Skipping pre-approval could be a mistake in a hot market, as it typically strengthens a buyer’s offer.
Not hiring a real estate agent could put first-time buyers at a disadvantage at the negotiating table.
Other costly mistakes some first-time buyers might make include overpaying, waiving inspection, and hesitating on a home they love.
You’re ready to buy a home, and the only thing standing in your way is a sizzling hot housing market. Maybe bidding wars are common, or every house you love seems to disappear off the market in days. In a competitive housing market, buyers should be aware and educated to avoid a mistake that could cost them in the long run. Here are 5 common mistakes buyers might make in hot markets — and how to avoid them.
1. Skipping pre-approval
A seller may view a bid without a mortgage pre-approval as risky, especially if they receive multiple offers. Think about it from the seller’s perspective: they could have no other way of knowing if you’re qualified to buy the home. It’s usually a good idea to get pre-approved for a mortgage before house hunting. This shows the seller you’re serious about buying a home, and that you’re more likely to qualify for a mortgage if your bid is accepted.
2. Not partnering with an agent
A buyer’s agent can be an invaluable tool in a hot market. An experienced real estate agent should have specialized market knowledge that could help you make strategic offers and negotiate a better deal. Without this expertise on your side, it may be challenging to navigate the competition as a first-time buyer. Plus, the seller usually covers the buyer’s agent commission, so you may not have to pay for this service.
It can be frustrating to continually lose out to other buyers. It might be tempting to offer the seller a significantly higher price to make your bid stand out. But doing so could be a mistake. The home may not appraise at your offer price, making mortgage approval difficult. Plus, overpaying could put you at risk of owing more on the home than it’s worth if its value dips.
4. Waiving inspection
Some buyers may choose to waive the home inspection, hoping to sweeten the deal for sellers who value speed and certainty. But skipping the inspection can be risky, as you may overlook major problems with the home that aren’t visible. That could leave you with expensive repairs in addition to your down payment, closing costs, moving expenses and more.
When it comes to a hot housing market, time is of the essence. You might not have time to hesitate on a home others have already expressed interest in. Some homes can disappear off the market in mere days. When you’re ready to start making offers, double check that you have all your paperwork ready to go, and confirm that your pre-approval hasn’t expired. This will allow you to move more quickly when you find the one.
Of course, keep in mind that buying a house is a major financial decision, and it’s not one to be made hastily. Work with your agent to strike a balance between moving quickly and carefully.
This content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice. Opendoor always encourages you to reach out to an advisor regarding your own situation.