Many of us are readjusting our lifestyles changed by the impacts COVID-19 in the past 2 years. The real estate market is also readjusting in 2022 and the Russian/Ukraine war doesn’t help our economy, or the world economy get back on its feet. As inflation continues to rise thru 2022, first time home buyers or home buyers needing to buy a primary residence will be hugely disadvantaged… competing with savvy professional investors purchasing homes aggressively investing their funds into real estate market to mitigate risk against inflation. Another catalyst are favorable tax laws in Texas attracting many large corporations to relocate headquarters to the state, which drives real estate competition even higher, especially in the areas surrounding Austin, DFW, Houston, and San Antonio. We are approaching this year’s peak homebuying season (spring & summer), and ALL home buyers are still likely to face an uphill battle.
Here ‘s three tips for home buyers to increase chances of getting property under contract in this highly competitive market with cash buyers and investors.
- Start with realistic expectation
Unfortunately, you don’t have much negotiating power as homebuyers in 2022, due to the high market demand on homes around metropolitan areas. It is important that you are going in with realistic expectations before you begin the home search. Otherwise, you may find the process stressful when seeing the home you desire, sold overnight, over the price you were willing to pay you didn’t even get to view the listing. Starting your home search with realistic expectation would help you manage your emotions giving you the ability to endure those surprises.
- Get preapproved for your mortgage.
It is not an option to assume your pre-qualification will suffice until you find a home to buy in this market. Know your budget, how much are you “pre-approved”? It’s ideal to get an approval from underwriting which eliminates seller’s doubt and more appealing. When your file is pre-approved by underwriting, you have an advantage to close your loan as soon as the appraisal is received, and some cases the appraisal could be waived if you put larger down payments. Caveat is the property must be in a location with a stable and in growing market. If so, you may close as fast as, 10 to 14 days if your loan is already pre-approved by underwriting. Retroactively we will do the approval segment upfront, putting buyers in a better position to complete with cash buyers or other professional buyers who may be making an offer for a quick closing.
- Be decisive and present best and final offer upfront
We hear many homes buyers’ frustrations in the highly competitive 2022 market. There is a reason why investors are flooding into the real estate market which created an increase in property demand. That is because investors understand that property values will continue to increase, even though they may be overpaying for the property at the time of purchase. We recommend partnering with an experienced realtor to develop a competitive strategy and submit the best & final offer upfront to increase the chances of getting your offer accepted. Also, buyers must be ready to make split second decisions when the opportunity arises because there are many buyers lining up to purchase the same property.
As home buyers in 2022, you face different challenges in real estate market due to post pandemic and inflation effects. Good news is home values continue to rise and housing inventory is improving. With the right strategy and people on your side, there’s still hope in finding your dream home. I suggest that you prepare your financials, get pre-approved from underwriting before submitting an offer, know what price point such as budget and proximity you desire to purchase. Daily, you need to be scrubbing the listings for potential homes so you can be submitting an offer early-on. Hopefully the market experiences an influx of homes this Spring and Summer of 2022, which could play a critical role in the stabilization of the real estate market through year-end.