Now that the real estate market is transitioning with softening sales and rising interest rates, it is important to be in the know as a home buyer. Here's how to prepare yourself for the ride:
Align with an Agent
Find a real estate agent who is local, knowledgeable and experienced. A good real estate agent should provide you with exceptional service and have your best interests at heart. As a buyer in a transitioning market, you have more to prepare for. A great place to find an agent is through a personal referral of friends and family or one of the agent matching sites such as upnest.com.
The housing market continues to display high, premium home prices. Home values are not going down anytime soon however inventory of homes available for sale is increasing. Even so, there are still many home buyers out there. It is important to keep this in mind as you navigate the home buying process.
Prepare with a Preapproval
First and foremost, you should speak to a mortgage lender and obtain a preapproval letter. Sellers will still want to be sure you are financially qualified to purchase their home before they entertain an offer from you.
It is no secret that mortgage interest rates are rising. According to freddiemac.com on September 15, 2022, "The mortgage rates continued to rise alongside hotter-than-expected inflation numbers this week, exceeding six percent for the first time since late 2008." Think about that for a moment. The rates have doubled since they were at three percent. This is taking some buyers out of the market to purchase a home. This is primarily affecting first-time homebuyers. Be sure you still qualify for a home at the new, higher rates. You may have to be prepared and open to exploring options that you have not considered in a home including a lower priced home.
Open to Options
You may have to expand your search to areas you previously ruled out. You may not be able to purchase as large of a house, or as many bedrooms or bathrooms. Some buyers who were hoping for a single-family home may have to be open to attached housing such as a duplex, condominium or townhome.
Sales are softening and the market is balancing for buyers and sellers. Many sellers are not able to list their homes as high anymore so buyers may have a little more negotiating ability now. Be sure your agent is on your side and working hard for you, securing the most house for the best price possible.
Comparative Price Analysis
Ask your real estate agent to prepare a comparative price analysis for any homes you are considering putting offers in on. You want to be sure you pay the right price that aligns with today's home values. Your agent will compare similar homes in close proximity to the ones you are considering. They should take into consideration the square footage, number or bedrooms and bathrooms, number of other rooms, amenities, updates and upgrades.
Importance of an Inspection
Do not, under any circumstances, waive a home inspection. Many buyers have done that over the past couple years when the market was a hot seller's market. If defects or safety issues are found in the home you are looking to purchase, ask the seller to fix them. Buyers have a little more leverage now.
If you are a buyer who waited until now in this transitioning market, you may find yourself in a better position than previously. Be prepared and take advantage of what this changing market does for you. Happy house hunting!