They’re pre-approved and ready to move.
Homebuyers today are done playing a wait and see game with the real estate market. Many have been saving money and doing their homework for quite a while. As a result, when they find the right home at the right price, they’re making a good solid offer.
The prime season for real estate is heating up, and local real estate professionals are super busy showing properties to prospective buyers, negotiating deals and preparing for closings. The one piece of business that hasn’t quite caught fire this spring is listing appointments. A few more listings would help satisfy increased demand.
“It’s a competitive market right now,” Matt Evans of RE/MAX Realty Associates, who was recently recognized with the prestigious RE/MAX of Indiana Sagamore Club award for his top performance in 2012, said. “Timing is huge, so buyers need to be prepared. Every buyer needs a pre-approval letter, preferably from a local lender who knows our market, our local employers and local appraisers. That’s not to say they shouldn’t work with a national lender. There are many that have good reputations out there, you just need to be cautious.”
A graduate of Valparaiso University with a BS in Business Administration and Purdue University’s Krannert School of Management with an MS in Marketing, Evans returned to his hometown after becoming a licensed REALTOR® in Colorado. Licensed in Indiana since 2009, his firsthand local knowledge plus broad-based real estate experience including home building and remodeling helps Evans meet the needs of residential, commercial and investment clients from his home base in Valparaiso.
“People are sometimes surprised at how much money they can borrow at today’s low interest rates,” he said. “So what they really need to determine is how much they are comfortable spending. Once they know they qualify for a loan, they can have the lender or REALTOR® use a loan calculator to show them where they’ll be with taxes, insurance and closing costs included to ensure they have the down payment.”
While a pre-approval is not a guarantee for a loan, it does show a seller that a lender has verified the income, credit score and other relevant financial information required for a buyer to make the payments on a mortgage of a certain amount.
“Sellers today do not want a difficult transaction,” he said. “In many cases, they have more than one option to consider. I advise my clients to present a good, clean offer. There are a lot of factors that go into the buyer/seller relationship. Finding that ground everyone can agree on, whether it’s price, timing or terms, is where a negotiation succeeds. Right now, it’s the key to getting any deal done. You definitely need to be working with an agent experienced in negotiating on your behalf.”
With increased buyer demand outpacing the number of new, desirable properties on the market, bidding wars are not uncommon this spring and some people have ended up on the outside looking in as the house they were hoping to purchase becomes the home of another buyer.
“In a competitive bid situation, it’s important to make a strong offer the first time around to gain the seller’s respect,” Evans said. “The sale price should be based on current comps and what you are willing to pay. You should also be willing to work within the seller’s time frame for closing and possession if at all possible.”
It’s also important for buyers using FHA financing to understand that their offer may not standout against another with conventional financing when everything else is equal, according to Evans.
“There are potential pitfalls when it comes to FHA inspections,” he explained. “They are looking at the overall health and safety of a home plus the building envelope. They are going to require repair on things like missing handrails, peeling paint, broken or missing GFCI-protected (ground fault circuit interrupter) electrical outlets, broken windows or broken door locks. The FHA wants an asset that’s well protected for the future – for the lender and the homeowner. It is negotiable as far as who will fix any issues, but everything must typically be done before closing per the lender.”
With pent up demand and low inventory creating a bit of a frenzy in the real estate market this summer, especially as new properties come on the market, buyers who have seen good houses come and go are definitely feeling a sense of urgency to act.
“For the most part, listings that don’t sell in today’s market are either overpriced or have some other undesirable issues,” Evans said. “On the other end of the spectrum, turn-key houses that are priced right sell fast. If you want a shot at buying a property of this type, you’re going to need a real estate agent working for you who passes along the information as soon as a new listing on the market meets your criteria.”
In the meantime, while searching for the right home in a particular area, ask your agent about similar neighborhoods. Tour them at different times of the day, during the week and weekend. You may discover that you can broaden your search area and find the home of your dreams sooner.
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