Buying in 2021…
In case you have lived under a rock for the past 2 years (insert sarcasm here) the Real Estate market for Richmond and most of the surrounding areas in Virginia has been moving at a fiery pace. NAR reported in July 2020 that the average home for sale received 3.2 offers before ratifying one contract. Keep in mind that’s nationally not locally. After talking to Realtors in the area that deal with mainly buyers, the range was at least double sometimes tripled the national average. That means the average buyer will submit multiple offers before being the “top dog.” So here are some things to consider if you are a buyer in today’s market…
Reasonable expectations: As a Realtor, one of my goals is to keep my clients’ expectations reasonable. It’s a fine line to walk and the realtor must understand the specific person’s needs, wants, motivation etc. Sometimes that mean having that hard conversation that you may not get the first home you write an offer which can be a tough pill to swallow, especially if it happens more than once. The important part is to have an open line of communication between the buyer and realtor.
Don’t overextend your wallet: Many buyers in today’s market who get pre-qualified tend to only look at the top of their price range. This can become problematic with unforeseen circumstances that can come up during the process. Lenders often times interchange the terms “Pre-Qualified and Pre-Approved.” It is important to understand the difference; pre-qualified just means that a lender or bank has pulled your credit score. That pre-qualified number could move up or down after you submit pay stubs, car loans, line of credits etc. As a seller’s agent, I try to explain the difference between the two, especially in a multiple offer situation. Talk to your lender and ask to be pre-approved so your price point is solid. Your time and your Realtor’s time is important and should be made the most of.
Move down to move up: Wait, what? With inventory at a low, it may be worthwhile to move down in your price range to have more maneuverability. Think about that for a moment… Offering asking price and having no room to go above asking price puts you at a disadvantage in multiple offer situations. Hopefully your Realtor is doing his/her due diligence to find you every advantage possible to find the right home at the price for you.
Robbing Peter to pay Paul: Heard that phrase before? It’s true with offers as well. Trying to present the strongest and best offer is a give and take. The pitfall is giving a mile to gain an inch, which will only hurt the buyer if the transaction closes. While offering things like paying for the sellers closing costs or waiving a formal home inspection are great in theory, it’s not a wise decision if your wallet is strained right now and you’re at the top of your price range. Some offers are even going too far like trying to waive the HOA acceptance time (illegal by the way) or waiving appraisal without talking to the lender first.
Surprise Mortgage Payment: One thing that I try to have for buyers is a scheduled payment sheet. This is a sheet that any lender can email quickly and painlessly that shows what your monthly mortgage will be at certain price points with specific interest rates etc. The last thing that I would want for any of my buyers is to have buyer’s remorse, which does happen during the transaction and worse, after closing.Understanding what your monthly payment will be could be the difference in loving your new home or feeling trapped in your new home.
I hope you found this information useful, as you prepare or are already in the process of buying a home in 2021. If any questions, please feel free to contact either us.