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By: AgFed Credit Union

Welcome to AgFed Credit Union's MoneyDig blog! 

Get confident about your personal finances with a number of articles, tips, advice and more.


How to Buy in a Competitive Market

 Jul 05, 2021
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In case you hadn’t noticed, the housing market has sort of exploded lately. For those looking to sell a home, this is excellent news. But if you're on the other end of the process, where you were looking to buy a home sometime soon, it might not have been what you were hoping to hear.

Buying a house in a competitive market can get complicated, and the fierce competition for a good home can drastically change the buying process itself. You’re going to have to be prepared and act fast, which might mean you have to stretch your comfort zone. Fortunately, we have some advice to help you get ready to pounce on your future home.

Sort out your finances first

This should be pretty obvious, as the key word for today’s home-buyers is “competitive.” You won’t have time to hem and haw over every option or consideration. You’re going to want to fly through the process, which means you need to have all your paperwork ready to go.

The first recommendation here is to have a sizable down payment. You should be aiming for an amount that will give you a solid start on your mortgage. The goal is to get pre-approved, not just pre-qualified. Pre-approval means your lender has verified income, credit, and other important factors that verify how much home you can afford.

Another step that will help with the pre-approval process is to work on improving your credit score. This means settling outstanding debts and paying down your balances, but don’t close any accounts if you don’t have reason to. Open, inactive accounts shouldn’t hurt your credit, and you can close them once you’ve bought your new home.

A lot of these steps will need to be done ahead of time, and it won’t hurt to meet with a trusted financial advisor. Your financial advisor will help you make sure that your finances are in order and steady enough to handle the home-buying process.

Buying a new home takes a lot of paperwork, and it’s a good idea to gather up your records before getting started. This includes address and employment history, liquid and nonliquid assets, and information on loans and other debts. Issues with paperwork can lead to financing delays, which won’t help you in this grab-and-go market.

Get ready to dive right in

Finding the right real estate team is a clear advantage in this housing market. A good, experienced agent or team will help you navigate the process and act as your advocate. Don’t be afraid to talk to some of their past clients, and let their recommendations guide your decision.

Competitive housing markets mean you need to know exactly what you’re looking for. You’re probably going to have to be able to make big decisions fast, and you might not have time to double check things. This means you really need to narrow down what you want out of your new home, and why, so that you can be ready to grab it when you see it.

We can’t stress this enough—you probably need to be faster than everyone else. If you can jump on a new listing quickly, you’re that much more likely to close the deal. This means getting local with your realtors, so that they can be on the ground and tell you what pops up as soon as possible. The seller won’t wait around for you if they have someone else lined up.

Be the dream buyer that your seller is looking for

Competitive markets are better for sellers than they are for buyers, but it’s worth remembering that your future home’s current owner is probably also pretty stressed out. There are some things you can do to make yourself a more attractive buyer, and a lot of them involve taking a load off of the seller’s shoulders and making extra efforts to smooth out the process for the seller.

As we mentioned above, it’s a good idea to Include a strong pre-approval, or a conditional approval. Coming into the negotiations with this advantage puts you ahead of anyone who doesn’t have one, and it gives the seller some peace of mind. Pre-approval means the deal is less likely to be held up by financing issues.

There are other ways to make your offer stronger, as well. Make sure you include all relevant forms, disclosures, and information the seller needs to make a decision. Incomplete offers are more likely to be ignored if there are better ones available. You might even consider including a personal letter to the seller, to give your offer some personality. And make sure you’re easy to communicate with and always reply promptly.

If you’re competing with other buyers, there’s always the possibility that someone else is offering cash. Cash buyers tend to offer around the asking price, so if you’re looking for more ways to stand out, you can get some attention by offering more than what they asked for. You can also consider an escalator clause, which states you’ll match competing offers up to a certain point.

All in all, it’s incredibly important that you be flexible. It’s very, very unlikely that you will ever find a “perfect” home, so you need to decide what’s non-negotiable beforehand. Have these conversations with your family and decide where you can bend, and what is going to break the deal.

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