98% of First-Time Home Buyers Lost Out on a Home They Wanted: How to Avoid the Same Fate
In today's market, first-time buyers are struggling. Here's how to give yourself an edge when so much competition exists.
- A new survey reveals that many first-time home buyers have lost out on a home to another bidder.
- With the right strategy, first-timers can give themselves an edge over the competition.
Today's housing market is tough to navigate. Not only are home values extremely high, but there's not nearly enough inventory to meet buyer demand. As a result, many buyers are finding themselves thrown into bidding wars, where they're pitted against at least one other buyer in an attempt to get an offer accepted. Any time there's a bidding war, someone will inevitably come away disappointed.
First-time home buyers are really feeling the pain in that regard. In a recent Opendoor survey, 98% of first-timers say they lost out on a home they were interested in. If you've had that happen to you, or you want to avoid that fate, here are a few things you can do to give yourself an advantage.
1. Make an offer above asking price
Home prices are up so offering a seller's asking price may already be a stretch for you. But the reality is that a lot of sellers are walking away with deals that are above asking prices due to bidding wars. If you want to avoid a bidding war in the first place, you might consider going above asking yourself. If you do, a seller may just accept your offer without entertaining others.
How high above a home's asking price should you go? It depends on the local market, and your real estate agent should be able to offer guidance, but generally, if a seller lists a home for $500,000, offering $502,000 won't cut it. Offering $515,000 or $520,000 may be a different story, though.
2. Get pre-approved for a mortgage
Getting pre-approved for a mortgage doesn't guarantee you a home loan. Instead, it sends a message to sellers that you're a serious buyer whose finances have already been reviewed by a lender.
Having a mortgage pre-approval letter in hand could help sway a seller to choose you over another buyer. If your seller accepts another offer, they take the risk that your competition won't manage to secure a mortgage for the property in question. That's a risk a seller may not want to take.
3. Make it clear that you'll be flexible with your closing
The more leeway you're willing to give a seller as far as a closing date goes, the more likely you'll be to get your offer on a home accepted. It may be the case that your seller wants to delay their closing for three months to coincide with the end of the school year, for example. If you make it clear that you'll work around your seller's schedule, you may get your offer accepted more easily.
Being a first-time home buyer is tough. But it's especially hard in today's housing market, where there's so much competition. If you've already lost out on a home, these tips could help you avoid a repeat scenario. If you're making an offer for the first time, these tips could help you emerge victorious.
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