How To Be a More Appealing Homebuyer
With home affordability at its highest in years buyers are flooding the housing market and in markets with low inventory levels, the competition is stiff. As home prices continue to recover and interest rates remain at near-record lows, some houses are receiving multiple offers and to win the bid, buyers need to stand out from the crowd. According to the National Association of Realtors, houses sold in 71 days in January, down from 99 days a year ago.
Since markets are moving fast, experts recommend buyers have their loan pre-approved and down payment ready before starting their search. Multiple bids are becoming the norm, so be ready to compete and do your homework to seal the deal. Be reasonable without being difficult because until an offer is signed, sealed and delivered, other buyers can bid on the property.
To help you become a homeowner in this competitive market, experts recommend the following tips for being the most attractive:
You have to plan four months before you’re going to buy, says Michael Corbett, Trulia’s real estate expert. Check your credit for accuracy and avoiding making any big purchases or taking on any big debt during this time [Debt] brings down your credit score and increases your debt-to-income [ratio] which are two critical things banks look at when qualifying and preapproving you for a loan, says Corbett.
If your debt-to-income ratio is too high, experts recommend paying down as much debt as you can to lower this ratio.
Set Your Home Price
Only look at homes that are comfortably in your price range. Less supply on the market increases the likelihood for multiple offers, and you won’t be able to compete if you are looking at home at the top end your what you can qualify to buy. Understand how much homes are selling at compared with their asking price and shop accordingly.
Know that Cash is King
The more cash you have, the more appealing you are as a buyer. Putting 20% or more down makes you look more financially stable and gives sellers comfort that you’ll qualify for a mortgage. Â Cash can cover a multitude of problems when you make an offer, whether it’s difficulty with the mortgage process or a lower-than-expected appraisal.
Get Preapproved before Your Search
Getting prequalified for a mortgage gives a ballpark for what you can afford to buy and will streamline your search process.If you’re financing your house with a mortgage, have a pre-approval letter with you and if you’re paying cash, have proof of funds that shows you’re good for it. Getting preapproved will also help you to compete with an all cash buyer, says Walter Molony, spokesperson for the National Association of Realtors.
Limit Your Contingencies
Experts suggest having as few contingencies as possible to be an alluring buyer. Certain contingencies based on your ability to get a mortgage, the appraisal and home inspection are standard, but piling on more could make the seller less inclined to work with your offer. Making your offer contingent on you selling your house first will make you a less appealing buyer. If you need to sell your house before buying a new one, then sell your home first and rent or move in with family or friends while you look for your new home.
Be Flexible with Closing Dates
Let the seller know that you would be flexible on the closing timeline. Find out when the seller would ideally like to close on the house and see if you can match it.