Despite higher interest rates, the current real estate market has a surplus of buyers, and even more are sitting on the fence waiting for interest rates to drop into the 5% range. To secure victory in this competitive real estate market, prospective buyers need a solid homebuying plan, a professional team, and clear priorities.
Create a winning homebuying plan
The saying “if you fail to plan, you plan to fail” holds particular significance when navigating the market for a new home. While online searches offer glimpses into available homes, they fall short of an action plan. A comprehensive homebuying plan involves:
Getting pre-qualified or pre-approved for a mortgage: It’s important to know a homebuying budget before you start touring homes. The best way to do that is to have your finances and credit reviewed by a loan officer and discuss which mortgage loan program best suits your needs. With a pre-approval letter, you can confidently make an offer in a competitive market.
Hiring a professional real estate agent who knows the neighborhoods where you want to buy a home. Professionals initiate conversations by prioritizing what’s most important to the buyer.
Determine what you want in your home: Thoroughly identifying must-haves, needs, and wants, provides a roadmap for the home search. This includes a detailed list encompassing everything from commute tolerance to specific home features.
Categorize your preferences into these sections:
- Must-Have: Non-negotiable items, such as a minimum number of bedrooms and bathrooms, commute or proximity to public transportation, or school district
- Need: A must-have that’s open to compromise, such as a large yard for the dog, but if there’s a dog-friendly park close by, a small backyard or courtyard will do.
- Want: Features that you would prefer but can live without for now. For example, a dated kitchen can be renovated later.
Manage your expectations
With preferences categorized, your real estate agent can focus on searching for suitable homes. Be realistic about what your homebuying budget can afford in your desired neighborhoods. Once you start house hunting, be prepared to review your lists. For example, if location is a must-have, you might be willing to compromise on a smaller or outdated home.
Make competitive offers
First-time homebuyers should be prepared to compete for an affordable starter home. This is when it pays to work with an experienced real estate agent to make competitive offers. In a multiple-offer situation, you might receive a blanket counteroffer requiring you to submit your highest and best offer. Consider these tips when making a counteroffer:
- Shop for homes below your maximum loan qualification to allow room for potential price increases.
- Determine with your loan officer and real estate agent whether you need to get pre-qualified or pre-approved. Loan pre-approval will require your lender to thoroughly review your credit and finances, but it will put you in a better position to submit a strong offer or counter offer.
- Discuss modifying or waiving contingencies with your real estate agent, considering factors like seller preferences and the financing contingency period. Avoid waiving your right to a home inspection, as this could be a very costly decision if a structural issue is later found with the home.
Your competitive edge
Now that you know how to create a competitive homebuying plan, you can finish your homebuying journey supported by a communicative, confident and experienced team to make informed decisions and submit a competitive offer to increase the chances of securing the desired home.
