Buying a home for the first time can be challenging especially in a seller’s market. With a shortage of homes, low levels of new construction, as well as the Covid-19 pandemic, have kept many areas in America in a seller’s market including here in Atlanta. There are more buyers entering the market than there are homes for sale. Purchasing a home in this market takes a solid plan and just a bit of luck.
Think about the reasons why you want to purchase a house. Is it for more stability and the pride of ownership? Are you tired of renting? Are you looking to build wealth to pass on to your family? Or do you just need more space?
First, get pre-approved for a mortgage. This will allow you to find out how much a lender will loan you towards your first home purchase. You may think you are eligible for a certain amount but based on factors such as how much debt you have, monthly income and tenure at your current job, whether you are self-employed or not, you might qualify for less. Getting a pre-approval shows sellers that a lender has verified your finances and you are ready to move. This will make you a stronger buyer in the eyes of the seller over another buyer who is seeking financing for a mortgage loan but who has not been pre-approved.
Now that you know how much money you can borrow, it is time to create a housing budget. Your lender will tell you the minimum down payment requirements for the loan you desire and the loan you qualify for. Make a note of how much you will need and factor that into your current budget. Remember that the purchase price of the home is not the total new home expenses. You will also have to factor in other expenses such as closing costs, lender escrow requirements, inspections, appraisal fees, homeowner’s insurance, HOA dues, HOA capital contribution, HOA Management miscellaneous fees, pro-rated taxes, and maintenance costs. Even though you can afford a mortgage and down payment, that does not mean you are able to afford the long-term costs that will occur after you move in. When looking at homes in the current market it is a good idea to look at some homes below your spending limit. This way you can have some room to bid up on a home you really like without going over your budget.
Hire a realtor. Having a good buyer’s agent to help you navigate this market is crucial. Your buyer’s agent will consult with you to find out the type of home that you are looking for. After deciding on the type of home you would like to purchase, think about the specific home features you like and separate them into wants and needs. It is important to maintain flexibility even though you would like your purchase to match your wants and needs as closely as possible. Include the non-negotiable features such as size of the home and neighborhood in your needs list and smaller details like the tiles in the bathroom and cabinets in the kitchen on your wants list. Interior design can be changed so don’t let the carpet in a room deter you when all your other boxes have been checked. You agent will alert you as soon as listings that matches your criteria hits the market and make you aware of other properties that will be coming to market soon.
When you tour a home that you like you, be prepared to make an offer very quickly as we are still in a seller’s market, and you may be competing with other offers. Time is of the essence.
Your buyer’s agent will also assist you in preparing an offer that stands out among the others, negotiate on your behalf, and guide you through the home buying process. You may interview a few agents to find the one who fits your needs the best.
so, remember to be flexible with your desires. Sometimes “good enough” is better than finding “the one.”
Once you have found a property that checks majority of your boxes, you will need to make a strong offer to compete with other interested buyers. Remember the pre-approval you got? This will put you at an advantage. Your agent can also find out if the seller wants to close quickly. If you’re ready to move, your agent will be able to help you get everything in place and this can help you move higher on the seller’s preferred buyers.
Due to low inventory, it may be a little harder to find a home right now. So, to be successful at finding a home and getting your offer accepted you will need to be patient. Don’t rush and make a bid on a home you don’t truly like because you are afraid of missing out or you will end up with a home you do not love and become unhappy with your purchase. Should you decide to wait and rent for a little, the pros are you could have some more time to set aside more money for a down payment, fine tune your wish list and work on your credit score. However, in today’s market where interest rates and prices keep increasing, the cons are you may not be able to save enough money in a short period of time, at the same rate, to compensate for the increase in prices and interest rates.
Buying a home in the current market will be a challenge but it is not impossible. To be successful you need to be prepared to move quickly and do not be afraid to compromise.