Home Buyers Guide to a Changing Real Estate Market
If you have been searching for a home recently, you surely understand the selection is limited. This home Buyers guide may improve your chances of getting the home you desire.
We are entering what we call in the real estate industry the busy season. Inventory of available homes for sale is at a historic low which means there will be more home buyers than sellers. In my market area of Reading, PA, and Berks County, I am seeing a paradigm shift towards a seller's market.
It has been almost a decade since we have seen anything resembling a real estate market favoring the seller here in Berks. There are many in the business that has never dealt with anything but a buyers market. The change may catch many agents and customers off guard.
Home Buyers Guide Rule One: Find a Good Real Estate Agent.
I know this sounds self-serving, but it is not a selfless plug. Often home buyers find a real estate agent when calling for information a house. Yes, the house is the star of the show, but without a good director, you may never see opening day. An agent can introduce you to available homes you are interested in faster than any website. A website only knows about homes that are formally listed for sale. As the real estate market continues to change and tighten not all homes will make it to the house shopping websites before they are pending.
Not all agents are the same and contrary to common belief, buyers do pay for real estate representation. Many times the full commission you owe the buyer agent is paid for or subsidized by the home seller but not always. If for example your agent charges three percent for buyer representation and the seller is offering less you, the buyer, are obligated to pay the bill. In some cases, the seller may agree to pick up the additional fee but be aware, if you need closing cost assistance the seller may be less inclined to pay those costs if they have to spring for your additional representation costs.
You would never hire a contractor to do work on your home and not ask for an estimate. Don't do it with your real estate representation. Make sure you ask the agent what they charge for buyer representation. Does that fee include things like transaction or consultation fees? Buyer representation is a good thing just understand what it costs up front. The costs could have an effect on your home offer you never expected.
Home Buyers Guide Rule Two: Get Prequalified for a Mortgage.
The first thing I tell buyers is to be financially prepared to buy a home. Being prepared sounds elementary and straightforward enough but few get this right. Contact local lenders and get pre-approved for a mortgage. Understand all the costs involved with obtaining financing. If you do not require a mortgage, be sure to have a financial statement prepared showing you have the funds on hand to settle the deal. Your agent can assist with providing a Buyers Financial Information Form to accomplish this objective better. It is very important for the seller to know you are qualified to own their home.
Home Buyers Guide Rule Three: Be Aggressive!
Once your agent knows you have an interest in a home the process of information gathering begins. A good buyer representative will immediately contact the listing agent to see if there are any other offers on the property. The answer to that question will influence what will happen next. If there are other offers or interest, do not be afraid to make your highest and best offer right away. It may be the only chance you have of getting the home. Have your agent explain what an escalation clause is. Be prepared to put your thoughts and feelings in writing and attach them to your offer. There is little that garners a sellers attention more than a buyer who appreciates their home and is willing to put it in written words.
Of course, you can be at your most aggressive when you understand all the costs involved. Knowledge will help you understand your limits and boundaries then you can leave it all on the field for that special home. It is that important!
Knowledge is Power!
Jeffrey C. Hogue