Today's Home Buying Environment

Via Daily Real Estate News | Thursday, May 03, 2012

With signs of a housing turnaround getting stronger, buyers are finding that the rules have changed for submitting an offer on a home purchase. A recent article at U.S. News & World Report highlights some of these changing “rules” for home buyers:


Forget Lowball Offers: Most sellers are savvy and have been advised of market conditions by their real estate agent. Sure, deals are still around, but lowball offers that aren’t in line with comparable sales data are increasingly proving to be a waste of time. Buyers may be better off asking for seller concessions, such as closing cost assistance or making home repairs, rather than making offers way below the asking price. “Keep in mind that a lowball number may turn off the seller and close down any chance at negotiation,” the U.S. News & World Report article cautions potential buyers.   


Get Pre-Approved for Financing Before Shopping: Getting a loan isn’t easy nowadays as lenders have tightened their credit standards in recent years. Serious buyers should check shop for a mortgage and get pre-appoved for a loan to determine how much of a home they can even afford even before they start their home search.  Increasingly, sellers won't even consider an offer unless it's accompanied by proof of funds for a cash offer or a financing qualification letter from a bank.


Be Realistic:   Study the local market.  In the same city, home prices can differ drastically from one neighborhood to another, or even one street to the next.  Ask your real estate agent for data on sales transactions from the last six months and how long properties are staying on the market.  


Expect Multiple Offers. Housing inventories are dropping in many areas and spurring an increase in demand. Home buyers may face increased competition for the home they want, particularly among short sales and foreclosed properties, where buyers may be up against investors who are making all-cash offers. Sellers are looking at more than just price when analyzing multiple offers.  Are you also asking for a contribution toward your closing costs, or to pay for the title policy, home warranty, or survey?  


Do Your Homework Before Closing: Buyers should hire a title company to check for any liens and mineral rights. Housing experts also recommend hiring a home inspector, verifying the accuracy of the property line (by asking seller for the survey or having your own conducted), and make sure all necessary disclosures about the property, required by the state, have been made. 

Source: “Traditional 'Rules' of Home Buying Return,” US News & World Report (May 1, 2012)