Believe it or not, according to a recent NPR report, housing purchases have actually increased during coronavirus! It seems more are buying affordable away from the cities now that they can work from home. If you are one of these individuals, putting down that first offer can feel overwhelming and nerve-wracking! But if you avoid these mistakes when putting an offer down on a house, you’ll be well on your way to a great deal.
One of the biggest mistakes you can make is forgetting to get pre-approved for a mortgage, obtaining offers without doing so first. However, if it comes down to it, you’re much more likely to recieve a great rate on the mortgage if you’re pre-approved. As such, it’s best to gain pre-approval from a couple of lenders; that way, sellers will feel confident in your abilities. You can do this by heading to their websites. Note: this might take some time; however, it’s well worth it!
One of the most important parts of purchasing a new home is doing proper research. Unfortunately, even with social media at their fingertips, many forget to do so. Take some time and looking into real estate agents, banks, home sellers, and so on. Of course, take extreme reviews with a grain of salt. However, if you find consistent bad reviews for one party or another, it’s certainly worth staying away from them! Meanwhile, research into banks and lending parties will ensure you score the cheapest deal on a mortgage or loan.
Looking For A New Home
Once a buyer has a budget for their home, based on their mortgage or savings, its time to start looking for a new home! Real estate experts have one major rule here: do not become attached to one home. Yes, the house might have great natural light and a swimming pool. However, if the seller cannot be trusted or the home has aging pipes, it’s better to simply move on than try to make the deal work.
Don’t get attached to one location just because it has a beautiful porch that reminds you of your grandpa’s or a man cave instead of a basement. Instead, find the home that will best serve you in the decades to come. As such, real estate experts recommend having at least a few backups before making your first offer.
Making The First Offer
So, it’s finally time to make that first offer! When many buyers are ultimately approved for a loan, they sometimes see dollar signs and forget about their initial, often smaller, goals, instead of wanting to bid the entire amount of the home of their dreams. However, it’s quite clear the pitfalls of this plan. First, and most obviously, there’s no cushion room should costs increase. Meanwhile, many sellers don’t like seeing buyers bid their entire pre-approved amount for the exact same reason. So, its much better to set a limit on how much of the loan you would like to bid, preferably leaving anywhere from 25%-10% untouched.
So, if a buyer shouldn’t bid the whole amount, they should lowball, right? Well, only to a certain extent. Remember, you’re not buying a table on Facebook – its a house! There is an element of “you get what you pay for” at play. Of course, when sellers see a way-too-low bid, they can also feel offended and stop negotiations altogether. So, while it’s a good idea to start low, just make sure not to start too low!
When you reach a deal with a real estate agent, make sure to not list too many contingencies in the deal. This can often lead a seller to balk. Outside of a home inspection before sealing the deal, but don’t make too many rules – the seller will feel uneasy. In most markets, keep the requirements to the minimum required.
Sources: Mortgage AfterLife, The Mortgage Reports.