How to Buy a House When Inventory is Tight
April 7th, 2016
It’s not easy to buy a home in a great area. Everyone else does too and the inventory of available homes is usually low. The people who are there usually don’t want to leave. In some areas, even homes in not so great areas are hard to come by. With the increase in population here and the increase in rents causing people to evaluate a mortgage, it’s getting more difficult to buy a house. Don’t buy that RV yet. There are ways to get a good home for a good price.
Where to Start
Do yourself a favor and get pre-approved with a reputable loan officer. That way, you’ll know exactly how much you can afford when you place your offers, and you will be a stronger candidate since you already have financing.
Clean up your credit report and keep it clean. It’s checked during closing.
Make your best offer up front as you may not get another chance.
Keep your list of “must haves” and “nice to haves” up to date. You’ll see new things as you visit homes. That way, if a house hits all of your must-haves, you’ll be ready to make a good offer.
Be available for your real estate agent during negotiations. If the seller wants a fast answer and doesn’t get it, they may go to the next person on the list.
How Tight Is Inventory
Zillow is reporting that while home sales are currently flat, home values rose 4.3 percent year-over-year to a Zillow Home Value Index of $184,600.
Of course it depends upon where you live, and where you want to buy.
Strategies for Purchasing
Yahoo Finance recommends:
- If you are eager to buy and have found a home you really want, you make your offer as strong as possible. Your real estate agent should have some solid suggestions since they will know the area, and how much homes are selling for.
- If you have time to shop around, you can be a bit more aggressive with a lower offer.
- Another way to set yourself apart from other buyers' is to increase the amount of earnest money you put up with your offer. The money goes toward your down payment if your offer is accepted, and is returned to you if the seller declines your offer. You lose the money if you back out of the offer, so only do this on a home you really want.
- Consider the type of mortgage you will use. A conventional mortgage may be more attractive to the seller. The requirements for the condition of the property are often stricter for FHA. loans, so some sellers may be wary of being asked to make repairs before the sale can proceed.
- Limiting the number of contingencies in your offer regardless of whether they are related to financing, inspections or other conditions,will strengthen your offer.
Zillow offers some online tools to find listings that you may not have thought of.
- Look for all expired or withdrawn over a longer period. Perhaps a house was overpriced at the time but would be competitive now.
- Use Zillow’s Make Me Move (R) tool to find a home.
- Evaluate rentals. Perhaps someone moved due to work or school and didn’t have time to sell their home, so they’re renting it out.
- If a home is overpriced, see how long it’s been on the market. After six weeks, there may be more negotiating room.
- Have your real estate agent look for “pocket” listings. These are private listings because, for whatever reason, the owner doesn’t want it put officially on the market. Maybe they don’t want to keep the house clean and empty for viewings. Either way, it could give you an edge over people only looking at MLS.