Tips For Buying Real Estate in a Sellers Market – Step 1

It’s hard to turn a blind eye to what is happening in the real estate market right now. With half of all homeowners in Phoenix being upside down with their mortgage you would think deals would be a plenty. But such is not always the case. Yes prices are low and interest rates are the lowest they have ever been, but as some home buyers are experiencing, buying a property in today’s Phoenix market can come with its own set of challenges.

Currently active home inventory in the Phoenix metro area is at a 3 months supply. So what does that mean? Based on the current rate of homes being sold, it would take only 3 months for all the supply to vanish if new listings weren’t being added to the market. Check out these stats. Current listing inventory on MLS is down almost 40% from this time last year while home sales are up 21% for this same month last year. The shortage of real estate inventory is very real and has potential buyers competing on single properties where we are seeing 5-10 offers being submitted. So how do you get your offer accepted? What can you do as a buyer to increase your chances of finding your “diamond in the rough”?

Step one. Get pre-qualified with a reputable lender. This is a big one and the step I stress as the biggest to people thinking of buying real estate. Before you start looking for a home you must know what you qualify for in today’s market and know what your payment will be at any given interest rate and home price. The key, is knowing what you qualify for today, not six months ago. As of today, rates are at the lowest they have been in 60 years. Seriously, 60 years! Guidelines for qualifying have been going through a state of flux since the market began to decline in 2006 and you need know how the current lending guidelines affect you and your ability to borrow money.

Something important to remember here is that just as we as Realtors are very different, so are lenders. As lending guidelines have become stricter it is very common that lenders will have different rates of success closing loans. In our experience, going directly to a big bank, a national bank, for your mortgage in this market is not the best place to look. More often than not, their underwriting guidelines and times to fund your loan are going to be longer than going to a smaller bank where you get more personalized service. We have a couple mortgage lenders that we work with time and time again that consistently beat the timeframes of larger banks because they have the ability to make underwriting decisions in-house. They take great care of our clients, and really develop a great relationship with our clients and instill confidence that they can get the job done right from day one. Another thing to remember about financing is that we cannot submit an offer on a property without a prequalification letter per the Arizona real estate contract. If you start looking for a home and find the one of your dreams but you haven’t been prequalified more than likely you will miss out on the property because homes are selling so fast.

Once you are confident your finances and loan prequalification is done it’s time to move into step two.

Stay tuned next week for step number two in our three part series.

Please feel free to comment with any questions or feedback that you may have. If you or someone you know is interested in taking the first steps at buying or selling a home please consider us a resource. Feel free to contact me directly at 602.553.4382.