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It’s a seller’s market out there.
The shortage of homes available for purchase and growing competition among buyers can make it challenging for first-time homebuyers to compete.
But first-time homebuyers can take steps to position their offer in the best possible light and make it more appealing to sellers.
First-time buyers typically always face an uphill battle because often, they cannot spend as much as other buyers, or their credit histories aren’t as strong.
But that doesn’t mean that first-time homebuyers can’t compete. On the contrary, you can make a strong offer for even the most competitive bidding war with just a bit of planning.
In this post, we’ll look at what you can do as a first-time homebuyer to compete and make a winning offer on your dream home.
Start with mortgage pre-approval
One of the significant hurdles most first-time homebuyers face when they set out to buy a home is competition with investors. In competitive markets like the one we’re currently experiencing, investors can often swoop in and grab many “starter-priced” homes.
Getting preapproved for a mortgage is arguably the single most effective step you can take to help you make a successful offer to buy.
Mortgage pre-approval not only tells a seller you’re serious about making the purchase but that you’ll be able to follow through on it.
And so many homebuyers don’t get mortgage pre-approval. Waiting until after you see a house to start the process can mean losing out on a perfect property.
No seller wants to waste time on an offer that might ultimately fall through.
A pre approved mortgage tells the seller you’re a safer choice than others who aren’t pre approved.
Mortgage pre-approval also means you can move fast when you find a house you like. If you see a home that’s right for you, you can get your offer on the same day, sometimes even within the hour, because you’re pre approved!
The great thing about mortgage pre-approval is how quickly you can take care of it. In less than half an hour, you could be pre approved and ready to start looking for homes.
An online mortgage calculator can also help you get a clear understanding of your home buying budget.
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Minimize what you want from the seller
In a buyer’s real estate market, you could ask the seller to include a piece of furniture you like or repair some minor damage before you take possession.
But in a seller’s market, these demands can put your offer at the bottom of the pile.
Consider what you can comfortably take care of yourself and keep your offer as simple as possible.
Think of it this way, if someone else offers the same amount of money as your bid, but they want windows replaced, and you don’t – your bid will look more enticing by comparison.
Include closing costs in your offer
Offering to pay as much of the closing costs as you comfortably can afford can make your offer to buy more attractive to the seller.
This can be a powerful move, especially if the sellers are saving for buying another home.
It not only can help them save money, but it can streamline the paperwork. And because closing costs aren’t typically rolled into your mortgage, you won’t have to pay interest on them for the lifetime of your home loan.
Can you go over the seller’s asking price?
After carefully evaluating your financial situation, and securing the funds necessary for your downpayment and closing costs, consider whether you can make an offer for more than the seller is asking for.
Going above a seller’s asking price can help first-time homebuyers compete against other offers in a hot real estate market.
Real estate agents often list a property slightly below what the seller wants to get for the house. They do this with the hope of starting a bidding war.
However, by offering “over asking,” you might be closer to the seller’s intended price—and that can mean a quick decision in your favor.
But only ever make an offer you can comfortably afford. It’s essential to make a wise, financially sound decision—one that works for your budget.
Don’t get involved in a bidding war just to win the house. The home’s price will affect your monthly mortgage payment amount.
Offer the seller more time before you move in
Offering the seller more time in their home allows many first-time homebuyers to compete against similar offers.
This can be a strong move against anyone buying strictly as an investment property—which often will require immediately renting out the property.
By giving the seller more time to pack up and move (and maybe also find a house to buy), you’ll not only make your offer stand out, but you’ll give yourself extra time to save additional funds.
If you can, consider offering an extended closing time frame—up to three months.
This is also an excellent move for first-time homebuyers on a tight budget because it helps your offer stand out but doesn’t cost you more money upfront. Instead, it can help you save money.
Include a personalized note for the seller
The one thing a first-time homebuyer has that other buyers do not is their story.
Stories are powerful.
Stories help us connect with others.
And your story might just help you get your dream house.
Consider including a brief personalized note to the seller. Often, sellers have mixed feelings about leaving a home they’ve lived in for years, a home that has seen their family grow and flourish.
Letting a prospective seller know who you are and why their home resonates with you might be the winning move—especially if the seller wants to ensure the new buyers aren’t going to tear it down or flip it.
Homefinity is ready to help you move into your new home
Your new home is out there, and the loan officers at Homefinity want to help you get it.
We’ll help you navigate the different local and federal programs which can help first-time homebuyers compete in today’s real estate market.
We’ll also provide a rate quote to help you understand your financial situation for buying a house.
Book a time to chat with us. We’ll help you secure your mortgage pre-approval and have you ready to start house hunting in no time.
Some references sourced within this article have not been prepared by Fairway and are distributed for educational purposes only. The information is not guaranteed to be accurate and may not entirely represent the opinions of Fairway.