Let’s embark on your house hunt with a dream in mind, one that can transform into a delightful adventure. As a homebuyer, particularly if you’re a first-timer, you may have visions of finding the perfect house in a fantastic neighborhood at an unbeatable price.
In the past, achieving that dream might have been possible with a stroke of luck. However, in today’s seller’s market, once you move beyond daydreaming about listings and start making actual offers, reality can hit you fast and hard.
Now, let us clarify something: We are not here to discourage your house-hunting endeavors, and we certainly don’t want to shatter your real estate goals. Instead, We aim to assist you in succeeding by highlighting some common misconceptions we frequently come across in our line of work.
So, here are a few house-buying dreams that might require a reality check in today’s market.
Your dream home will fulfill all your wishes
With historically low inventory, that so-called perfect home, if and when it pops up, is likely to attract a multitude of buyers. Even if it initially seemed like a “great price,” it will probably trigger a bidding war. So, does that mean it won’t be perfect after all?
Keeping an open mind is key. Understandably, you want to avoid extensive renovations or a lengthy commute to work. However, being willing to make cosmetic changes or drive an extra ten minutes can significantly aid your cause.
You can find a mortgage after finding the house
House hunting can be fun, while finding a mortgage may feel like a chore. But if you postpone securing financing until after discovering your dream home, there’s a good chance it will be snatched up before your loan paperwork is even complete.
Having your mortgage pre-approval before scheduling your first viewing is crucial for several reasons. Firstly, it provides a guidepost by revealing the loan amount you qualify for—more or less than you expected. Additionally, due to COVID-19, many markets now require buyer financial statements to schedule a showing, helping sellers differentiate between serious buyers and mere window-shoppers.
What if you’re just casually browsing and stumble upon a home that ticks all your boxes, prompting an immediate offer? Without proof of funds, you can’t submit a competitive offer.
Even cash buyers should consider obtaining a pre-qualification. It serves as a safety net in case they fall in love with a home that exceeds their liquid budget. And the best part? It’s incredibly easy to call your banker and secure one over the phone within an hour.
You can handle the homebuying process on your own
Thanks to the internet, you can conduct preliminary research without a real estate agent, which is a great way to familiarize yourself with the market you’re exploring. However, beware: there’s no substitute for an agent’s training, guidance, and experience.
The truth is, a local real estate agent can more accurately determine what constitutes a “good deal” and speak confidently about factors like location. They also have access to vital information shared on the multiple listing service, such as essential details like “This property is located on a flood plain” or “Price reflects the need for a new roof.”
The seller will fix any issues uncovered during the home inspection
Traditionally, a proud seller would be more inclined to address most problems. But in today’s seller’s market—which still encompasses most of the country—not so much, especially when there are backup offers and buyers willing to waive the inspection altogether.
So, let’s be realistic. If there are major structural issues, evidence of radon or mold, or significant plumbing problems, negotiating the price may be possible, but not always.
While an inspection aims to shed light on maintenance issues and potential defects, many smaller concerns will likely be forgotten once you move in. Expecting a seller in a competitive market to address every minor detail is a delusion that could cost you the house.
The asking price is what you’ll pay
The prevalence of bidding wars in recent years has resulted in a pricing strategy that can be frustrating for both real estate agents and buyers.
To maximize interest, many seller’s agents have employed a “bargain basement” starting price, anticipating a bidding war that will drive up the final price.
In some markets, that final price can skyrocket. It’s not uncommon for homes in high-demand areas across the nation to sell for $100,000 to $200,000 above the list price. So, if the cost of a beautifully renovated, spacious home in a fantastic location seems too good to be true, chances are it’s a delusion.
Can’t find the right house? Just build one instead
The real estate market is posing challenges for homebuyers across the United States. Many buyers are now considering purchasing land with the belief that building a home from scratch will be less arduous than navigating listings and surviving bidding wars. It’s an appealing fantasy, but be sure to do your homework.
However, be cautious. Many building materials are currently back-ordered due to supply chain disruptions, and their prices are at all-time highs. There’s also a general labor shortage across much of the U.S. Furthermore, depending on the parcel of land, you may need to hire professionals to conduct tests to determine its buildability. Infrastructure for electricity and septic systems might also need to be added. The costs can be astronomical, and the process itself could take several months.
So, as you embark on your house-hunting journey, keep these insights in mind. While the current market may present some challenges, with the right mindset, realistic expectations, and the guidance of a trusted real estate agent, you can still find a wonderful home that suits your needs and brings you joy. Happy hunting!
