While real estate has been a hot market year-round lately, things really heat up when home buying season rolls around. Technically, home buying season comes twice a year, both in the spring and early fall months, with the former being the most popular time to buy and sell.
If you’re looking to purchase a home in the coming months, here’s what you need to do to prepare for the home buying season.
Some of the most recent forecasts already project that home values will increase by as much as 13.5% by the middle of this year and end the year 10.5% up from where they are now. These numbers remind buyers of one crucial fact: the real estate market is hotter than ever, and you must act accordingly.
A “hot” market is defined by higher list prices, more buyers, and fewer listings. With that said, you’ll generally notice an influx of homes going up for sale as home buying season begins, and that’s your chance to pounce. Of course, you don’t want to make a rash decision, but you do have to act quickly, so how do you come to the right choice? Take our advice to avoid common hurdles and mistakes.
Buyers simply don’t have time to meander through the home search this season. You’re going to feel some time pressure and a sense of urgency, and those things are very real. Your best bet is to prepare yourself for the home buying process before you start your search, which means:
- Getting yourself pre-approved, not just pre-qualified, for a specific loan amount.
- Laying out your budget, knowing its absolute top-end that you can not exceed.
- Understanding the closing process and timeline to expect once an offer is accepted.
- Breaking down your “must-haves” and “wants” into separate lists.
This home buying season is going to move fast, and that can create a thrilling experience for home buyers as long as they’ve done this essential prep work.
Having your lists that define your must-haves and wants is essential to informing your buying decision and enabling you to act quickly in a fast-moving market. These lists help you separate essential needs from the things that you would love to have but can ultimately live without (or add/change later on).
When looking at homes, you should see past paint colors and even flooring, cabinetry, and other design elements. These things can be changed over time. Your primary focus should be the size of the lot, the size of the home, and the layout. These are the things you can’t change, at least not without major renovation, and they should hold much more weight in the decision-making process compared to aesthetic elements.
Since you need to move quickly, getting into the right mindset won’t just help you identify homes that do fit your needs quickly, but it will also help you dismiss homes that don’t just as fast. Don’t waste your time touring or making offers on homes you don’t want.
Depending on where you live, homes may be staying on the market for a few days or a few weeks. During that time, sellers may be entertaining multiple offers. To make sure that you have the best chance of getting your offer accepted, you need to understand what goes into crafting a compelling offer.
Contingencies help protect your interests as a buyer. For instance, most buyers make their offer “contingent upon financing,” meaning they will not be required to move forward with the purchase in the event they can’t get financing for it. Even if you’re pre-approved, this is a wise contingency to have as things can change quickly if you lose a job, have a major personal expense come up, or the bank simply decides not to fund the house for a myriad of reasons.
Another wise addition is “contingent upon inspection,” meaning you will order a home inspection and you can withdraw your offer based on the inspector’s findings. You could also add a long list of other contingencies, but in doing so, you make your offer less appealing. You have to determine where your comfort levels lie while keeping your own interests in mind and knowing what to leave out of your offer to make it more appealing.
Sellers know that contingencies delay the closing process, so an offer with fewer contingencies will be more appealing to them.
Looking to bring attention to your offer? In most hot markets, the earnest money is a must. This is a sum of money, usually $1,000 or 1-3% of the sale, that you include when you submit your offer. In most cases, you’ll get the earnest money back if the offer is rejected. If the offer is accepted, the earnest money is typically applied toward the purchase as part of your down payment.
In any case, getting your earnest money quickly to the seller helps show that you’re serious. You’ll want to ask your agent about the contract and local laws pertaining to earnest money so you know when and if you’ll get that money back.
If your offer is rejected, it may take up to a week to see your earnest money returned to your bank account. So, make sure you have enough money set aside so you can make a new offer on another home in the meantime. Otherwise, a rejected offer may hold up your home buying process.
It can be quite intense when the seller comes back with a counteroffer or if you hear that another buyer is actively bidding during negotiations. However, you should be mindful of your emotions and ensure that they don’t drive up the price.
In a hot market, walking into every deal with your numbers in mind is essential. These numbers will make sure you don’t bid out of your budget and, more specifically, will enable you to look at the property for what it is and draw the line where it’s comfortable for you. Keep these numbers written down and in front of you throughout the negotiation process so you don’t regret your decision.
Your real estate agent will play an essential role in keeping you “grounded” as you endure the excitement that is making an offer and bidding on what could potentially be your new home. Make sure you choose that agent wisely!
Whether you’re a first-time home buyer or simply looking to get into a new property, LemonBrew knows that having the right agent by your side is crucial. Use LemonBrew to get matched with the perfect local expert to guide you in your home buying journey and learn about LemonBrew’s mortgage services. Get started on your journey today!