‘I’ve Never Seen a Market This Hot’
April 26, 2021
Home prices are rising quickly, bidding wars are common, and housing shortages abound: It’s not easy to be a home buyer this spring. “I have been in the business for more than 30 years, and I’ve never seen a market this hot,” Glenn Brunker, president of Ally Home, told CNBC.
Real estate pros are working hard to prevent buyers from feeling remorse after frantically jumping into the market. Figuring out the buyers’ finances is key, real estate pros say. “Come up with a number first,” Jacqueline Cooper, founder and president of Financial Education Associates in Dorchester, Mass., told CNBC. “What you can afford is going to guide not just your principal and interest payments but also taxes and insurance payments.”
Home buyers are heading into transactions quickly, but they need to take into account the full costs of homeownership to truly know what they can afford, such as costs for homeowners associations, sewer and trash maintenance, and utility fees. A mortgage preapproval also is necessary before house hunters start their search, real estate pros say. With a preapproval, a lender reviews the borrower’s finances and provides a specific loan amount for which the borrower qualifies. Also, giving sellers more time to find a new home may be another way to make an offer more attractive. Some first-time buyers are finding that this extra time allotment is a better way to compete against other offers.
Waiving contingencies has grown more common in bidding wars, but it can be a gamble and lead to buyer's remorse later on. You should talk thoroughly with your clients about waiving inspection or appraisal contingencies so they understand the risks. Also, have more talks about competing in a bidding war so your clients make a smart financial decision. Some buyers may get so involved in a biding war and the idea of winning that they take on more than they can comfortably afford. “It doesn’t matter what the highest bid is and whether you can beat that if you don’t have the money,” Cooper told CNBC.
Updated: June 14, 2021