Aaaaand it's gone....South park creators Trey Parker and Matt Stone created an episode in Season 25 called "city people." This episode really shows exactly how crazy the real estate market has been over the last few years and has sparked numerous meme's across social media. The episode shows how the town of South Park is being hit with an influx of relocation and Cartman (the show's protaginist) becomes a Real Estate Agent operating without a real estate license and how he is getting overpriced bids for south park homes and his mother tries to explain to him how the market reacts to over inflated bids that don't match market value and will never make it through escrow.
How to buy a home in a competitive market: First Time Home Buyer's Edition
First time home buyers are the demographic being hit the hardest in this competitive market. We are here to help you write the winning offer in a multiple offer scenario. There was time, not too long ago; that you could take your time and really think over the house you were considering making an offer on and you had time to talk it over with your significant other, bring the family by for their input, and ask for seller concessions to make your purchase more achievable by asking for various credits regarding closing costs and prepaids. This is not that time; however we are seeing some improvements in the market as interest rates are predicted to stabilize and sellers are beginning to list more homes thus increasing the housing inventory.
The following are tips for First Time Home Buyers to help you on your path to home ownership; some you may be aware of and some may be some things to think about before making your first offer.
Don't make Cartman's mistake and assume that a Real Estate Professional's only job is to take a leaned back fold your arms glamour shot! A Real Estate Professional in this market is like having a Captain navigate rough seas in the perfect storm. You wouldn't go grab the ship's wheel and try to steer through 2o foot swells; unless you're Cartman; which brings us to Number 1.
- Don't try to go it alone - Seek out a professional Realtor. There are many reasons to seek out help from a real estate professional; but the main one that is going to help you in a first time home buyer situation is to ask for help! You don't know what you don't know and if you don't know where to start; then you have already possibly cost yourself that dream home you were looking at online through one of the many available online home searches in your area. Choosing the Right Realtor for the job is your first and foremost priority. You want an agent that has experience dealing with multiple offer scenarios that knows how to guide you toward writing an accepted offer. Any real estate agent can write an offer as overly stated by Cartman; but it is the experienced agent that is going to get your offer accepted and put you on the path to home ownership. A Realtor is the first to know when a home in your preferred area or price range comes on the market; they will set you up on a search tailored specific to your needs and will have the listings emailed directly to you when one matches your search criteria in the multiple listing service in your market otherwise known as the MLS. Through many of their networking avenues most oftentimes a Realtor will know when something is coming on the market even before it hits the MLS. They can also reach out to their connections to see if there is anything coming soon in the desired area or neighborhood you want to live in.
- The second thing you want to do is make sure you have done your own homework! There is nothing worse than locating your dream home and putting in an offer only to find out that you can't qualify for a loan for that amount or that you need to do some work to clean up your credit score. Pre Qual - Pre Qual - Pre Qual Not only does this help you figure out how much house you can afford but it also gives you more Buying Power! Sellers are looking to get as much as they can for their house while trying to ensure that the offer they accept will actually close. When sellers are looking at multiple offer scenarios; they are looking at how serious is this buyer, have they already been pre-qualified for a loan for the amount of the offer, and how long will it take to close the deal. Sometimes a lessor amount offer will win out because there are no contingencies, cash deal means fast and easy close, and the length of time that it may take to close may also impact a sellers decision. This leads back to your Realtor knowing your personal circumstances and the best way to write a winning offer for you. They will also know who/whom is the best in the mortgage industry that can offer the best loan for your circumstances. Oftentimes, they will know of special financing programs or tools they can utilize to help you secure the best loan product at the best possible rate. They can also guide you on down payment assistance programs and work directly with your Realtor to provide a pre-approval letter to be sent along with your offer for acceptance which strengthens your offer in the eyes of the seller. I know when we bought our first home we had some work to do to clean up our credit and Rabih (our mortgage guru) was able to simulate what our score would be if we paid off a couple of our credit cards and paid down on a couple of others to get our debt to income in line with the loan requirements. We visited Rabih's office in November and did everything he told us to do and came back in January and we closed on our house February 15, 2020. Here is the kicker, we were able to accomplish this after waiting the required 2 years for an FHA loan after filing bankruptcy. So, yes, it CAN be done!
- It is important to save up for your dream home; however, there are down payment assistance programs available in the state of Arkansas. You might be surprised at the income requirements as they are not as low as you might think and you may qualify for down payment assistance. ADFA Homeownership and Down Payment Assistance Programs make purchasing a home more affordable for low-to-moderate income families and individuals. Find out what programs ADFA offers and how they can help you achieve your dream of homeownership.. Please see the link below for the ADFA website for more information. There are also different loan programs to assist you and this is where arming yourself with a team of professionals will really benefit you as a first time homebuyer. Your realtor will be able to help you determine based on your financial situation which lender(s) will be a good fit for you as they help you assemble your Avengers!
- There are other expenses to consider when you are a first time home buyer other than the down payment, (again as we mentioned) there are several loan programs tailored to assist in most financial situations helping to ease the amount of out of pocket expenses associated with a new home purchase. Other expenses include closing costs and prepaids. Your lender will be able to provide you with an estimated cost to close the loan. Previously, we have seen the market where buyers can ask sellers to assist in paying some of the buyer's closing costs; however, that has not been the case in the last few years as the market has been extremely competitive. This is where your mortgage lender and Realtor really go to work for you with negotiations and tailoring a loan specific to your needs allowing a little extra to be applied to your closing costs working it into your loan. I am not a mortgage expert but I do know several who would love to help you out!
- The best thing you can do to assist your Realtor when you are sending over houses that you find during your many online searches is to windshield it! What does windshield it mean? It means doing an initial drive by and looking at the neighborhood, the outside of the property, what do the neighbors houses look like, etc. I know at one time we had over 20 houses saved and we would drive by them and suddenly our list to give our Realtor went from 20 homes to 5 homes. Pictures can be misleading, even the exterior photos because it is a real estate photographer's job to show the house in the best possible light and the best possible condition. A picture may be worth a thousand words but if you drive into the neighborhood and it doesn't appeal to you then there is no point going any further. This will eliminate time wasters and in a competitive market this can mean the difference between getting the home of your dreams or getting the home you can live with for a few years. Which brings us to number 6.
- Adjust your expectations! This was a tough one for us as we knew exactly what we wanted but because life happens we had to adjust our expectations and learn that our first home doesn't have to be our last home. We bought an older house that has a nice backyard for the puppies and have now worked our way into being able to build our dream home on our land that we purchased last year. We certainly didn't lose anything by buying what we could afford and updating it; if anything, we are in a much better financial position as our house now has equity so when we sell it we will have positive income to go along with our new custom built home. This is a much better financial move than to continue renting and throwing that money away. Now, we have invested in Real Estate. Again, this only took about 3 years from the time we purchased our home in 2020.
- While mortgage interest rates climb they are still not as bad as they have been in the past. If you are waiting for them to come down to 2.9%; it may be a while, if ever. Keep in mind that those were historically low interest rates and we will likely not see them that low again any time in the near future. However, adjusting your expectations and investing in Real Estate as a first time home buyer with a higher interest rate is still better than renting as you are investing in your future. The key takeaway is that yes, the interest rates may be higher but you are also not paying 30-100k over asking price anymore either. The home prices are starting to balance and course correct and stabilize over the last year. There are still some price points and certain areas that the houses are selling quickly (within hours of being put into the MLS) so it is important to work with a Realtor who knows the real estate market where you are looking to purchase your home!
- Please DO NOT MAKE AN OFFER ON A HOME YOU HAVE NOT SEEN! A trend that was happening because of the scarcity of homes and so many buyer's competing for the same homes being so great; is that people were writing offers on homes they haven't even seen in person. We do not recommend doing this as mentioned before pictures are not going to show you any hidden damage. Please do not buy a home without having it professionally inspected and please do not buy a home that you have never stepped foot inside the door. You don't know what you are getting into and to waive your right to inspection just right off the top; not a good idea. The recommendation is to at least have your Realtor or a close friend go and view the house for you if you cannot and have them take video for you. I know I did this for a friend who couldn't travel to where they were relocating and I set it up to where we facetimed while on the tour with her Realtor as she was relocating to Little Rock. Do not buy sight unseen no matter how desperate you are at the time. Yes, it is important to be quick, decisive, and ready to sign that offer; but please take the time to look at the home or at least have someone you trust look at the home if you cannot. You can waive the request for repairs but we highly encourage you to not waive your right for inspection even if it is for informational purposes only.
- Sign up for instant notification when something new hits the market in your price range and in your area. You can do this easily on our website by selecting your specific search criteria and saving the search. That way each time a new listing that matches your search criteria hits the market you will be the first to know it as you will receive a push notification/email letting you know that a new listing matching your search criteria just hit the market. Take advantage of scheduling options on our website. If you see a house and you want to schedule a showing. You can do that right on our website at adkins-associates.com. It is true that the early bird does indeed get the worm!
- Let your friends and family know that you are looking to buy a house and where; especially if they live in the neighborhood or school district you desire to purchase a home in as oftentimes neighbors know when a house is going up on the market before it hits the MLS. These are all things you can do to give yourself the upper hand when you are a first time home buyer. Last, but by no means least; don't be afraid to ask questions, interview prospective Realtors as your buying agent. Make sure they are not only knowledgeable but responsive. I can't tell you the amount of times we missed a deal because our agent at the time wasn't responsive or ready to write our offer and by the time it was sent over to the listing agent; they had already accepted another offer. There is nothing more frustrating than writing an offer only to be told mere seconds after you sign it that the house is already under contract and that we missed it because our agent (Cartman) didn't view us as a priority. I can assure you that will not happen at Adkins & Associates Real Estate. We know how important it is when you're making one of the biggest purchases in your life and we also know what that disappointment feels like. We will make every effort to set the proper expectations, assemble a team of professionals, and help you not only write a winning offer but also help you write an accepted offer that puts you on the path to home ownership!
Author: J. L. Owens
****Don't forget to enter the Taylor Swift vs The Housing Market Contest with the link below! All you have to do is comment the answer (The answer is "22") in the Taylor Swift vs. The Housing Market Blog Post!
Thank you to our wonderful Adkins & Associates agents who helped contribute to this blog post article.
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