In today’s real estate climate, people are buying homes almost as soon as they’re put on the market. Realtor.com[i] predicts that 2021 will continue the trend of high home prices and stiff competition between buyers.
As exciting as homebuying is, it can be difficult to snatch up your dream home with so many others making offers. Before you look for your new home, read these seven ways you can make yourself stand out amongst other homebuyers.
It’s typically a good idea to start planning your move four months before you buy. Be sure to check your credit score, avoid making any big purchases, and try not to take on any big debt. Debt lowers your credit score and increases your debt-to-income ratio, which are two key areas that banks, mortgage companies, and other financial institutions look at before preapproving you for a loan. If your debt-to-income ratio is too high, try your best to pay off as much debt as you can before starting your home search.
Set Your Home Price
As tempting as it may be, don’t look at a $300,000 house if you can only afford up to $250,000. With a lower supply of homes on the market, you will likely run into some difficult competition and there is a strong chance that any home you’re interested in will have multiple offers. Getting a preapproval and discussing your options with a mortgage advisor can help you plan a budget for your future home.
When you do spot a great deal on a house, jump on that opportunity. Because houses are selling so quickly, you should learn how to spot a great deal by researching an area’s home prices. Doing your research beforehand will help you and your realtor negotiate and could prevent you from overpaying for a house.
Know that Cash is King
The more cash you have, the more appealing you are as a buyer. Sellers will feel more comfortable if you are able to put down at least 20% of a mortgage—this makes you look financially stable and responsible. Cash can cover a multitude of problems when you make an offer, whether it’s difficulty with the mortgage process or a lower-than-expected appraisal.
Get Preapproved and Prequalified Before Your Search
Getting preapproved requires you to fill out a mortgage application to determine your creditworthiness, whereas getting prequalified gives you an idea of what you can afford and helps to streamline your search. If you’re financing your house with a mortgage, have a preapproval letter with you, and if you’re paying cash, have proof of funds. Getting preapproved will also help you compete with an all-cash buyer.
Limit Your Contingencies
It’s recommended that you don’t let your ability to buy a home depend on you meeting a bunch of requirements beforehand. That is to say, if you have to wait to sell the house you’re currently living in before you can afford the house you want to buy, it might be a smart idea to temporarily rent or stay with friends or family. However, some contingencies (such as getting an appraisal or home inspection) are standard.
Add a Personal Touch
In the same way you should write a personalized cover letter for a job you want, consider writing a letter to the sellers of the house. This can show them that you care about the home on a personal level and don’t just care about numbers.
Be Flexible with Closing Dates
While you might be eager to move in right away, try to play it cool when it comes to settling on a closing date. Be patient when talking to the seller—find out when their ideal close date is, and then try to match that date as best as you can.