Housing is BACK!
Best Moves for Home BUYERS
(Part one of a three-part series)
The Economy is recovering, and Housing is back!!
Six years after prices collapsed, housing has begun to climb out of its hole. So what are the best moves to make now? In a three-part series, we offer smart strategies for buyers, sellers, and owners in today’s market.
Thinking about buying a home? For the first time in more than half a decade, the economics of the market are working against you in most places.
Inventory is tight, and bidding wars are back in some parts of the country. To snag your dream home, you’ll have to pay up and contend with continuing strict loan requirements. The bright side: Despite rising prices and mortgage rates that are edging upward, buying a home is still cheaper than renting in the majority of the top 100 markets.
Don’t waste time with a low-ball offer.
Here’s how to figure out how much to offer initially: In places where homes are still selling below list price but deals are being made in less than two months, come in no more than 2% to 3% below the asking price, says Michael Murphree, a realtor in Birmingham, Ala. Where homes are selling above the listing price, make your first offer the asking price.
Be the winner in a bidding war.
You win bidding wars, of course, by raising your price; it also helps to have few contingencies and to move quickly, since today’s sellers don’t want multiple go-rounds. “You have to give your best offer,” says Dallas real estate agent Mary Beth Harrison. “Step up to the plate or walk away.” Be flexible about closing too: Quick deals — the median time on the market for homes is 71 days, down from 99 a year ago — have left many sellers scrambling for alternative housing. Leave the closing date blank on your contract for the seller to fill in, or negotiate a leaseback if the seller needs to stay put for a while.
Outsmart the pros who bring cash.
To beat out the professional investors who have scooped up houses in these areas by offering all-cash deals, lead with your best offer; investors count on nabbing properties at a big discount and are unlikely to boost their bid by more than 5% to 10%. “They’ll just move on to another house,” Harrison says. Also, include a pre-approval letter from SDFFCU or statement of funds to show that your money is as reliable as investors’ cash.
Assess your local market.
To get an idea of a neighborhood’s prospects, start with the foreclosure rate heat map at RealtyTrac.com.
First of a three-part article by CU Insight 2013.
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