I have potential buyers constantly asking the question, “How can I possibly buy a home in this real estate market?” It’s a good question to ask.
Inventory is again low. Interest rates hover around 7% for a 30-year fixed mortgage, and prices are at historical highs and aren’t coming down anytime soon. It can be difficult, that’s the truth. Buying right now may take more time and require some strategic planning, but it’s not impossible.
I’ve had a few buyers lately who needed to buy in this difficult market. Here’s what I know that helped them find homes:
Set your sights lower and be willing to settle for less
It’s easy to come up with a list of wants and dreams. These days, it’s much harder to find a home that fulfills all of them and is affordable. Maybe we’ve all watched too many house-hunting shows. Could you live in a smaller home? Perhaps a two-bedroom? How about a one-car garage or a carport instead of a 2-car garage? Have you considered a condo or townhouse? And of course, perhaps there are neighborhoods you’ve never explored with housing prices lower than your dream neighborhood. A home is a big investment, but not necessarily a forever investment. Think about your purchase as a stepping stone. This may not be your dream home, but it’s one step closer to your dream home.
Look at homes that have been on the market for a long time
Look for imperfect properties that have been sitting on the market for a while. Both of my recent buyers bought homes that had been on the market for over 30 days. The sellers were motivated, and the properties weren’t perfect. But they were livable. My buyers abandoned their desires for move-in-ready homes and settled for homes that needed cosmetic updates. Their willingness to live with ugly meant that we weren’t competing with a lot of other buyers, and the current market is seeing a lot of multiple offers on pretty homes. Motivated sellers are more willing to accept a lower-than-asking-price offer, pay part of your closing costs, or buy down your interest rate as well.
Talk to a mortgage professional
It’s ideal to talk to a mortgage professional before you actually go shopping if you’re financing your purchase. Their job is to look at your finances and determine how much of a mortgage you can qualify for… basically, they are financing advisors. They do a lot more than that as well. They have access to loan programs that might be advantageous to you: FHA, VA, USDA, grants, or other down payment assistance programs. Ask for lots of options and ask lots of questions. You might find a mortgage calculator app helpful if you wondering if you can afford something. Here’s one on zillow.com that I find helpful.
Think about the timing
Real estate markets are very regional. Markets in cooler climates are slower in the winter months. But every market has a surge in activity during the spring and summer as people look for homes before the new school year begins. I’ve found that here in Florida our only real slowdown time is between Thanksgiving and New Year. No one wants to spend time looking for a home or moving during the holiday season, but it’s a very real opportunity. There’s something about the end of a year that motivates sellers. They want to wrap it all up and move on, especially if their home has been out there on the market for a while.
Perhaps the time isn’t right for you now. The interest rates are just too high or you need to save more downpayment money. Very understandable. But get ready, talk to a mortgage broker, and think about how you’re willing to flex. The right opportunity sometimes comes up when you least expect it.