In the past several years, it has been a pretty strong buyer’s market in most areas. That has recently completely switched over – it is now a sellers’ market in most areas.
So what does it mean to be a buyer in a sellers’ market? The thing you’ll need to understand is that it is going to mean more preparation that it has in the past.
The very first thing you’ll want to do is talk to a lender. Get yourself pre-approved by a trustworthy lender, and have that lender letter in hand before you even start looking.
There are a few reasons for this:
- You want to know what you actually qualify for, and how long it will take for your lender to close your loan. There is a difference between what you are comfortable paying every month and what the bank is willing to lend you. It is best to know up front what that number is – before you fall in love with a home that is outside of your price range. What’s more, while some smaller, more local lenders can close your loan in as little as 21 days, some of the bigger companies may need more than 30 days. You’ll want to know this from the start so that you can write a reasonable closing date in your offer. Remember that the sellers need to make their own plans for moving, so they’ll want a firm date to plan around.
- If you see a home you want to write an offer for, you want to be prepared to submit a complete offer. That means the offer, the lender letter and a copy of the earnest money check. This lets the seller and their agent know that you are ready, willing, and able to close on the contract that you have just offered them, after your due diligence has been completed.
- Sometimes there are issues on your credit report that need clearing up. This can be anything from a mis-reported item to a credit score that is not quite high enough to qualify. You’ll want to be sure everything on your credit report is cleared up before you shop for your home so that you can qualify for that loan! Another thing to remember is that the mortgage lender will pull your credit twice, once at the beginning of the loan process, and then again just before the loan closes. You’ll want your credit report to be strong and consistent, and knowing what’s on it and how to keep it looking good will be a discussion that you have with your lender at the beginning.
In Part 2 of What it Means to be a Buyer in a Sellers’ Market, we will take a look at some of the things you will want to know once you’ve got your lender letter in hand and are actively ready to shop for your new home.