Home prices have been soaring across the country. According to the National Association of Realtors, the median existing-home price rose more than 17% from March 2020 to 2021. This reflects just how competitive the market has become for homebuyers. If you are looking to purchase a new home, you need a solid strategy that can put you in a more competitive position in today’s home buying market:
#1 – Get your financial house in order
Have a good handle on your current financial situation. If you are already a homeowner, understand the value your home will bring in today’s market and how much equity is available. Set aside enough funds to cover a down payment on a mortgage or other expenses related to moving. It makes sense to sit down with your financial advisor to be aware of your current financial capabilities to participate in today’s market.
#2 – Look to professionals
Seek out the guidance of a real estate professional. Find an agent through a referral from somebody you trust to identify a qualified agent. Don’t be afraid to interview more than one to find the right fit. Also talk to a lending institution to get pre-approved for a mortgage (if you require financing). This is especially important if you are a first-time homebuyer and want to reassure potential sellers of your creditworthiness.
#3 – Consider all your options
It is easy to get your heart set on a particular community or neighborhood as you search out homes, but you may need to expand your horizons. Draft a list of the priorities that help define your ideal home and setting to help narrow down your choices. It can open doors to other areas that may actually meet your needs. Be careful not to get too focused on your “perfect” home - flexibility is important in today’s market.
#4 – Set a budget and work with it
Assess the affordability of a home by calculating the maximum monthly mortgage payment and property taxes that can fit into your budget and circumstances. It is common today to see home prices bid up beyond the asking price. Prepare for that possibility and lower your sights a bit to make sure you stay within your budget, even if you have to offer more than the list price of the home.
#5 – Be patient and persistent
Buying a home in such a competitive marketplace is not likely to happen overnight. Don’t be surprised if the process takes some time. In many markets, there are a fair number of potential buyers for quality homes. Sellers tend to have the upper hand right now. It may become frustrating at times, but persistence is necessary to find the right property and be in a position to present the winning offer. Stay committed to the idea that the right opportunity will come along at the right time.
Teresa L. Turner is a Financial Advisor with Independent Investments Group, a financial advisory practice of Ameriprise Financial Services, LLC. In Florence, Alabama. She specializes in fee-based financial planning and asset management strategies and has been in practice for 24 years. To contact Teresa, call 256.765.3622 or email Teresa.Turner@ampf.com