Home inventory levels hit record lows in 2020 with a decline of almost 40%. So far, in 2021, this trend is continuing. Tight markets make it hard for new home buyers to find a home let alone buy one. Check out these tips that can help you buy a home when there are so few homes on the market.
Have your financing ready. You should get pre-approved for a mortgage and have all documents ready to send to the mortgage lender. Once financially set with the down payment and loan, you can begin house-hunting. Having everything in order first can help you stand out when you make your offer. Whether you’re looking at homes for sale in Macomb County or somewhere else, it pays to be ready.
Know What You Can Afford
There is more to owning a home than the asking price. There are property taxes, homeowner insurance, possibly mortgage insurance, and upkeep and maintenance costs. Have a budget ready before you look for a new home to make sure you can afford to live there comfortably.
Know Your Budget
Avoid homes at the top of your budget. Knowing your budget will help you focus only on the homes you can afford. In low inventory markets, it is usual for homes to sell over the asking price, sometimes thousands of dollars over the asking price.
If you are pre-approved for $400,000, look at homes that are several thousand dollars lower in price. This will let you be able to bid a little higher if necessary.
When you find a home you’re serious about, submit the proper amount of earnest money. The usual earnest money amount is 1% – 3% of the sale price but could be different in your market. Submitting the proper amount shows the seller you are serious about buying the house.
Earnest money protects the seller if the buyer should back out of the deal. The earnest money is held in escrow until the transaction is complete. The money can be applied towards the down payment or closing costs. If the sale falls through because of some contingency listed in the contract, like a failed home inspection, the buyer gets their earnest money back.
Make Your Best Offer
In a low inventory market, there is no point in making an offer that isn’t your best offer. Someone will instantly beat your low offer, so make your best offer. When so few homes are listed, there will not be a lot of negotiating. Your real estate agent can discuss the various strategies and the best way to make your offer.
Write a Personal Letter
In a market with few homes listed, it can help if you write a personal letter to the seller, explaining why you want to buy their home. Explain what you love about the home and why it is perfect for you and your family. Compliment them on how the home has been cared for and what you specifically love about it.