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First-time Buyers: How to Compete & Win in a Sellers’ Market

Columnist: Tim Carroll
September, 2017 Issue

If you’ve gone through the home-buying process in the North Bay within the past few years, you know how competitive and difficult it can be. But for first-time homebuyers the process can be even more daunting and challenging. If you’re a first-time buyer, there several key steps you can take to greatly increase your chance of competing and winning in a competitive sellers’ market.

•    Work with an experienced and connected Realtor. In today’s fast-paced market you need a Realtor who is knowledgeable, hardworking and has strong connections within the real estate community. Kim Carroll, Realtor at Prosper Real Estate in Santa Rosa says, “Choose your agent wisely. Just because they have a license doesn’t mean they have the experience. The average Realtor in Sonoma County closes only three to five transactions per year. Be sure to interview several agents and choose the person you feel will work the hardest for you and who has the experience”.  

•    Get “pre-approved,” not “pre-qualified.” When a lender “pre-qualifies” someone, it simply means the loan officer has reviewed the credit, income and assets of the buyer. In addition, they likely will have run the buyers application through an automated underwriting system that generates an “unofficial” pre-qualification. “Pre-approval” means that in addition to the above steps, the buyer’s loan has been submitted to an underwriter for review and approval. This simple step can give you the edge you need as it removes any doubt from the seller’s mind whether you’ll qualify for a loan.

•    Have realistic expectations and understand current market trends: “One of the biggest challenges working with first-time homebuyers today is that much of their information is coming from TV shows like House Hunters,” says Adam Menconi, broker at Prosper Real Estate. Unfortunately, this can give them a distorted sense of reality. The last episode they watched may have been about a purchase in Cleveland and they incorrectly assume things will be the same in Santa Rosa.” Therefore, it’s critical to sit-down with your Realtor and devise your strategy for making offers. Menconi has another suggestion, “Be careful with the advice offered by friends and family. While we all appreciate input from those close to us, it may not always be the best advice. Uncle Joe, who made his living in manufacturing and has not purchased a home in 20 years, may not be the best person to advise you on purchasing a home in today’s market.”

•    Be flexible with your “must-haves” and “non-negotiables. Most first-time buyers have visions of a cute house in a quiet neighborhood and a white picket fence. The reality is your first home most likely won’t be your dream home, or the home you retire in. Therefore, try to establish the critical elements that you absolutely need such as number of bedrooms, back yard and garage. If your list of “must-haves” is too long, you’ll severely limit the number of properties available to you and limit your chance of success. Be flexible.

•    Make your highest and best offer upfront. Today’s market is clearly a “seller’s market,” which means there’s a shortage of homes on the market and a huge demand. This means that you’ll have a lot of competition. “Most first-time buyers are nervous and driven by fear,” says Menconi. “I equate the process to trying to jump on a moving train—the initial leap is scary. Unfortunately, in many cases, fear wins out and people are afraid to make their highest offer.” As a first-time buyer, ask yourself: How much do I want this house? If you want it, you must play to win. In many cases that means offering above the asking price. Increasing your offer by $10,000 will only increase your payment by about $50 per month. 

•    Offer a quick close. Many sellers today want their transactions to close quickly. Buyers who can move fast oftentimes have a greater chance of success. If possible, offer a closing period of 21 days (versus 30 to 45 days). Reduce appraisal and loan contingency periods down to 14 days. Work closely with your agent and lender to determine just how fast you can close.  

Today’s real estate market favors the seller, and this has led to incredible competition among buyers. Unfortunately, most first-time buyers don’t have the deep pockets or financial qualifications of more seasoned buyers. Therefore, it’s critical to find ways to make your offer stand out from the rest. By following the above suggestions you will give yourself the best chance to compete and win.

 

Tim Carroll is branch manager of CMG Financial in Rohnert Park. For more than two decades, he has helped North Bay residents with their home loan needs. He specializes in both purchase and refinance transactions and especially enjoys educating and assisting first time homebuyers. For more information, go to www.homeloansrohnertpart.com. Or, contact Tim at tcarroll@cmgfi.com or call (707) 781-8180.

 

 

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