeowner might decide it’s good time to sell and buy their dream home. In this situation, your offer would be the only offer. Another thing to consider is making your move before the busiest time of the year is upon us…the late spring / summer home-buying season. Most people with kids don’t want to have to worry about moving until their kids are out of school so if you can handle that challenge (or maybe you don’t have kids so it’s not an issue), buying in the winter / early spring can give you an edge.
Rates are low right now but with the stock market doing so well, the only thing keeping rates where they are is the unknown of the coronavirus (or whatever uncertainties there may be when you are reading this). History has shown that when that goes away, rates will go up. As jobs come back and the unemployment rate gets back to around 4%, rates are most likely going to move higher. The sooner you get pre-approved and start looking for a home, the more likely you are to be able to lock in a low rate and a (relatively) low price without the hassle of dealing with multiple offer situations. I know some great Realtors who will represent you well – contact me and I’d be happy to make a referral –or 801-893-1737.