Climbing home prices and lack of inventory create challenges for anyone looking to buy a home, but the biggest negative impact is on first-time buyers. Without the profit from an existing home sale to provide some capital to buy a new home, and multiple buyers to submit competing offers, it’s harder than ever for first-time buyers to purchase a home. While there are challenges to buying a first home in a seller’s market, SetSchedule CEO Roy Dekel says there are some ways that buyers can better position themselves to have an offer accepted. Make sure your credit is in top shape, and get pre-approved for a mortgage In a competitive market, there are often multiple offers being submitted for a home, and first-time buyers have to contend with cash offers that are more appealing to sellers who want to sell their home quickly. “First-time buyers are left behind because the presumption is that they will be subjected to loan underwriting that is much slower, because they don’t have the track record,” Mr. Dekel said. “That may lead to lost opportunities because sellers don’t want to wait for the deal to close.” On the other hand, if a buyer has a pre-approved mortgage, with paperwork in hand, it demonstrated to the seller that they are serious about buying a home and help speed the process along. In order to get that pre-approval and eliminate as many roadblocks as possible, Mr. Dekel recommends that anyone looking to purchase their first home pay close attention to their credit. Buyers with high credit scores will be approved more quickly and subjected to less scrutiny than those with a rocky credit history. Find the real estate agent Mr. Dekel recommends that first-time buyers be sure to find an agent that is willing to work with them to find the perfect home. That means one who knows where to find houses that are priced affordably, can recommend programs and other resources for first-time buyers, and is willing to take the time to guide the buyer through the process. To find the right agent, Mr. Dekel recommends buyers ask about their agent’s relationships with real estate brokerages, as well as mortgage lenders, in order to find a realtor who can help through every step of the homebuying journey. Another key is to make sure the agent is familiar with areas and markets where housing is more affordable. Adding to the challenges for first-time buyers is the fact that a lot of starter homes have been bought by investors who are hoping to sell them for a profit, or turn them into rental properties. However, there may be some neighborhoods where bargains can be found, if the buyer and their agent know where to look. Most importantly, Mr. Dekel recommends finding an agent with patience and understanding. “I personally recommend that you go with an agent that is not extremely busy,” Mr. Dekel said. “If they have too many clients, they may be too inundated with other demands to provide the support that a first-time homebuyer would need.” Make sure you’re ready to settle down Buyers who have a more nomadic lifestyle might want to hold off on buying a house in the current market, but those planning on staying put for ten to twenty years will see their purchase pay off. Families who are planning to have kids and settling into a house for the next decade will see the market complete another cycle, which means that they won’t lose money if the market takes a downturn. On the other hand, if someone isn’t prepared to make a ten-year commitment, Mr. Dekel suggests that it might be better to wait. “In that case, you’re better off renting and setting aside money for a down payment, before going out and buying in two or three years’ time, because inevitably, a seller’s market will become a buyer’s market, and you can buy at a better price point,” he said. “That will lower your risk, because you can buy right, and you can probably sell right in five years.” If the time is right to make a first home purchase, reach out to SetSchedule’s network of qualified real estate agents to get started.
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