Wednesday Welcome: Coming Out on Top in a Competitive Market
This week we’re welcoming Stacey Max, a real estate broker who offered to share some tip for home buyers who are thinking of dipping a toe in the market.
Are you thinking that now’s the right time for you to buy a home? It seems that the bottom of the market is in our rear-view mirror and interest rates are beginning to eeek up from their record lows, showing economic strength. Around the country the real estate market definitely feels like it’s in an optimistic place. Prices are still not at their peak and mortgage rates are still very favorable.
Now may be the perfect time to buy. Here’s what you need to do:
- Get pre-approved. The first thing that you want to do is speak with a mortgage professional to find out how much you can afford. This is not the world that it used to be where you would overextend yourself on the purchase of a home expecting that it will appreciate exponentially. History shows that your home WILL appreciate over the long term, but you also need to be able to afford it for the long term. So make sure that you’re comfortable with the amount that you are going to spend, and make sure that you still have your emergency fund even after your down payment.
- Be prepared for a competitive market. Now that you know how much you want to spend, be prepared to spend THAT MUCH. I work in New York City, and right now we have fewer listings than we’ve had in 13 years. It feels like there are 6 buyers for every listing. I think that the inventory shortage is similar in many markets around the country. This is a good thing for the strength of the real estate market overall, but it definitely makes it more challenging for the purchaser who is out there looking for a home.
- Use a good real estate agent. As a real estate broker myself, I can’t help but advise you that you should work with a good real estate agent in whatever city you’re in. In a competitive market, your real estate agent’s job is to teach you how to get the home that you want.
- Be confident that you know what a home is worth to you. In order to actually GET the home that you want, you need to be aggressive. There will be other times when you can haggle — like at a flea market — but this is not that time. And you need to feel confident that you know what different homes are worth to you. Nobody else can tell you what something is worth to you. You are the buyer who is out there looking at properties, you know what you want, and you know what other houses are asking. When you find the home that you want, think about how much it is worth to you. If you want to try to get it for less than you’re willing to pay, then you can certainly bid less. But if there is competition for the home then be prepared to offer as much as you are willing and able to pay. Offer as much as you would regret that you didn’t. What I mean is if you are willing to pay $500K for a house and you bid only $450K, and someone else bids $500K and you lose the house, would you regret that you didn’t bid $500K? If you bid $500K and someone else bids $600K but you weren’t willing to pay more than $500K, you won’t have any regrets. In strong markets, the average negotiability is less than 5%, so be aware that often the asking price or more is what it will take to secure the home.
- Don’t think about everyone else. Emotionally, competitive markets are very difficult for buyers. Don’t pay attention to the competition. Don’t pay attention to the other buyers; only think about what the home is worth to you; and if you bid that much, you have nothing to lose. But you could get your dream house. Good luck!
About Stacey: Stacey Max is the Managing Sales Director of the Chelsea office for BOND New York Properties, a residential and commercial real estate brokerage in New York City. She’s been a residential real estate broker for over 16 years. Stacey is also a graduate of the Cornell University School of Hotel Administration and a volunteer Chapter Ambassador for her local chapter of the National Multiple Sclerosis Society.