Real Estate Buyers

How the Pandemic Is Affecting Where Buyers Move

In these turbulent times, one thing is for sure: The COVID-19 pandemic has drastically changed the real estate market. Low inventory and high demand continue to drive up home prices as buyers explore new markets and consider new places to call home that previously may have been off the table.

By Kaycee Miller: Kaycee manages marketing and media relations for Rentec Direct and shares industry news, products, and trends within the community.

Trends have emerged in terms of popular destinations as a result of changes brought on by the pandemic. Here are a few factors that are expected to continue influencing buyers in 2021.

Remote Work: The New Normal

While remote and virtual work was a growing trend prior to COVID-19, now, nearly a quarter of the U.S. population is currently working from home because of the pandemic. Many experts predict a substantial percentage of the workforce will continue to work remotely in some capacity even after life returns to normal, which means buyers are looking in locations that previously wouldn’t have been a viable option.

With buyers no longer tied to locations because of their jobs, they’re more often considering a move based on lifestyle and quality of life. And if the trend of remote work continues at its expected pace, more buyers will be willing to live further away from their jobs, foregoing downtown areas and public transportation options because they no longer have a daily commute. As a result, homes with a dedicated office space and other work-friendly features will grow in demand.

In San Francisco, some tech company are now allowing employees to work remote indefinitely. I know one buyer who’s now considering moving across the country to North Carolina. There’s not only a substantial difference in housing prices compared to the Bay Area, but he will also be able to keep his current salary. As you can imagine, this will have a massive impact on his family’s income and savings—and it’s something he never would have considered pre-pandemic.

High Costs Contributing to Migration

With people spending more time at home than ever before, many are weighing the pros and cons of price per square footage and opting for more space in a rural location as opposed to less space in a highly populated area.

A growing number of city-based buyers are also considering moving to the suburbs for the first time in pursuit of lower housing prices. And many people have been forced to move during the pandemic as a result of income or job loss.

The draw of popular downtown areas will not likely disappear completely. Job opportunities and proximity to restaurants, entertainment, and culture will continue to attract buyers. However, 2020 did result in more homeowners and renters moving to the suburbs, especially areas with a high number of COVID-19 cases.

Prioritizing the Great Outdoors

As Americans seek easy access to outdoor recreation options, there have been major increases in the number of people moving into states like Utah, Oregon, New Mexico, and Idaho this year, perhaps looking for more distance from others.

The changes this year have been so abrupt and drastic that we have no precedent for examining these trends. What we do know, however, is that the pandemic is ongoing and its complete impact on the real estate industry remains to be seen. The trends we are tracking may or may not be permanent, but it’s worth keeping a close eye on population movement, as these metrics will definitely influence what the marketplace will look like in 2021.

 

Thinking About Buying or Selling Your Home?

If you’re looking to buy or sell your home, then look no further!

We’re here to service ALL your real estate needs. Over 30 years of experience, you can trust. We are an extraordinary real estate company located in downtown Wolfeboro in the heart of the Lakes Region.

What's your home worth? One of our real estate experts can assist you with your no-cost, personalized, current market analysis.

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New Year's Resolutions for Aspiring Homebuyers

This year, many of us have spent more time at home than ever before, and what we need from a home has changed. If you’re thinking about buying a home with a big backyard, a home office, or just a place where you can paint the walls and hang up all your favorite decorations, here are some new year's resolutions for you.

By Christopher Kelly, RE/MAX Bayside

Reduce your debt.

Your debt-to-income ratio (DTI) will play an important part when lenders determine whether they want to issue you a loan. Your DTI is the sum of all your monthly debt payments divided by your gross monthly income. You can improve your DTI by paying off some of your debt before you apply for a mortgage.

Improve your credit score.

Your credit history and credit score also play a big part in your mortgage approval. The better your score, the better the rate you’ll qualify for, which can save you tens of thousands of dollars over the course of your loan. Start monitoring your credit score now and look for ways to improve your credit score.

Save for a down payment and closing costs.

There are several low down payment options available, but even a small down payment is typically a few thousand dollars, depending on the cost of your new home. You’ll also have to pay closing costs when you purchase a home. These cover expenses such as title insurance, home inspections, appraisals, etc and could run around 5% of the home price. Start saving now to meet your home ownership[ goals!

After you lower your debt, improve your credit score, and save up your down payment and closing costs, you’re ready to get preapproved and find the home of your dreams!

 

Ultimate Fall Indoor Cleaning Checklist

As the days grow shorter, the weather becomes colder and snow is on its way, it's time to begin focusing on the indoor task that you may have been putting off.

 

1. Sweep and Inspect Chimneys and Fireplaces

Tzogia Kappatou/ iStock/ Getty Images Plus

A chimney should be cleaned and inspected yearly. A chimney sweep will help protect your home from accidental fires caused by creosote build-up. If you didn't give your interior fireplace surround a good cleaning at the end of last winter, do it now. Waiting another season will just add to the build-up of soot and make cleaning even more difficult.

Gas logs and fireplaces should also be inspected and cleaned so that they are safe and ready for use.

2. Change Smoke Detector Batteries

Jul Nichols/ E+/ Getty Images

A change of seasons also signals a time to change batteries in smoke and carbon monoxide detectors. This is one chore that can mean the difference in life and death and thousands of dollars in repair costs.

3. Clean or Replace HVAC Filters

firemanYU/ E+/ Getty Images

In addition to having an HVAC technician check your heating system, it is important to regularly change the filters in your heating and air conditioning system. Changing or cleaning filters will improve the air quality of your home and reduce the wear and tear on your furnace.

4. Clean and Reverse Ceiling Fans

powershot/ iStock/ Getty Images Plus

If the ceiling fans in your home have been running all summer, it's time to turn them off and clean the fan. Then, look for a small switch to reverse the blades so that the heated air will be redirected in a downward flow to keep you warmer during chilly days.

5. Deep Clean Throughout the House

gilaxia/ iStock/ Getty Images

If you've taken it easy during the summer and only gotten rid of the most visible grime, it's time to do a deeper cleaning including those places that you have been forgetting to clean including your cleaning tools. As you move through the rooms in your home, follow a checklist to make sure everything gets the attention it needs.

6. In the Bedroom

Oktay Ortakcioglu/ E+/ Getty Images

7. Store Summer Clothes and Inspect Winter Wardrobes

I_rinka/ iStock/ Getty Images Plus

While you're cleaning the bedrooms, don't forget your closet and summer clothes. Empty each clothes closet and sort summer clothes before storing them away. Choose clothes that you want to store until next year to be laundered or dry cleaned. The rest should be sold, donated or discarded. 

While the closet is empty, check that no harmful pests that can ruin clothes are lurking by vacuuming it out well.

8. In the Bathroom

Remove Soap Scum in Bathroom. hesh photo / Getty Images

9. In the Living Room

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10. In the Kitchen

Jul Nicholes/ E+/ Getty Images

  • Empty and clean the pantry. Make a list of holiday baking supplies that you will need.

  • Clean the oven and vent hood.

  • Clean the refrigerator and freezer and discard unusable items. Dust and clean the refrigerator coils.

  • Inspect and clean small appliances.

How To Use Home Equity To Your Advantage

Photocredit: Getty

By Tara Mastroeni, Contributor, Forbes

If you're a homeowner or aiming to be one someday soon, you probably know that having home equity is a good thing. However, beyond that, many people start to lose track. That's why we've taken it upon ourselves to solve the mystery of home equity once and for all. Read on to learn what it is, how it works, and how you can use it to your advantage.

What is home equity?

Put simply, home equity is the percentage of your home that you own outright. While you're always considered to be the owner of your home, if you took out a mortgage to buy it, the fact is that your lender also has an interest in the property. Over time, as you pay down your mortgage, the lender's interest in your home shrinks and your home equity grows.

However, you can also grow your home equity in another way. You can do it by increasing the overall value of your home. This can happen by either living in an area with rising property values or by making substantial improvements to the property that will increase its resale value.

How to use your home equity

The good news is that, once you build it up, you can use your home equity to your advantage. When people talk about real estate being an asset, they mean that building home equity is a way to leverage wealth. Here are a few things that you can do with it.

Home equity loan

Home equity loans are often referred to as second mortgages because the two loans function very similarly. A home loan disburses the funds from the loan in one lump sum, much like what happened when you bought your home in the first place. From there, you'll be responsible for making regular, monthly payments to pay back the money you borrowed.

With a home equity loan, you're borrowing against the equity you've built up in your home so the amount that you're allowed to borrow may be limited by how much progress you've made in paying down your mortgage. Typically, lenders will insist that you maintain at least a 15%-20% ownership stake in your home at all times.

One benefit of borrowing against your home equity is that you can often do so at a much lower interest rate than credit cards or personal loans. That's why many people use this option to pay for big-ticket expenses like home remodels, paying off medical debt, or financing a child's college education.

Home equity line of credit

Home equity lines of credit are similar to home equity loans in that you're still borrowing against the equity in your home. However, the disbursement and fee structure couldn't be more different. With home equity lines of credit, the loan is divided into two distinct pay periods: the draw period and the repayment period.

During the draw period, your home equity line of credit acts a lot like a credit card. You can draw on the equity in your home whenever you see fit. During this time, you'll likely only have to make payments on the interest accrued by your purchases.

After a specified amount of time, you'll enter the repayment period. During the repayment period, you'll no longer be able to draw funds from your home equity. You'll also have to start making payments on both the principal and interest of what you've borrowed.

Cash-out refinance

Traditionally, with a refinance, you take out a new loan - usually one with better terms - to pay off and replace your old one. With a cash-out refinance, things work a little differently. In this case, you borrow more than what you owe and receive the difference in funds, which can be used as you see fit.

Here, the amount that you can borrow above what you currently owe is determined by how much equity you have in your home. Usually, you can borrow up to 85% or 90% of your home's value.

Move into something bigger

The most traditional way to use added home equity is to sell your house to buy something bigger. When you sell your home, you'll most likely use some of the proceeds from the sale to pay off the remainder of your mortgage. However, if there is any difference between the sale price on your home and the amount you still owe, it comes to you as profit. That profit can then be used to buy a bigger home and leverage your home equity even further.

How to figure out how much equity you have

Figuring out how much equity you've built up in your home is easy. All you need to know is what your home is worth and what you owe on your mortgage. You can find out exactly how much your home is worth by having an appraisal done or you can get an approximate figure by having a real estate agent prepare a comparative market analysis. Online valuation tools are also an option, but they may not always be accurate.

Once you have that information in hand, subtract the amount that you owe on your mortgage from the value of your home. The remainder is your home equity.

 

8 Ways to Make a Space Feel Larger

Feeling cramped at home? These tips can help open up a room without knocking down a wall.

  • Accentuate the vertical. Draw the eye upward so a room looks more spacious. Add a bookshelf that reaches to the ceiling. Install vertical shiplap or wallpaper with vertical stripes. Hang a pendant light fixture.

  • Consider “see-through” furniture. Choose chairs and sofas with visible legs instead of furniture with skirts that reach the floor. This allows you to see under and around pieces so they appear to float in the room rather than dominate it. Glass coffee tables are a good choice, too.

  • Lighten up surroundings. We all know white walls reflect light and makes a room look bigger. But why stop there? HouseLogic recommends painting walls, ceilings, and trim the same shade of white to present a soaring, bright space.

  • Go big with accents. Many people think small when designing a small room. Instead, add a couple of oversized accessories, like a big piece of art or a single large chair. A lot of little objects make a room appear cluttered while one or two big ones make it feel more spacious.

  • Get away from the wall. Create a central layout instead of pushing a sofa up against the wall. When there’s a wall right next to a piece of furniture, your eyes are drawn to the wall, which can make the room seem more cramped.

  • Simplify the color scheme. Use a monochromatic color scheme for walls, furniture, and accessories. When objects are a similar color, your eye doesn’t dwell on each one but rather sees them in a unified, uncomplicated form.

  • Skip the curtains. Curtains block natural light and the view to the outdoors, making a room feel smaller and darker.

  • Bring nature indoors. Add plants and use natural textures in furniture to tie indoor decor to the outdoor view that’s visible through the windows that aren’t blocked by curtains.

 

Sources: Denise Balassi, Spaces Of Distinction; Laura Britt, Britt Design Group; Melissa Grove, Laura U Interior Design; HouseLogic.com

 

Closing on a House: The Common Problems to Spot in a Final Walk-Through

Both buyers and sellers should be aware of the issues that can arise during a final home walk-through. The final walk-through typically takes place mere hours before the closing itself. It’s one last opportunity for the buyer, along with his or her agent, to inspect the home and make sure there aren’t any last-minute problems.

 

 

By Deanna Haas, Contributor for U.S. News and World Report

For homebuyers and sellers alike, the final walk-through can be one of the most significant steps in the real estate process. It may also be one of the most nerve-wracking.

Hopefully, your final walk-through will be smooth sailing. Every now and again, though, issues do arise – and they can go as far as to derail the entire home sale.

Here are the most common final walk-through discoveries that can potentially throw a wrench into the transaction:

  • The home isn't empty.

  • The house is a mess.

  • The negotiated repairs haven't been completed. 

  • Included personal property has gone missing.

  • The lawn hasn't been cared for.

  • The utilities have been shut off.

  • The appliances aren't working.

  • There's major damage to the walls or ceilings.

  • The HVAC systems aren't working.

  • The home was damaged in the moving process.

  • Garage door openers don't work.

  • Toilets don't flush properly.

  • Garbage disposal and exhaust fans don't run right.

  • Open and close window/doors to make sure they're in check.

 

The Home Isn’t Empty

Unless otherwise agreed upon, the sellers should be totally moved out of the house by the time of the final walk-through. Now, if they left behind a can of paint or a couple bags of trash, that’s probably not the end of the world. But if they left behind much more, the buyer may have to request they come by and clean up.

The House Is a Mess

The typical agreement is that the seller leave the property in broom-clean condition. This is a somewhat nebulous term, and it may mean different things to different people. The house doesn’t necessarily have to be spotless, but neither should it be a disaster area. Ideally, the house should appear move-in ready for the new homeowners.

The Negotiated Repairs Haven’t Been Completed

When buyer and seller negotiate on repairs or renovations, it’s expected that they all be finished by the time of the final walk-through. If the seller needs a little additional time due to unforeseen circumstances, this should be communicated to the buyer well in advance of the closing.

Included Personal Property Has Gone Missing

Did the seller take items they said they would leave for you? Light fixtures? Window treatments? A piece of furniture you wanted to buy along with the house? That’s definitely something that can stall the closing or lead to some tumult.

The Lawn Hasn’t Been Cared For

Generally speaking, real estate contracts stipulate that the seller will keep the lawn areas maintained until the date of closing. That doesn’t mean everything has to be perfectly manicured, but if the grass is five feet tall, or has died during the escrow period, that’s a problem.

The Utilities Have Been Shut Off

Typically, your real estate contract will stipulate that the utilities have to be on through the final walk-through. If you don’t have power or running water during the walk-through, that could technically be a breach of contract.

The Appliances Aren’t Working

For homebuyers, it’s important to use the final walk-through as an opportunity to test all the appliances included in the sale, confirming they work as intended. If something doesn’t work, you can ask the seller for a repair allowance.

There’s Major Damage to the Walls

Did the seller remove a wall-mounted TV, a piece of artwork, or some kind of home automation technology? And if so, did it leave behind damage to the wall? This could be a big issue.

The HVAC Systems Aren’t Working

Buyers should test out both the heating and cooling capabilities of the home. See that they work satisfactorily. If not, that’s something for which you’ll likely want to negotiate repair costs or a price adjustment.

The Home Was Damaged in the Moving Process

If the sellers did any kind of damage to the home while they moved out, that’s something for you to take stock of. In some cases, it may be worthwhile for you to request a repair allowance.

These are some of the main items you’ll want to look out for if you’re a buyer going through your final walk-through. And if you’re in the process of selling a house, let these serve as words of caution. Make sure to avoid these common hurdles to the home closing.

 

 

How to Write an Offer Letter to a Seller

Connect with home sellers to make them feel good about letting you purchase their home. A personal letter to a home seller allows you to provide better context to the offer price and conditions, and also allows you to make a personal connection by sharing everything you love about the home. 

Getty Images

By Tania Isacoff Friedland, Contributor to U.S. News & World Report

First impressions are everything. Whether you’re buying a home, an apartment or some other type of property, presenting your initial offer in a positive light paves the way for a productive and smooth negotiation process. 

Typically, formal offers are sent by the buyer’s broker to the seller’s broker in writing via email. In some cases, a buyer will also write a personal note to the seller to send along with it.

In this case, the buyer’s broker will often include a short profile about the buyers and express their love for the property, but brief enough so the buyers' personal letter remains impactful and is not redundant. If the buyer is not working with a real estate broker and does not have representation, the offer would come directly from the buyer.

So, if you truly love a home or want to acquire an investment property, how do you write the perfect offer letter that combines your personal touch with a formal offer? 

Keep it simple, and focus on three things: State your intentions, show that you have the financial means to make the purchase and make a personal appeal to the seller.

Here's how to write your letter to the seller:

  • Start with the details.

  • Paint a picture.

  • Romance the seller.

  • Go the extra mile.

Start With the Details

At the beginning of your offer letter, express your appreciation for having the opportunity to visit the property, and state your terms upfront. Note the example below is intended for an offer on a private residence – an offer for a different type of property should be modified accordingly:

“Thank you for allowing me to visit [INSERT ADDRESS]. I love [INSERT ADDRESS] and I’m eager to make it my new home. I’m pleased to present my offer of [INSERT OFFER PRICE].” 

Next, include information about how you plan to pay for the purchase (all cash or financing), your requests for contingencies (financing contingency and inspection contingency, for example), your desired closing time frame and any other special conditions. If you’re financing the purchase, a preapproval letter from your bank should be provided along with the offer letter. 

It is important to make it clear that you’re a serious buyer and you're prepared to sign a contract upon completion of the due diligence process. You should also be in touch with a real estate attorney to help with the transaction.

If you’re making an offer that’s substantially lower than the seller’s asking price, you might consider including your reasoning for the low offer. To help build your case, consider contextualizing current market conditions and recent sales of comparable properties in the same neighborhood or building to put things into perspective. If the property is older or in need of repairs and renovations, outlining what specific updates need to be done and the approximate renovation costs can also help justify your offer.

Paint a Picture

Presenting yourself as a human being, rather than a simple dollar amount, is key to establishing a successful negotiation position. Provide the seller with a brief personal background and tell them about your spouse or family, if applicable.

Include career details, such as your current job and a description of your professional industry, as well as a quick summary of your career path leading up to your current position. This could also include where you grew up and which schools you’ve attended. You can even tell them about any pets you have.

Now, you’re a person with a story – you’ve painted a picture about who you are, which is harder for a seller to ignore. The seller will think of you as a human being, not just another buyer who offered a certain price for the property. 

Romance the Seller

Once you’ve shared a bit about who you are, shift your focus to romancing the seller when it comes to his or her home. Flatter the seller by highlighting all the things you love about the house, and explaining why it is the place you want to call home. Be enthusiastic, but don’t go overboard. 

While a real estate negotiation is a business transaction, if the sellers identify with you on a personal level, they can develop an affinity towards you – particularly in a competitive bidding situation – which may mean that they offer some flexibility during a negotiation. The sellers can feel pleased that they are passing their home on to someone who will love and appreciate it as much as they have.

Go the Extra Mile

In a competitive bidding situation, buyers can send flowers or cookies to the seller, along with a handwritten note. A small gesture like this indicates your thoughtfulness and authentic love for the property. Just be sure to keep it simple and tasteful, as you never want a seller to feel uncomfortable by being overly aggressive.

In the end, the important thing to remember is that you want to make sure your offer letter clearly states your intent to purchase a home, that you are in a sound financial position to make the purchase and that you’re providing a personal appeal to the sellers so they know their home will be in caring and responsible hands.

 

 

The Guide to Buying a Home

Here's what you need to know to get from start to finish in the home buying process. From when to begin your search to how to secure financing to the right way to make an offer, buying a house requires carefully navigating a number of steps. 

By Devon Thorsby, Editor, Real Estate at U.S. News & World Report

Whether it’s your first home or your fifth, the home buying process can be daunting. Not only does the housing market change from season to season, but the process of searching for a house, making an offer and working toward closing evolves over time.

For any homebuyer, you first need to account for your current financial situation, needs in a new home and what features and amenities you hope to have at your fingertips. Before you start touring houses, study your local real estate market to get a better grasp of what’s available and within your budget.

With home prices rising across the U.S. and many markets reporting few homes available for sale compared to the number of buyers, it can be easy to get discouraged. It may take a little extra time to wait for the right house, or it may take some work to improve your credit and save for a higher-priced house, but either way, buying your next home is possible. 

The biggest determining factor in your ability to buy a home, of course, is your ability to pay for it. While some people can liquidate assets and pay for a house in cash, most opt for mortgage programs through a bank, credit union or other type of lender to leverage the total cost of the property.

The first steps to buying a house always revolve around the financial side of the deal – how much you can afford and how you plan to pay for it.

Getting a mortgage

Financing through a mortgage is the most common, and often the most attainable, way to buy a house or condo. 

To avoid being shocked if a bank turns you down for a loan or approves a far lower maximum price than expected, it’s important to know how your credit history and current financial status measure up. The interest rate or amount you pay upfront to the lender (points) is all connected to how attractive a borrower you appear on paper: “How much you can afford also ties into what your future cash flow looks like, and that then ties into rates and points.”

It’s free to receive your credit report once a year through annualcreditreport.com, where you can access reports from the three major credit bureaus, which will provide you with all the information a lender will see about your financial history.

Also take a look at your current financial situation, including the amount of money you have in savings, gross income, recurring expenses and how much you’re able to put toward savings on a regular basis. From this, you should be able to determine how much you can comfortably spend on monthly mortgage payments.

Next, it’s time to shop around for lender and mortgage program options. The most common type of mortgage is a 30-year, fixed-rate mortgage, which typically comes with a slightly higher interest rate in exchange for the guarantee that the payment amount won’t change for the life of the loan. 

The interest rate is typically the most-discussed aspect of a mortgage, as it can differ from lender to lender and program to program. The interest rate offered to you based on your financial situation can be completely different from what’s in a mortgage rate table.

“That’s why the interest rates advertised online are worthless,” he says. “If the lender doesn’t know essential information such as your credit score, your debt-to-income ratio or the size of your down payment, it’s impossible to provide you with an accurate rate quote.”

Buying a home with no money down

If you’re lacking the savings needed for a down payment, you may not be out of the running to buy a home just yet. Active members of the military and veterans can apply for a VA loan through the U.S. Department of Veterans Affairs, which requires a small additional monthly cost in lieu of a down payment, but otherwise requires zero percent down.

There are plenty of other low down payment options – as low as 2 or 3 percent – available to first-time homebuyers, buyers with nontraditional credit histories or those who have recovered their credit over time, among other situations, with additional regular fees. Keep in mind, however, that the less you put down, the more you’ll be required to pay each month.

Buying a house with bad credit

A blemish or two on your credit report can be a problem when it comes to getting approved for some mortgage programs. But fortunately there are options aimed at homebuyers who don’t have a perfect credit history. For example, if you're a borrower with a credit score of at least 580, you may be considered for an FHA loan through the Federal Housing Administration.

Bad credit doesn’t have to keep you from homeownership. Lenders are more likely to look past a low credit score if you’re planning to make a high down payment or have solid proof of a high income that will be consistent for a long time, for example.

Buying a house with cash. If you’ve got the funds to skip financing altogether and pay for your house with cash, you should have a faster transaction, as you won’t have to wait for a loan to be underwritten, the property to be appraised and the lender to formally approval the mortgage.

But that doesn’t mean you don’t have to get your financials in order ahead of time. “The way a cash buyer can be prepared is to be willing and able to show proof of funds, whether it’s stock they’re going to liquidate or cash that’s already in the bank,” says Gannon Forrester, an associate broker with Warburg Realty in New York City.

Additional costs of buying a home

The costs don’t stop at the agreed-upon purchase price and interest to the lender when applicable. Homebuyers should prepared for other costs leading up to and at closing, plus they should have some cash remaining in savings afterward for unexpected repairs to the house. 

Costs include:

  • Inspection

  • Property appraisal

  • Attorney’s fees, points paid to lender and other fees required at closing

  • Property taxes

  • Rainy day fund for repairs

 

Best Time to Buy a Home

Home sellers and buyers alike favor spring as the ideal time for homes on the market. If you’re looking for the widest variety of home options, this is often the best time to start your search. Early fall also often sees a surge in buyers and sellers looking to strike a deal before the weather turns cold.

However, there are also benefits to shopping for a home in the off-season, when there are fewer buyers to compete with. You’ll have fewer houses to choose from, but you may be less likely to find yourself in a multiple-offer situation, which can make it easier to get a seller to take a serious look at your offer. 

Either way, if you live in a market currently low on housing inventory, don’t expect a sizable price difference from season to season. Sellers can wait a few extra days or weeks if a lowball offer doesn’t appeal to them, so keep your offer realistic for what you think a home is worth.

The absolute best time to start shopping for a house, however, is when you’re ready, both financially and personally. If you have children, for example, closing on a house during the summer months is ideal because you don’t have to worry about packing up while kids are doing homework or making a rough adjustment due to midyear school transfers.

The most important rule of thumb is to wait to start house hunting until you’re actually in a position to make an offer. “If you do that beforehand … you’ll end up finding the house of your dreams, you won’t be ready, and someone else will buy it,” says Amin Dabit, director of advisory service for Personal Capital, an online financial advisory and wealth management company.

Where to Start House Hunting

Once you know your budget and how you intend to fund your purchase, you can start looking for the right house to buy. You can begin your search online by searching consumer-facing listing sites like Zillow, Trulia or Redfin, which can help you get a feel for which neighborhoods and houses fall inside your budget.

You’ll also want to interview several real estate agents before you start working with one. It’s important to trust your agent to advocate for you in the deal, so you shouldn’t feel you have to withhold details about the reason you're moving or what’s included in the right home for you. Ask about the agent or Realtor’s schedule and experience and who you’ll be working with most often, and see if the answers meet your expectations as a client.

Be ready to answer questions from your real estate agent about how many bedrooms you need, your preferred neighborhoods – whether that’s based on public schools, access to public transportation or proximity to shops and restaurants – and anything else that’s nonnegotiable for you in a home purchase.

Especially in markets where housing inventory is low, your agent may have to discuss compromising on your vision of your dream home to help ensure that you have enough properties to tour in your price range. Zeibert notes many homebuyers are becoming more willing to sacrifice some square footage or a bedroom for the chance to live in the neighborhood they want: “The house is not the end-all, be-all. While super important, it is the neighborhood and the lifestyle that they are trying to purchase by going out and buying that house.”

How to Win Over a Seller

When you do find that right home in the right neighborhood, it’s time to put in an offer. And in a popular neighborhood, you may have to work fast. It’s important to start the house hunting process with your financial information on hand so you and your agent can put together a formal offer quickly.

Included in that financial information is a preapproval letter from your lender that notes the company’s willingness to work with you to purchase the home. A prequalification letter is also an option, though preapproval tells the seller that the lender has already done a deep dive into your finances and hasn’t found any surprises.

“A preapproval letter will give the buyer an edge when they put an offer in on a house, showing the seller they’re serious and have a good chance of obtaining a mortgage,” Simmons says.

Writing a personal letter to accompany the offer can also provide some additional insight to sway the seller, since people like to hear their house is going to someone planning to make memories in it. Especially if the seller has lived in the house for a long time, sharing your plans to raise a family in the house could make him feel comfortable selling the house to someone looking to make similar memories.

However, Forrester says it’s not always necessary and can occasionally backfire by leaving room for discrimination – intentional or not – and muddling an offer when a seller is focused on the financial details. There are also scenarios when a personal letter won’t have much of an impact. “Sometimes personal things can sway someone, but a lot of times in New York it’s a financial thing,” Forrester says.

Appealing to the seller is important, but don’t get caught up in the heat of a bidding war or negotiations – any agreed-upon price shouldn’t leave you skimping on meals for the next three years or otherwise make it difficult for you going forward. Forrester says buyers can have trouble making the connection between the purchase price in negotiations and actually paying the money when it’s time to close the deal: “They don’t realize they actually have to come up with the cash or be happy signing that down payment check.”

Closing on Your New House

It may take a few tries with different houses or it may require a little back-and-forth negotiation, but eventually the right seller will accept your offer. Now under contract, you feel like you’re in a whirlwind of activity working toward the day you close on the property.

You’ll need to schedule an inspection on the house, which helps to find any code violations or maintenance issues that you should be aware of. The inspection is key to catching any existing problems the seller may not know about or hasn't yet disclosed, and it's often a required step by the lender. Depending on the results of the report, you may need to renegotiate with the seller about needed repairs, a change in price due to the needed fixes or if you’re now questioning the purchase entirely.

Meanwhile, your lender will be working through the formal loan application process, which includes an appraisal on the property to ensure the lender feels comfortable with the sale price. If the appraisal comes up short, you may have to negotiate again with the seller to see if you can lower the price, or you may have to come up with the difference in cash to follow through with the deal.

Combined with fees for your real estate attorney and title insurance that are a part of the process on closing day, you should expect to pay an additional 2 percent to 5 percent of the purchase price.

The home buying process may be done once closing is completed, but your expenses certainly haven’t stopped. Make sure that even after the down payment and closing costs, you still have close to six months of expenses. It’s something that is very important because there is a lot of unexpected cost that pops up when you first move into a home.

How to Successfully Buy a Home in a Tight Seller's Market

If you’ve decided to buy a home this fall, good luck to you. Your challenge will be not just finding a home you like, but also beating out all the other homebuyers who like it and want to make an offer on it, too.

By Teresa Mears, Contributor, U.S. News & Report

The number of homes for sale is low, particularly in the price ranges desired by first-time homebuyers. 

That means if you want to end up with a nice home, you need to be strategic. Expecting to find the home of your dreams by nonchalantly walking into a few open houses or perusing some online listings is not realistic in this seller’s market.

Here are nine tips to help you get the house you want.

Get your finances in order first. Before you intend to start looking, you should get copies of your credit reports to make sure you’re in a financial position to buy. Shop for mortgage financing before you start looking at houses and get a preapproval letter or proof of funds to show the seller.

Move quickly once you find the house you want. That often means making a decision to purchase new homes within hours of them being listed and writing up an offer immediately if you like the house.

Don’t make snap judgments based on listing photos. A house that doesn’t look appealing in photos could still be a great house. Homes being sold by an estate or homes with tenants inside often yield particularly poor photos. Plus, photos fail to convey the feeling of a home or the floor plan. Unfortunately, sometimes pictures don’t tell the true story, you have to be willing to look past them.

Be realistic about the inspection and repairs. The more competitive the market, the less likely a seller will be to make repairs, though some sellers may lower the price if the inspection reveals expensive defects. The purpose of the inspection isn’t to get the seller to repair every small problem but to find out for sure that the house is what you thought it was. 

Start with your best offer. A competitive market is not the right environment to negotiate a bargain. You may get only one chance to make an offer, and your offer may be one of several the seller will choose from. You need to come in with your highest and best. Remember that the offer includes not only the price, but also your financing package and other terms such as the closing date and contingencies.

Write a personal letter to the sellers. Some sellers are interested only in how much money their home sale will yield, but others love their home want it to go to a new family that will love it just as much. If you really like a house, include a personal letter and a family photo with your offer.

Make a big earnest money deposit. The expected size of the earnest money deposit, and the rules about when you get it back, vary by locality. But sellers often see a larger deposit as a sign that you’re serious about the deal.

Make a backup offer. Many prospective buyers don’t want to make an offer on a house that has a pending contract. But deals fall apart over inspections, financing and other terms. If you found the perfect house, you can make a backup offer that will put you in first place if the initial buyer walks away.

Consider waiving or shortening contingencies. Most offers are made contingent on the buyer getting a mortgage, the appraisal being equal to the purchase price and the buyer approving the inspection. Waiving any one of those contingencies can be risky, but may be the right move in some circumstances.