By Vanessa Saunders, MBA, MIMC, Broker Owner, Global Property Systems Real Estate.
We’ve talked a lot in this blog about the seller’s market currently driving Hudson Valley real estate sales. With so few homes for sale (inventory) and so many buyers competing for them, it takes a well-prepared buyer to stand out from the crowd. The following tips will help you make a confident and informed offer while avoiding some of the most common pitfalls.
Don’t buy based on emotions.
Buying a home is a business deal, not a love affair. Yes, you should “fall in love” with the home you finally select, but don’t ignore red flags that signal trouble ahead. Rely on your Realtor to be the voice of reason. After all, it’s as much their job to tell you what’s wrong with a house as it is to point out what checks all your boxes.
Get a mortgage pre-approval.
Having an agreement with your lender that you are already approved for a mortgage up to a certain amount tells sellers you are serious about buying. And remember that phrase “up to” because it isn’t necessarily what you need to spend. Plus, if you go all-in on your first offer, you might lose room to negotiate if the seller responds with a counter offer.
Make a decent offer.
It may seem a clever way to dig for a good deal, but making too low an offer will only tick off the seller. Especially in a seller’s market, make an informed offer based on the market value of the home, its condition and recent home prices from sales in that area. Your Realtor has the tools to guide you in setting a reasonable offer.
Negotiate with flexibility.
A seller has three options when given an offer on his home: he can accept it, reject it, or make a counteroffer. Sellers usually counter by lowering their price, but they can also request other options, like adjusting the target closing date or setting exclusions. The more flexible you can be in these negotiations, the more likely you will win in a multiple-offer situation.
Be careful with contingencies.
Buyers use contingencies to protect themselves from costly surprises after they buy the house. For example, making your purchase contingent on a home inspection and appraisal will ensure that the value of the home matches the sales price.
Resist the temptation to waive the inspection contingency, especially in a hot market like ours, or if the home is being sold “as-is”, which means the seller won’t pay for repairs. Without an inspection contingency, you could be stuck with a contract on a house you can’t afford to fix.