New Year... NEW HOME
A New Year is often the perfect time to hit the reset button & start fresh. It’s also an excellent opportunity to start reaching towards new goals. If buying a home is something you’ve been thinking of, use the New Year to begin taking the steps towards homeownership.
How to make BUYING A HOME in 2021 a Resolution Easy to Keep
Track Your Spending
The first step to buying a home is to prepare financially. Track your spending to understand where and how you spend your money. This enables you to identify poor spending habits. There are several ways to monitor expenses, including an excel spreadsheet, money-monitoring apps, such as Mint, Wally, etc. Once you’ve tracked spending for a month or two, you can determine where (if necessary) you need to cut costs & how much you can set aside.
Save for a Down Payment
Create a budget that is realistic for your household. Ensure that you are saving money by allocating a specific amount to your savings each month. There are several small changes you can make that add up over time. Start by cutting unecessary living expenses, like streaming services or magazine subscriptions. Reduce your Starbucks runs to just one or two per week, and commit to dine in more, rather than purchasing takeout.
Check & Improve Your Credit Score
Your credit score is a significant factor that lenders use to determine your eligibility to obtain a mortgage. The better your credit score, the better your chances are to secure a home loan at a great rate and on good terms. Pay your bills, such as utility and cell phone, on time. Pay off any outstanding debt and keep credit card balances low. Only apply for new credit lines or consumer loans IF NEEDED & do not close unused credit cards.
Build Your Team
A team of professionals, including a local REALTOR®, loan officer, home inspector and escrow agent, will make the homebuying process so much easier. Start with a reputable real estate agent & REALTOR®. Not only will they assist in the home search, contracts & negotiations, they’ve likely already created teams of professionals who will look out for your best interests and who have the skills to ensure a smooth transaction.
The COVID-19 pandemic is impacting REALTORS® & their clients in unprecedented ways, and raises numerous unique and novel issues specific to the real estate industry. Rest assured that REALTORS® are taking necessary precautions to keep their clients safe.
Buying a Home in a "Sellers" Market
Buying in a seller’s market requires both patience and discipline. Buyers need to be patient and make offers on multiple properties, as they may lose out to competing bidders in a seller’s market. Buyers also need discipline in not becoming emotionally invested in a single property and chasing the price up in a bidding war.
Make Multiple Offers
Buyers should make multiple offers on different properties to increase their chances of getting an accepted offer on something. This saves the buyer time vs only bidding on one property at a time. In a seller’s market, this strategy is terrible as your one offer has a very high chance of being beaten by a competing bidder. As a result, keep your options open and make competitive offers on as many listings as you can!
Buyers should make their offers as competitive as possible in a seller’s market. They should eliminate unnecessary contingencies to compete against non-contingent and all cash offers. Contingencies that are superfluous or uncustomary for the region should absolutely be eliminated. Remember, an offer doesn’t really mean anything, even after it’s been accepted.
Be Flexible on Closing
Buyers should offer to be as flexible as possible on an anticipated closing date in a seller’s market. Being flexible could make or break your offer, and may tip a seller into choosing your offer over someone else’s. This is especially true if you find out that the seller has a special situation, such as needing to stay past closing before their new home purchase closes.
Go Easy On Inspections
It’s quite normal to get a home inspection if you are buying free-standing property such as a house or a townhome. However, you should know that in Utah, properties are typically sold in as is condition. This will be especially the case in a seller’s market. As a result, don’t be tempted to try to negotiate after inspection and ask the seller for a concession because you found a minor issue.
Don't Become Emotional
It’s very easy for buyers to become emotionally invested in a property that they like and have placed an offer on. If the seller negotiates and there is a chance that the buyer might get it, the buyer could easily drop focus on anything else and only concentrate on this one offer. This is a terrible idea as you have no assurance that your offer will ever progress to a signed contract.
The difference between a buyer’s and seller’s market is in who has more leverage and pricing power. In a seller’s market, inventory is scarce and sellers have the power and can demand premium pricing for their properties. In a buyer’s market, buyers themselves are scarce, and a bona fide buyer can pick and choose and often successfully bid below the listing price.
You can easily determine whether your local real estate market is a buyer’s market or a seller’s market by searching online, reading the news or asking a local real estate broker. For example, it’s very obvious to Utahn’s that we have been in a seller’s market throughout 2020 – and expect to continue going into 2021.
Your best tool when navigating a seller’s market is a trusted REALTOR®.