Shopping around for a new house?
Right now, we’re in what experts call a “cool market”. But that doesn’t mean you can’t find the home of your dreams. Read on to learn more about what a cool market is and how you can use the current conditions to your advantage as you house hunt.
What Is a Cool Housing Market?
In a “cool” housing market, home shopping and buying activity is slow. This means homes are remaining on the market for longer. As a result, sellers may be more open to lowering their asking prices over time.
Why is the housing market cool?
Buyers have been hesitant about the already-hefty home prices of the last few years. According to the National Association of Realtors, the median existing-home price for all housing types rose above $400,000 for the first time ever recently. On top of that, the more recent hike in mortgage rates has made buyers pull back even more.
This has left a lot of sellers’ homes on the market for an extended period of time. With no good offers, the response of some sellers has been to lower their asking prices. Others have changed tacks altogether and started renting their properties.
Tips For Buying a House in a Cool Market
It’s always good to have a strategy when approaching any type of housing market. In today’s real estate climate, we recommend the following tips for finding the home of your dreams and getting your offer accepted.
Know How Much You Can Afford
Start where you are with what you have. If you haven’t already, go over your finances and assess your income, spending (and spending habits), and expenses. Enlist the help of a financial advisor if you feel the need.
Essentially, you’re looking for how much you can afford in terms of a monthly mortgage. Most advisors recommend keeping your monthly payment to no more than one-quarter of your gross (monthly) income. This should include the required insurance and taxes.
Once you have a cost range to work with, only view homes within this range. Many homebuyers make the mistake of touring homes that are outside of their price range — and then they fall in love. In some cases, they may be approved for a loan for the entire cost of such a home. However, if a buyer cannot afford the monthly mortgage payment, buying such a home could be a risky choice.
Work with a Skilled Real Estate Expert
Buying a house can be done so many different ways, but it’s nearly always easier with a skilled realtor by your side. The best real estate experts are talented negotiators. They understand the legal jargon and technical side of things, and their motivation is to make you — the buyer — happy.
Use their expertise to your advantage. As long as the price per square foot of a potential home is justified and the house is sound and what you’re looking for, they’ll be able to help you assess the best offer for your budget. Realtors can leverage things like the seller’s urgency to seal a deal and the time the home has been on the market to come up with the most enticing offer.
Don’t Compromise on the Quality of the Home
It’s never a good time to buy a poorly built home. While you may be able to “land a good deal” when purchasing a new home, it’s never advisable to skimp on quality.
If you’re unsure about a foundation or possible water damage, enlist an appraiser to ensure you’re getting the best value for your hard-earned money. Do some research about the neighborhood and community. Ensure that — were you to have your offer accepted — you will have made a wise decision.
Look for Properties Where the Seller Is Offering Perks
When sellers are motivated, they’ll often kick in perks to sweeten the deal. Some may cover the cost of closing while others will make room in their asking price for repairs they know are desirable. While this isn’t always the case, it never hurts to ask.
Negotiate and Present a Realistic Offer
While a cold market can mean housing prices are slower to rise (when compared with a neutral market), it doesn’t necessarily mean you’re going to be getting throw-away bargain prices.
In this way, it’s okay to negotiate as you normally would. As always, be realistic with your expectations. Sellers may be more motivated to sell, but imprudently low offers are never taken seriously and will be rejected outright.
Finally, be wary of homes that have been on the market for an extended time. This isn’t to say that such a home couldn’t be a good fit. Rather, you want to know why past shoppers have rejected it. If the issue or issues are not as problematic for you, you may even be able to leverage them in your favor.
Make Buying a House Less Stressful with Help from Members Plus!
Buying a house is a serious and sometimes lengthy process no matter what market you are entering. The added pressure of a cool market can be daunting. Let Members Plus Credit Union make your home buying less stressful. Even if looking and finding the perfect home may take a second, your mortgage doesn’t have to! We offer fast approvals along with the service and guidance we are know for. Please Contact MPCU today for all your mortgage needs!
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