House buyers in a growing number of areas are finding something they haven’t seen in years when house-hunting: Competition. With housing affordability high and mortgage rates low, home buyers are ready to cash in but they’re finding a lot of others are as well.
Bidding wars are becoming more common, particularly as the inventory of for-sale homes remains constrained across the country.
“Buyers have to change their attitude about the way the market is,” says Carol Hooks, a real estate professional with Coldwell Banker Residential Brokerage in Alexandria, Va. “Many still think it’s OK to make a low offer and ask for closing-cost assistance, but they really need to come up with a good, realistic offer and be prepared to pay their own closing costs.”
Real estate professionals are helping to prepare their buyers for the increased competition. For example, they’re encouraging buyers to get financing in order before they look for a home and go through the mortgage-approval process, not just the lender’s prequalification letter. Eldad Moraru with Long & Foster Real Estate in Bethesda, Md., says it’s important for buyers to find a lender who will be able to provide them with a new approval letter within an hour of finding the home they want to purchase. The new letter should include the address of the property so they can attach it to the offer.
Home buyers also need to have their earnest money deposit and down payment ready to go, Moraru says.
“A lot of buyers will have some money in stocks to sell and some money in a checking account and will tell me they need a few days to get it together,” he said. “You need to have that money consolidated and accessible in one account before you find a house.”
As competition heats up , buyers need to prepare to think fast.
“If [the buyer] moves fast enough, [they] can have a home inspection before [they] make an offer, and then [they] can waive the home-inspection contingency,” Moraru says about being competitive in some multiple bid situations when you know when the seller is going to be reviewing all offers.
Some agents compare today’s competitive housing market to the process of dating.
“You need to win on both looks and personality,” says Phil Bolin, a broker with RE/MAX Allegiance in Alexandria, Va. “The ‘personality’ part is the fundamental issue of financing and down payment, but the ‘looks’ part doesn’t cost you anything. It can be as simple as making sure there are no mistakes in your contract. If there are mistakes or missing items in your offer, you don’t look like a serious buyer.”
