Planning on buying a house this season? Go in prepared with advice from the pros.
Summer brings longer days, warmer weather and more people out house-hunting — particularly families hoping to get settled before the school year begins in September. But there aren’t necessarily more houses on the market—and this year that’s truer than ever. “Inventory is the lowest I’ve ever seen it,” says Denver, CO, agent Susie Best. Recent Trulia research bears this out, showing inventory falling for 8 consecutive quarters. The reasons are varied: investors bought up homes during the crash and are renting them out now; prices have risen so much that homeowners can’t afford to trade up; or some homeowners are still underwater and can’t afford to sell yet. This means “multiple offers are driving up prices,” says Best. How to up your chances? Here’s what agents are advising buyers to do in this hot market — at the hottest time of year.
Research trends based on your market location
While many markets are red hot in the summer, that isn’t true across the board. For example, Chicago winters are long and many families seize the all-too-brief summers for vacation, so single-family home sales slow down a bit from June to September. “Right now we’re really a tale of two markets,” says Jennifer Ames, a Chicago, IL agent and a broker with Coldwell-Banker. “There’s a home surplus at the high end; the starter homes are where the competition is. I tell buyers, ‘Understand the dynamics of your particular market.’ They’re not all the same.” You can use Trulia Maps to check out historical pricing trends in the housing market where you’re looking.
Line up your financing
This one applies year-round. And although interest rates will probably keep creeping up, “it’s still relatively cheap to borrow,” says Ashley Kendrick, an agent in Kansas City, MO. Even so, sellers are much more apt to consider buyers who present a loan preapproval letter up front. And make it from a known lender like a bank—not an application completed online.
Be clear with yourself on what matters most
Make a list of your must-haves, your wants, and your it-would-be-nices so you’re ready to decide right away. “This is no time to be a lookie-loo,” Best says. “There’s no more, ‘Let me see if I qualify for this and come back.’” Know what you can live with and what you can’t live without.
Don’t quibble on price
As the inventory for starter and trade-up homes continues to shrink, the competition for what’s available on the market is fierce. In markets where this is happening, “the price is never the price,” says Anthony Gibson, an agent from Austin, TX — buyers may need to offer more to stand out. “A healthy down payment always appeals,” Kendrick adds, since it suggests you’d have cash to cover any difference between appraised value and a higher asking price; you may be asked to sign a waiver agreeing to that. That’s not raising the overall price, Best notes—just how much you’d pay outside the loan.
A bigger earnest-money payment (the good faith deposit you pay to a seller to show you’re serious) could also provide an edge, says Jennifer Ames. “A typical initial check might be $1,000; I might advise a buyer in competition to start with $5,000.”
Get your own real estate representation
Particularly when timing is everything, a house-hunter needs the right agent. “Make sure yours can provide accurate information the minute a home hits market—for example, whether the seller is reviewing offers as they come in or after the weekend,” Best says. And do get your own agent to represent you: This is no time to try enticing a listing agent to handle both sides of the deal in an effort to curry favor with the sellers. With competing bids flying, you want someone fully focused and advocating on your behalf.
Craft a strong offer
Top bid doesn’t always mean highest price. For sellers, flexible terms may be what clinches the deal—say, letting them pick the closing date, or a generous leaseback period that lets them stay put until they close on buying a home. Be sure not to load up your offer with unnecessary contingencies. “It’s important owners know they’re getting what they want,” Gibson says. And don’t forget the personal touch: “A letter to the seller always helps,” Kendrick suggests.
Need some inspiration for that a letter to the seller? Here are three offer letter templates to get you started.
Don’t sweat it if it doesn’t happen by August
Even when deals fizzle, the waiting and offering will probably pay off. “I tell my buyers, ‘You’ll find a house,’” Kendrick says. “It’s a patience game.”
Cynthia Rubin writes and edits stories on home design, renovation and real estate for publications including Austin Home, Palm Springs Life and Spaces by Marin Magazine. A freelancer based in Austin, Texas, she also works on books and marketing copy for realtors, architects, contractors and entrepreneurs.