What are the biggest challenges for homebuyers this year, and how can they be navigated?
For those that have purchased homes, or made the move up recently, this promises to be one of the most attractive years to do so. Of course, this doesn’t mean that there won’t be challenges and obstacles. So what factors could hold many buyers back from buying a home?
Down Payments
While homes in many parts of the country are still trading at very attractive prices, down payment requirements are still higher than they used to be. While Millennials are bringing a major wave of potential home buyers to the market, and many members of Generation X are looking to get back in to homeownership, many won’t have substantial savings to leverage as down payments. Making traction by trying to save is becoming even more difficult as rents and home prices rise simultaneously. Fortunately, those willing to look will find a variety of low and no down payment home loan options, as well as down payment assistance programs. Buyers can’t always expect home sellers or Realtors to be aware of these programs, but they are out there.
Financing
New and more aggressive mortgage loan programs are coming into the market. Some offer lower down payments and even 100% financing, others offer easier qualifying. However, the overwhelming sentiment still appears that mortgage underwriting is still too tight and difficult, even for very affluent executives with great jobs and incomes. This can make it a little frustrating to buy a home. However, those that wait until underwriting is relaxed even further will have to deal with higher interest rates and house prices. There are great home loan deals available, but it can take a little extra mortgage shopping to find them, and a lender that is serious about getting applications funded. But it is well worth the time invested.
Selling Old Homes
This is a superb time to move up to larger homes, and for some even to downsize. However, while the U.S. housing market is noticeably in better shape and heading in the right direction, not all homeowners will find it a breeze to sell their current homes for top dollar. It will take a smart approach to marketing, good pricing strategy, and will depend on the local market and what type of competition there is. Are foreclosures still rife and creating a drag on values, or is there a ton of new construction which may look more attractive? What’s your plan B to sell fast and get cash?
Responses from Real Estate Agents
Ironically, one of the biggest hurdles for many would-be homebuyers this year is simply going to be getting responses from Realtors advertising properties. Why exactly so many spend such great amounts of money and time on advertising only to not bother answering phones and emails is still a mystery, but it remains one of the painful realities of the industry for homebuyers. Just expect to make a few calls and inquiries before finding a source of properties. There are good Realtors and investors out there that provide great service, you just have to hunt them down. Just don’t let them go once you’ve landed one.
Making Sense of the Market
Some will continue to allow their lack of certainty about the real estate market, or the contradictions they experience between perception and reality to cause them to drag their feet and miss out on this great opportunity. Home buyers need to recognize the advantages of buying a home right now, and recognize how to separate this common sense approach from being blown by the whims of media hype. While there are many great house deals to be found when looking at the larger picture some will also have to get over the idea of scoring ‘steals’ on foreclosures and short sales and still getting their vision of a dream home in one package. These properties are still out there, but represent a smaller portion of the market than they used to.
Dealing with Competition
As the American housing market continues to improve, the level of competition over homes for sale will grow too. This doesn’t mean that competition is a bad thing. Sometimes it just means buyers need to move faster when they find a decent deal, though sometimes bidding wars can get overblown. Buyers need to remain objective and know when to walk away or not.
