Rising home prices squeeze buyers out at the low end
Supply constraints hold back May new home sales
Multiple offers above the asking price are becoming more common
--None of these headlines are good signs for people who are trying to buy a home.
We really are living in unprecedented times. What was already a hot residential real estate market before the pandemic has only gotten hotter as COVID-19 restrictions are lifted and the spring / summer selling season gets underway in 2021.
Whether you are a first-time homebuyer, trading up or downsizing, there is hope!
Here are a few winning strategies for homebuyers you may want to consider:
The web is your friend – In addition to real estate sites such as Zillow.com and Redfin.com, don’t forget to check out the town and neighborhood websites. Wikipedia.org is a good starting point for local info. Town government websites often have a lot of information about the kinds of services provided to residents (e.g., what are the schools like) as well as the current property tax rate and, in Massachusetts, if there have been recent Proposition 2½ tax override.
Social media - Local blogs and town Facebook pages can be helpful, too. In Natick there is a “Natick Dads Group” and a “Natick Moms Group” (I think you know which one I belong to) along with several other town groups. There are also more general groups such as “Laconia Proud” in my hometown that shares local happenings. You often have to request permission to join, but inside these groups there can be a lot of helpful information and, you can ask questions there, too.
Virtual and 3-D tours – More and more real estate listings include virtual 3-D tours that include drone flyovers of the house and neighborhood. You can see so much more than the old 2-dimensional photos, e.g., what is behind the photographer? During COVID, realtors have learned that they have to show you a lot more.
Get off the couch / get out of your car / do a drive-by – Visit the towns and neighborhoods that you are interested in. Walk around. Go downtown. Talk to neighbors and ask them what it is like living there. Look at the demographics of the town to see who lives there and what are the big issues in town.
Work with an experienced, local realtor – Your own research only takes you so far. Professionals who know the area and market can offer you insights about towns and neighborhoods as well as current market conditions. In addition, they may hear about new properties before they come on the market. Personally, I have benefited from this experience during a property search in NH where the local realtor was able to show a property before it was listed on Zillow or the MLS system. This can give you an edge.
Be patient – In this hot market, it can be easy to feel like you are losing out when your offer on your dream home is topped by thousands of dollars. Be hopeful but try not to fall in love with a property.
Here are some other quick tips
- Be ready to act quickly (but don’t rush your decision)
- Get pre-approved (not pre-qualified) for a mortgage
- Get any cash gifts in your bank account now
- Pay cash or make a large down payment (at least a 20% or more)
- Be ready to raise your offer
- Be ready to compromise – to get into the right neighborhood or house, you might have to settle for a home that needs significant cosmetic work
- Don’t buy unless you have actually seen the property
- Do not waive the inspection but consider waiving repairs up to a certain limit; this indicates that you are only going to make an issue of a major problem such as a septic system failure or extensive termite damage.
- Be flexible on the closing date or offer to let the seller rent the home for a short period
Homebuying in this market is a pretty intense experience right now but we try to make it a little easier and less stressful. Feel free to reach out to us. We are often consulted by our clients who want to get ready for those big financial decisions. We also talk to realtors on a regular basis.
If you have questions, give us a call. We’re here to help.
Lyman H. Jackson
Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. FPS provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client after entering into an advisory relationship. Information herein includes opinions and forward-looking statements that may not come to pass. Information is derived from sources believed to be reliable. Information is at a point in time and subject to change without notice. Such information may not be independently verified by FPS. Please see important disclosures link at the bottom of this page.