In Chester county this past few months, we have seen a sellers real estate market, low inventories and a strong buyer demand for homes. Great news for home sellers. However, a little tough on home buyers fighting off competition to buy their dream house.
Here are some tips for Home Buyers in a Seller Real Estate Market
1. Hire the right Realtor - Sit down with your Realtor for an initial consultation to understand location, school districts, work commutes, home values, mortgage options etc. Cannot emphasize how crucial this is. You don't just want a Realtor who has a key to all homes you want to see...you want a professional who gives good advice, who takes time to understand what's right for YOUR family.
2. Know your 'Must haves' and 'Like to Have' in your new home - Not easy to distinguish between the two, but very important. You will not recognize the perfect home even if it is in front of you, unless you have this clarity. Often the home features one wants are contradictory and no home will have everything, If it does, it comes with a price tag that may be prohibitive. Writing it down helps.
3. Understand the paperwork and process - Whether you are a first time buyer or have been a homeowner multiple times, the real estate process differs from state to state, and even within the state, the contracts are continually updated. Home buyers should read and understand what they are signing. When documents are signed electronically, pages flip fast and it is difficult to stay focused. What is an escrow deposit? What should the amount be? What is an 'Escalation Addendum' and when is it used?
4. Research neighborhoods - Local tours are not just for relocating buyers. Have your Realtor give you a tour and explain pros and cons of local neighborhoods. This is why a Realtor friend who lives and works 20 miles away is not the person you want to hire. Work with a local Realtor who knows home values and even local news like "Builder of this neighborhood is being sued for ...." or "that house backs up to the highway ... or there is a mushroom farm behind that neighborhood which smells..."
5. Be financially prepared - Speak with a mortgage advisor and get a preapprvoal. Yes, I understand that you know your finances and have tried the online mortgage calculators, and have friends who give you good advice. Mortgage underwriting requirements get updated constantly, an offer may be submitted in a hurry and your lender may be unavailable to give the pre-approval, the estimate of closing costs given by the lender may include items you were unaware of (eg. HOA cap contribution)...many reasons why it helps to do this in advance. Yes your credit score will get "dinged" if there is an inquiry - but by how much? The positives far outweigh the negatives.
6. Be a strong buyer - A buyer with the fewest contingencies is a strong buyer. Do you need a mortgage? Do you need to sell your home before you can buy? Do you have the down payment and closing costs or will you need a sellers assist? Will you need a "gift" from family? Will you be putting 20% down? Can you settle quickly or need to wait until schools are over, or lease runs out? Sellers will look at not only the purchase price being offered, but also the other terms of the contract and the Buyers Financial Information (BFI) before they decide, and may even opt for stronger buyer over a higher purchase price.
7. Understand Inspections - Whether you will buy a new construction home or resale, understand the anatomy of a house and what the big ticket areas of fixing something in a home could be. Know and understand what to negotiate and don't sweat the small stuff. How expensive are stucco inspections? Onsite septic and well inspections? How much does radon remediation cost?