Here are a couple of tips that will make you a stronger buyer in 2021.

Which tips do you need to know as a buyer in 2021 to make sure you get the right home at the right price? 

As interest rates continue to rise, it’s important to be able to distinguish between the properties you have interest in. Having an approved letter for the number you’re looking to spend is also important so that you’re not wasting your time when you attend open houses and showings. As different properties from a seller’s market shift into a buyer’s market, the advantage for buyers will take a turn. You’ll see a lot more availability and variety. Over the past year (starting with the pandemic), sellers have had an advantage in terms of asking prices and purchase prices. Specifically, their purchase prices were typically much higher than what they originally asked for. 

When you attend an open house or showing, it’s important to ask three things right off the bat:

1. How many other offers have been sent in?

2. What kind of fixups does the home require? You don’t want to walk into a situation where there are a lot of tedious things to handle after going under contract. 

3. Is the seller amenable to you waiving inspections and/or the appraisal? This way, you’ll have a good idea of where your offer price sits when going under contract.

I’ve sent in offers for many clients in South Jersey over the past year, and it’s made me realize what a bargaining war it is to make your offer stand out. Certain things, such as waiving inspections and/or the appraisal, seem to be very enticing for sellers and their agents. They’re realizing that, from a conventional standpoint, sometimes they don’t need to fix whatever it is that’s in a state of disrepair. 

We know that for FHA appraisals, the offer price has to be met in order for the transaction to move forward successfully. However, some agents don’t realize that if they don’t move toward that number right from the get-go, FHA appraisals stick to a property in New Jersey for one year. This means if the seller or agent wants to put the home back on the market after it failed to meet that FHA appraisal, every agent and buyer will be able to see that number via public records. Thus, buyers can use that as a bargaining chip if the previous FHA appraisal number is less than the number they went under contract for on the home. 

“As interest rates continue to rise, it’s important to be able to distinguish between the properties you have a large interest in.”

For example, if a buyer goes under contract for a home at $250,000 but the appraiser values the home at $235,000 due to a much-needed repair, the seller has to agree to that $235,000 price tag in order for the transaction to move forward. If they don’t agree, the house goes back on the market with the $235,000 value attached to it.

Conventional loans are somewhat different in that you can negotiate the price down. If you and the seller can’t find a compromise, they can put the home back on the market and see if any offers come in that meet their standards. 

As we move through 2021, keep these tips into account as you visit open houses and showings. They’ll help you better understand your situation and prevent you from feeling as though you’re not a part of the process. Remember, this is likely the biggest financial decision you’ll ever make. When you understand the home-buying process better, you’ll have more of an advantage when negotiations commence. 

If you have questions about this topic or would like tips on selling a home, feel free to email me. I hope to speak with you soon.