Low inventory and rising prices all show one thing to be certain about the Central Texas real estate market: it is prime for sellers. But, we aren’t just experiencing a rise in home values – as it turns out, rent prices around the area are also increasing. What does this mean for the market? To avoid paying a significant value in rent, many are considering buying a home. However, these buyers are running into a problem. The increase in traffic and low inventory of homes available is not allowing enough time for many to find and make an offer on a home they like. How do you compete as a buyer in Central Texas’ hot market? These five tips to buy in a competitive market will give you the edge over the others:
Get Loan Pre-Approval
Before you even begin searching for homes, you should visit a lender and receive pre-approval. What is pre-approval? It is when a lender has examined your financial situation and determined how much mortgage you can afford. DO NOT start viewing homes until you have this letter in hand. Why? To a seller, this pre-approval letter shows that you are a serious buyer and you have the finances to buy the home successfully. If you make an offer without this letter, you may find a seller pass up your offer for another – likely a buyer with the letter in hand.
Look for a Hidden Gem
A move-in ready home is generally in higher demand than a home requiring renovations. Higher demand typically means more competition and competing offers, which may lead to an increased price. However, one that doesn’t include everything on your wish list may come with less competition and a lower selling price. This home, while requiring renovations, could be customized into your dream home. There’s just one caveat to this decision: don’t pick a home that requires too many improvements as it may end up costing you more than you saved – housing code regulations, foundation problems, etc.
Gather Your Best Down Payment
According to ATTOM Data Solutions, the average down payment is around 7.6 percent of the median sale price. While this is the average, it is advisable to submit a larger down payment. Why? Sellers are more likely to accept an offer with a more substantial down payment as this signals the buyer is more likely to qualify for a mortgage.
Make a Strong Offer
In a normal market, submitting an offer below list price is realistic. Even then, you have to be practical with your offer as a seller will likely be turned off if it is too low. This changes even more in a competitive market. How do you know what to offer? Trust the experience and knowledge of your real estate agent. They will know just what to offer while keeping your best interests at the forefront.
While contingencies can protect you as a buyer, they will more than likely place your offer at the bottom of the pile. This is a problem if you are buying in a competitive market. If you want your offer at the top of the stack, ensure your offer is appealing to the seller – i.e., no contingencies.
At the end of the day, it is always beneficial to position yourself as a serious buyer. The five tips above will do just that!
Do you have any questions about buying a home in the Central Texas area? We would be happy to advise you in our competitive market. Contact us today!