With the real estate market in California being so hot right now, it is proving to be a seller’s market where houses are often going on the market and back off again within 24 hours. This has resulted in many hopeful potential homeowners feeling the pangs of regret when the home of their dreams gets away.
Potential homeowners can experience house hunting depression when prospects seem bleak and home buying is getting more competitive, especially when it comes to homes that are both affordable and of good quality.
Here are a few ways to deal with moving forward after losing out on your dream home.
Get your finances prepared
When the market is competitive like it is right now, it’s natural to worry about losing out on a dream home to other buyers, especially if it has already happened at least once. Don’t let this influence you to overspend or get the wrong house for you. Don’t let a scarcity mentality affect your decision on buying a home out of your price range moving forward, even in an uncertain market.
Take a long look at your finances and figure out how much you can afford to spend on a home. Then get preapproved for a mortgage before you begin to look at homes. A mortgage preapproval is an offer from a lender, or bank, to loan you a certain amount under specific terms. If you end up in competition with other buyers for a home, offers from preapproved buyers will likely be accepted from the seller over buyers without preapproval.
Before you and your Realtor look at any homes, have your Realtor walk you through a real estate contract and explain all of the terms and what may or may not be negotiated. Together, you can discuss the risks of making specific concessions, so you can decide the terms you feel comfortable with.
Be prepared to bid
In a competitive real estate market, it is worth considering looking at homes that are under your budget so that you have some extra padding in your budget to bid with. When there’s a lack of inventory, homes are likely getting multiple offers and will often sell for more than their listing prices, often by thousands of dollars.
You need to be prepared to get into bidding wars and know your budget. If you start looking at homes at the top of their budget or above, you aren’t going to get the house in this type of market without way overspending.
It is possible that you’ll have to offer above the listed price on the home in order for your offer to be considered by the seller if there are other interested buyers, but make sure that the price you are offering is still within your budget. Think more about what will happen after the bidding war, like the years that you’ll be repaying the mortgage and take those numbers into consideration.
To be sure, calculate an estimate on the cost associated with your monthly mortgage payment, utilities, insurance, and any other necessary monthly expenses to make sure you can afford a home before you begin bidding.
How to bid for your dream home
The most important thing to do before you begin bidding against other home buyers is to be prepared. Talk over with your Realtor how the bidding will work and what things will be on the table to negotiate.
Are you willing to make some concessions to the contract to win over the seller? The more competitive the market is, the more concessions that buyers can be convinced to make. Whether it’s being flexible on the closing date or giving up the right to request repairs or to back out of the deal if the home inspection results are not acceptable.
You need to talk over the possibilities with your Realtor and understand the risks. Also know your budget and don’t concede on any protections in the contract that you couldn’t afford to do without.
If you can buy with cash, then you should. Sometimes this just means that you can come up with the money from your lender faster than the other bidders can.
If you must bid over the asking price, think of it in the perspective of a 30-year mortgage. A lot of times, going up five or ten thousand dollars can spread out to be only a few extra dollars a month over the span of the whole mortgage.
Most importantly, before you start a bidding competition, calculate what is the most that you’re willing to spend on your new home. You and your Realtor knowing that number beforehand will keep you on track and prevent overspending. It’s also important that you have peace of mind if you decide to walk away.
Have a great Realtor on your side
When you are trying to buy a home in a seller’s market, make sure you get the services of an experienced, hard-working Realtor. They will make sure you get the right home for your needs and help you stay on track with your financial goals.
There are simply too many nuances and intricacies when it comes to investing in real estate to leave it to chance by doing it on your own. You need someone who knows the legal procedures and negotiating tactics needed to walk you through every process.
A great Realtor will help you craft an offer that you will feel comfortable with, that is still competitive for the home you want. They’ll likely be able to determine if there is anything that will sway the listing agent and seller to sell the home to you that you might not come up with on your own.
Get ready for your next home
Whether you win your bidding war on this next dream house or in the near future, there are a few helpful things to keep in mind before going all in on investing in your new home.
When you think you’ve found the right next house, make sure it checks off the right boxes for you with this list.
When you do find a good one, make sure you take a moment to read through how to avoid these major homeowner regrets before buying. No home is perfect, but it’s smart to be aware of all that you can before taking the leap of investing in real estate.
When you are ready to move forward with buying a home, here are the steps to take to prepare for a smooth transition into new home ownership.
Remember that even though the real estate housing market favors sellers right now, there are still plenty of great houses that will be available for you. People are often moving and you will find a house that is a great fit for you and your family. There’s more than one great house out there that will fit your needs.
Home buying can be intimidating under normal circumstances, and we understand that buying a home during the pandemic can be even more stressful. So be sure to check out Coronavirus Real Estate Guide for what to expect when buying a home while keeping safe. Also, be sure to reach out and ask your Realtor for any updates to safety procedures that are being handled at this time to make sure you still get your dream home, without risking your health.
When you’re buying a home, the process and can be a lot to handle. Having a great Realtor on your side can make a world of difference. They can help find the right home for you, help you get a good inspector, help in negotiating your mortgage, and answer all of your questions.
If you’re thinking that now is the right time to buy or sell a home in the Sacramento area, give us a call at Quantum Real Estate to schedule a free consultation.