What You Need to Know About Buying a Home This Year
How to make a daunting process a little easier.
March through July are prime months for buying and selling homes. In fact, a recent report from Zillow showed that homes listed from May 1 to May 15 have a better chance of selling faster. But this busy and competitive season can be overwhelming for potential home buyers. “Home shopping season this year is shaping up to be one of the most competitive in recent history,” Jeremy Wacksman, Zillow’s chief marketing officer, told Real Simple. “There are 3 percent fewer homes for sale now than a year ago, according to Zillow housing data. Most metros are sellers’ markets and in hot cities like Seattle, Denver, and San Francisco, buyers should expect lots of competition and even bidding wars over desirable homes.” Zillow also reports that U.S. home values across the nation are up 7.2 percent over the past year and there are three percent fewer homes to choose from than a year ago.
To help potential buyers, we asked Wacksman for his tips for home shopping in this year’s competitive market. Check out what he had to say below and keep these in mind throughout the process.
The peak home shopping season is actually longer than it used to be because it’s taking longer for buyers to find a house. So you don’t want to procrastinate. “The home search process takes buyers an average of four months, and only 46 percent of them will get the first home they put an offer on,” he says. He also suggests getting your financing squared away early so you can make a competitive offer quickly when you find a home you’re interested in. “77 percent of people get pre-approved from a lender before they even find a home they want to make an offer on,” he says.
Find an Agent You Can Trust.
You’ll be working with this person a lot throughout the process so it’s important to find a trustworthy realtor with proven success stories. “Your agent is one of your biggest assets during the home search process,” Wacksman says. “Take time to find an agent who has expertise in fast negotiation, leveraging escalation clauses, and winning bidding wars. A good place to start your search is Zillow’s Agent Finder tool, which allows you to search for agents based on their area of expertise or past sales, as well as read reviews from their previous clients so you know if they have a winning track record.”
Sign up for alerts on real estate sites so you’ll be notified of new houses on the market. “Also, try to virtually tour as many homes as possible,” Wacksman says. “You can often get a good sense of the home, it’s layout, and more from the listing photos and videos, which can help you narrow down your list of top favorites before you attend an open house or in-person tour.”
Stick to Your Budget.
It can be difficult—first-time buyers are more likely to exceed their initial budget than repeat buyers—but it’s less likely to put you in a financial bind down the road. “Calculating how much you can afford early on can help you put parameters around your budget so you’re searching for and biding on homes that are within your price range,” he says.
Think About Extra Costs.
Don’t just focus on the sticker price of the house or the monthly mortgage payment. There are a lot of extra costs that come with owning a home that you don’t have as a renter. Homeowners can spend more than $9,000 per year on extra costs, according to a report from Zillow and Thumbtack.
Consider Unique Tactics.
In a very competitive market, there are some things you can try to get the house of your dreams. “Writing a letter or making a video can be a great way to set your offer apart from the rest,” Wacksman says. “While a competitive monetary offer is still very important, providing a thoughtful letter with some background about yourself and why you want the home can help in certain situations.”
Keep Options Open.
Hopefully you will be able to find a place you’re happy and comfortable with, but it can be helpful to come up with a Plan B just in case—especially if you have to move out of your current place by a certain time. According to Zillow, more than half of buyers said they also considered renting, and more than one third of first-time buyers seriously considered continuing to rent.