Key takeaways:
- A hot housing market can ignite bidding wars, so set a budget and stick to it.
- Before you start seriously looking, make sure you have a strong credit rating and a loan pre-approval letter.
- You could save a bundle by reassessing your wish list.
In a seller’s market with low interest rates, listed homes attract lots of prospective buyers who are willing to up the ante to beat the competition. As a busy educator, you may not have much time to devote to finding the right place or dealing with escalating bids, but you still can end up with what you want if you consider these expert real-estate recommendations:
1. Find the right agent. Given that the market is tight and your time is limited, choose an agent whose credibility is immediately obvious. Search for those who have strong, authentic reviews online. Ask friends and family members for recommendations. Focus on agents who have a proven track record of representing buyers who purchased properties in the neighborhoods you prefer, as well as those who specialize in the type of structure you’re after, such as a condo vs. a single-family home.
“Your agent should be an expert in your areas of choice, to lend a nuanced skill-set to the task,” says Earl White, co-founder of Sunny Isles Beach, Fla.-based House Heroes Realty. “This helps out a lot when the market is very hot.”
In addition, look for an agent who isn’t stretched too thin. “High-volume agents may not give the individual attention you need,” White says. “They may also work only on the highest-selling properties, to drive up sales commissions. You’ll want an agent who represents homes in your price range.”
If you encounter a bidding war or take part in an escalation clause, your agent should recognize – and respect – what your ceiling is and not push you to extend beyond it.
2. Don’t fixate on the “best” house or neighborhood. Once you know where you’d like to live, take a realistic view of the available properties there. The biggest and nicest ones may be out of your price range, so think about long-term value as opposed to excess space or star-quality curb appeal.
“Look for a smaller house in a nicer neighborhood,” says Michael Schaffer, founder/owner of Denver-based Reason Real Estate. “Shy away from those which are recently remodeled: Those are the ones that command big premiums from buyers who don’t see beyond the ‘surface shine.’ ”
If you love a great but pricey neighborhood, check for bargains nearby. “You don’t have to be in a super-hot neighborhood because, before long, the homes adjacent to a hot neighborhood will also get hot,” Schaffer says.
3. Conduct a “value” assessment. Like any investment, you want to get healthy returns when you eventually sell the property. Research “value appreciation” factors such as the school systems, crime rate, and proximity to appealing local shops, restaurants, parks, walking/running trails and other desirable amenities.
Your agent should have insight on another objective measure of demand: “The clearest sign that a home and neighborhood will hold value is average days on market (DOM),” White says. “If properties in the area sit around for long periods of time at a certain list price, their value will fall below that price. When houses ‘fly off the shelf’ over time as opposed to only in strong sellers’ markets, it’s a good sign that values are stable – or will appreciate.”
4. Come to the table with a solid financial footing. The better the state of your own “financial house,” the better position you’ll be in to own the home you want. Make sure payments on your credit cards and other debts are up-to-date. Review your credit rating and, if it needs a boost, start taking steps now.
Lastly, get pre-approved for a mortgage to demonstrate that you’re a serious buyer and can afford the home you’re bidding for. “If there’s no pre-approval, I wouldn’t read the offer any further, if I were the seller,” White says.
5. Get sentimental with the sellers. If you find the “perfect” place but there are other potential buyers, you can distinguish your value by expressing your love of the property. Write an old-fashioned, pen-to-paper letter that summarizes how much the sellers’ home means to you. It’s a way to make a “straight to the heart” connection with the seller, and it won’t cost you a dime.
“You can write an introductory letter when submitting the bid,” says James McGrath, co-founder of Yoreevo, a New York-based real estate brokerage. “Many sellers are emotionally attached to their homes. By telling them a little bit about yourself, why you love the house and why you want to make it your home, you will demonstrate to them why it will be in good hands if your offer is selected.”
6. Waive the inspection only under special circumstances. Skipping this critical step could help put your bid on top, but it’s also a high-risk proposition. In general, you should never do so with a single-family home, “but it can be a reasonable option on newly constructed condos or townhouses where an inspection is unlikely to turn up major issues,” Schaffer says. “Ultimately, you should strongly consider your agent’s advice here. That’s why the level of earned trust with your agent makes a huge difference.”
