We’re in a buyer-eat-buyer world where homeownership has outlasted sourdough baking and Tiger King.” Home buying is not as simple as it used to be.
It is becoming increasingly difficult for people to find a home because of stiff competition. WFH is still freeing a lot of Americans to move away from their offices, which is driving demand. Some are still looking for more space after living at home for two years (mostly). In 2020, the housing inventory fell to its lowest ever level. Home sales in 2021 reached the highest level in 15 years, further reducing inventory. Meanwhile, prices increased by about 20% compared to the previous year. The market is expected to remain competitive in 2022.
Is it possible to compete?
You can set yourself apart in several ways if you want to say “yes” to a new address.
- Money is the best way to convince them. Offering more than the asking price is not uncommon in a competitive market. If you need a mortgage, don’t go too high. Since lenders only lend you what the appraisal says the home is worth, anything more than that must be paid in cash. You might also be able to make a better sale if you put down a significant down payment (20% is often recommended).
- Pre-approval for a mortgage is very critical. By submitting an application beforehand, you can assure lenders that you’re responsible with your money (and will also be responsible with theirs). In addition to knowing how much you can afford, pre-approval communicates your seriousness to sellers.
- Hire a professional. It would be easier to become a homeowner if you worked with a real estate agent. You can also benefit from their expertise when it comes to preparing a competitive offer and successfully negotiating with a seller.
- Maintain flexibility. This could mean letting the sellers pick the closing date or extending their occupancy a month or two for free. Perhaps it’s giving up some “must-haves.” Hot markets restrict consumers’ choices.
Are there any other ways I can stand out?
You can earn brownie points by writing a letter. Using this method allows you to communicate directly with the seller and to express why you’re the best candidate for their home. Additionally, you can use it as an opportunity to provide more details about your employment and finances. This will enable them to feel more confident in your ability to deliver on your promises. However, don’t share too much information. The sale could be affected by discrimination if you disclose your race, religion, or family status.
In a competitive market, purchasing a home can seem like a long process. When you have the right team and money strategy, your dream home will be yours in no time.
Updated Feb. 4 with the most recent housing market data.
*This means a sponsored section.
If you buy anything from this article, The Money Skim may get something in return. If by any chance something’s out of stock, sorry, to be fair it was there (and all prices were accurate) when this article was published. Thanks.