The surging real estate market shows no signs of slowing down and that creates both opportunities and challenges for buyers. When looking to buy a house, a hot market can take home prices and the competition to a new level. Buyers can tell when the real estate market is hot when they see increased home prices, fewer affordable listings, more bidding wars (more buyers competing for the same property), and homes remaining on the market for less than the average length of time.
While the flurry of activity in the housing market is welcomed news, experts tend to agree that the country is immersed in a “seller’s market.” That label typically means that there are more active buyers than inventory of available homes. If you’re considering applying for a home loan, it’s essential to know what to look for when buying a house. It’s also crucial to avoid some common mistakes that could prove costly.
What to Look for When Buying a House
In a seller’s market, listing prices tend to uptick for a couple of reasons. One is that interest rates have gone down. Another is that there are far more buyers chomping at the bit than listings.
Given that real estate agents are advising sellers to list a little higher, you’ll be tasked with finding the one that’s a good value for you. There are a number of things to investigate before gaining a mortgage pre-approval. Here’s what to look for when buying a house:
- Neighborhood: You need to prioritize the location and find a neighborhood where you feel safe. You’ll want to make sure it offers the sense of community you’re looking for and is convenient for commuting to and from work.
- School Systems: When buying a house, you must check out the school systems. There are plenty of online resources to vet school systems. Beyond general ratings, consider stats such as graduation rates and how many students attend college.
- Crime Rates: You’ll want to look at these statistics thoroughly. Many online sites provide numbers based on incidents per 100,000 people. Consider how that compares to small towns versus larger urban populations. At the end of the day, ask yourself if you would feel safe in the neighborhood you’re considering.
- Property Values: It may seem redundant to talk about property values in terms of, well, value. But there are multiple ways to look at increased, static, or decreased worth in the area. If you’re a first-time home buyer who expects to sell and purchase a larger property, fast increases are good. But if you’re downsizing and plan on making this your last home, a static market could help tamp down property taxes.
- Secondary Investment: Some home buyers look for homes that require renovations. The strategy is to buy below market price and gain quick equity after fixing it up. If that sounds like you, be sure about the difference between your ability to complete DIY projects and the need to hire a contractor. The costs can add up quickly.
- Must-Have Home Features: When you decide which home features are a must, keep in mind that according to Zillow, the average homeowner stays in their home for 14 years before moving to another home. Make sure you think long-term when it comes to the space you need for your growing or shrinking family.
- The Right Price: Finding your dream home is great, but if you can’t afford it long-term, your situation will quickly change from bad to worse. Be sure to research “how much house can I afford” before shopping for your home. Consider using an online Home Affordability Calculator and getting a mortgage pre-approval to help you stick to your budget.
- Condition of Costly Items: Even if the outside of the home looks to be in good shape, there is still more work that needs to be done on the inside. Having an inspector check the major systems such as the furnace, oil tank, water heater, etc. as well as check for mold, uneven floors, plumbing issues, and leaks can prove beneficial. Consider asking the seller to repair any issues before closing or offer to take credit so you can fix them yourself.
- The Right Lender: There are many mortgage lenders and mortgage options available. Working with a trusted local lender like Peach State that can guide you through the home-buying process and offer reliable advice for your local community can prove invaluable. Be sure to consider us when you search for the best lender and mortgage for your home-buying journey. Whether you’re a first time home buyer, or a seasoned home-buying professional, we offer a variety of mortgage options to fit your needs.
The important takeaway is that doing the math on value is not just tallying up the down payment and monthly mortgage. Value also includes quality of life, equity, and what you pay in taxes. Of course, nothing gets a buyer in more hot water than making critical mistakes.
What Mistakes To Look For When Buying a House as a First Time Home Buyer
If you’re on the cusp of experiencing the American dream of buying a house, the excitement can be almost electric. And when people are moved by emotion, sometimes they make assumptions that prove costly. First time home buyers are more likely to overlook certain safeguards when they know multiple offers have been submitted on a property they love. These rank among the biggest mistakes.
- Skipping the home inspection
- Putting in an offer without knowing your credit score
- Providing excessive earnest money to sway the seller
- Submitting an offer higher than the market value
Failing to have the structure and mechanical systems checked should be an obvious faux pas; however, it’s surprising how many people feel confident after looking at a property themselves. The other errors in judgment often seem like reasonable strategies in a hot market to avoid having a house scooped up by another home buyer.
For example, putting in an offer on the spot knowing you have a full 20 percent for a down payment seems to make sense. That is until other factors such as a few late credit card payments or excessive student loan debt diminish your credit rating.
Plunking down a large earnest money deposit when buying a house may seem like a good way to get a seller’s attention. But if your circumstances change and you need to pull out of the deal, the seller usually keeps your money.
Lastly, submitting an offer above market value could result in you having to make up the difference — in cash — to reduce the home loan so you’re not underwater.
Apply For Your Mortgage with the Right Lender
If you really want to know what to look for when buying a house, consider working with an experienced real estate professional who can guide you through the process. Their advice about how to negotiate in a hot market could prove invaluable.
When it comes to finding the best mortgage for your needs, Peach State is here to help you every step of the way. Get pre-approved for your mortgage today!
For more tips on what to look for when buying a house, download our "How Much House Can I Afford in Georgia or South Carolina?" guide.
