Buying a house in today’s market-a sellers market-is not easy and can often be stressful. The reason it can be so hard to try and buy in today’s market is because for the most part there just aren’t enough houses for sale. Here are a few tips for buying a home in a sellers market.
A lack of homes for sale in many parts of the country is making house hunting a challenge this spring, especially for first-time buyers.
Tight housing inventories have pushed up home prices in many metropolitan markets, creating bidding wars for some properties, real estate experts say.
Real estate is highly local, of course, and trends range by city and by neighborhood. But nationally, home prices in March were up nearly 7 percent from a year ago, and up 2 percent from February, according to thelatest data from CoreLogic.
The dearth of inventory is particularly acute for entry-level homes, said Svenja Gudell, the chief economist at the real estate website Zillow. “First-time homebuyers are having a tough time,” she said, “because so few homes are available.”
Nationally, 6 percent fewer homes are on the market compared with a year ago, and there are 10 percent fewer entry-level homes, according to March data from Zillow. Some markets are particularly tight: Portland, Ore., has 40 percent fewer entry-level homes, and Charlotte, N.C., has 35 percent fewer.
The reasons for the tight inventory vary, Ms. Gudell said. In some areas, homeowners are still underwater — meaning they owe more than their home is worth — so they are unable or unwilling to sell until prices rise more and they gain equity.
In other markets, the lack of new home construction is contributing to the problem. Homeowners who want to sell their homes and trade up can’t find a suitable new home, so they stay put — keeping their property off the market.
The lack of homes on the market has also helped raise rents, so investors who bought single-family homes during the downturn are making good money renting them out and aren’t in a hurry to sell, said Greg Jaeger, president of USAA Residential Real Estate Services, a brokerage affiliated with USAA Bank.
Lee Ritchie, a real estate agent with Re/Max Metro Plus in Columbus, Ohio, said inventory in the city was generally low, especially in downtown neighborhoods where people can walk to parks and shops. “It’s multiple offers on every property,” she said. She said she spent a lot of time explaining to buyers that they should make their best offer right away, and move quickly if they see a home they like. “Sometimes,” she said in an email, “a buyer has to lose a home or two before they really comprehend how aggressive they need to be in order to win.”
Many markets are favorable for sellers. Kim Stone said she was thrilled to have several inquiries about her family’s two-bedroom, two-bath home, in a desirable neighborhood near San Antonio, within hours after it was listed in March. The house was made available on a Thursday, shown on Friday and went under contract that weekend to an all-cash buyer — for 10 percent above the asking price. She, her husband and their two children are now living in an apartment while their new home is under construction.
Buyers, though, may have to be patient. Kat Doucette, a real estate lawyer in San Antonio, said she and her husband searched for months before buying in an up-and-coming part of the city known as Southtown. Many properties were overpriced, she said, given the renovations needed. “I did a lot of research,” she said. The couple finally bought a home last August and are in the midst of adding a bathroom. Her advice? Know what you are looking for and be ready to pounce when you find it, but “don’t pay too much.”
Here are some questions and answers about buying a home this spring:
■ What can I do to prepare to buy a house in a tight market?
Get preapproved for a mortgage, so the seller knows you are serious, and make sure you have a preapproval letter, rather than one saying you are merely “prequalified,” said Tom Salomone, president of the National Association of Realtors. “There’s a big difference.” Prequalification may be based on verbal information given by the borrower, he said, while preapproval means the lender has run a credit check, verified your income and has authorized a loan for a specific amount of money.
■ Are there other ways, besides price, to make my offer attractive?
Putting down as large a deposit as possible shows you’re serious, Mr. Salomone said. And agreeing to requests that reduce hassles for the seller can help, too. For instance, if the seller asks to leave behind a backyard swing set, you may want to agree — even if your children are too old to play on it. “Let them leave it, and you can take care of it,” he said. “It may be advantageous.”
In areas with extremely low inventories, buyers may have to go further. Traditionally, a home inspection is done after an offer is made and accepted. Contracts typically contain language allowing the buyer to negotiate repairs if the inspection turns up problems. In some tight markets, like Seattle, buyers are having homes preinspected at their own cost, seeking to appeal to the seller by making an offer without a contingency clause, Ms. Gudell said. That can get expensive if shoppers end up making multiple offers; inspections can range from $150 for a basic walk-through to $800 or more for a detailed inspection.
■ What’s happening with home mortgage rates?
One bright spot for house hunters is that mortgage rates are remaining low. The average rate on a 30-year fixed mortgage was 3.61 percent for the week that ended May 5, according to Freddie Mac. Shoppers seeking home loans, however, should be prepared to provide detailed financial information because of tougher requirements since the financial crisis. “Much more documentation is needed,” Mr. Salomone said. To minimize delays, he said, have tax returns, pay stubs and W-2 forms on hand when you meet with your lender.
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