If you’re thinking of buying a home today, you already know that the housing inventory is quite low. As a buyer, low housing supply along with high buyer demand means you should be prepared to navigate a competitive market where homes sell quickly and get multiple offers.

In a bidding war situation like this, being able to do everything you can to get ahead of the competition is your path to winning the sale. That’s because when you find a house and submit an offer, it’ll likely be up against other strong offers from other buyers. In fact, according to the latest Realtors Confidence Index from the National Association of Realtors (NAR), homes today are receiving an average of 3.9 offers so the competition is real.

In order to successfully deal with the multiple bidding scenarios that are so common, here are some of the best ways to prepare yourself.

Solidify Your Numbers

Knowing your budget is important for any home purchase in any market but today’s landscape is a little different. With many homes going for over asking while undergoing a bidding process it is even more important to know your price ceiling so you don’t let emotions get the best of you. Also, most homes are going for over asking price so consult with your agent for what the local trend is and how that relates to the home of interest so you can make a strong offer.

Act Quickly

The best way to be able to move fast is to be prepared. This means that you will need to have all of your important information taken care of like a prequalification letter and strong market knowledge under your belt. Being armed with this will let you know you have found the right home, know what to offer and craft a strong offer in a timely fashion.

Submit a Strong Offer

When crafting an offer that is up against others you will want to put your best foot forward. Consult with your agent and leverage their expertise so that you make your offer as attractive as it can be. Consider your options like being amenable to different closing dates that may be better for the seller as one idea. Be sure not to waive anything that is too important to you like a home inspection. Your goal is to get the house but not be full of regrets later on down the road.

Existing home sales have recently seen a downward trend in February as home price increases and upward interest rates have occurred. Per a recent report from the National Association of Realtors (NAR), sales of existing homes decreased by 7.2% from the month prior and were 2.4% lower from the same time as last year. 

“Housing affordability continues to be a major challenge, as buyers are getting a double whammy: rising mortgage rates and sustained price increases,” National Association of Realtors Chief Economist Lawrence Yun, said. “Some who had previously qualified at a 3 percent mortgage rate are no longer able to buy at the 4 percent rate.”

Home Prices

Data has shown that the median sales price on existing homes has risen 15% since February of last year. However, the price increases have done very little in reducing competition as bidding wars are still very common due to lack of inventory. 

Housing Inventory

Inventory levels did see a slight increase by 2.4% in February from the month before. However, by comparison to February of 2021 it was still down 15.5%. Yun anticipates that prices will slow their pace in growth as more homes come on the market via new construction. 

“The sharp jump in mortgage rates and increasing inflation is taking a heavy toll on consumers’ savings,” he said. “However, I expect the pace of price appreciation to slow as demand cools and as supply improves somewhat due to more home construction.”

Mortgage Rates

The federal reserve has recently bumped up interest rates by a quarter of a percentage point mid month with more hikes to likely be on the way. Buyers can expect some changes that may both be against or in their favor as a result. While increased interest rates will raise costs it may help cool the frenzied demand that we are now seeing. In the end, increasing rents may still persuade first time buyers to keep looking despite any rate increases.

A home purchase these days will require a good amount of money down as you secure your mortgage. With home prices the way they are it only means that you will need even more to put down. One can certainly put less than 20% down but that can leave your offer looking less strong in today’s competitive market. So unless you are pulling a good amount of equity out of a home you are selling, then here are some helpful strategies to save to buy your next home.

Pay House Fund First

A great way to keep your house funds from getting clouded by other savings is to keep it separate in its own account. Get in the habit of paying it first, just like it’s one of your bills every month. Automatic and recurring transfers are also a great option if possible. 

Fund Your Down Payment 

Some people are lucky enough to have friends and family that will want to contribute to your house fund. There are a few options out there like HomeFundit or Feather The Nest which allow you to approach your goal in a similar fashion as GoFundMe. You can set target amounts and deadlines too.

Spare Change

Some apps or even banks will help you save by rounding up your payments to the nearest dollar and will funnel the extra change into a designated account that you have set for a home. Over time these things add up!

Local Assistance Programs

Some local governments offer down payment assistance programs and grants. Many are often income-qualifying but there are others for teachers, firefighters, and the like.

Check Your Taxes

If you are one who gets a decent tax return each year then you may consider lowering your exemptions to regularly take home more cash and invest and save it.

Check Retirement Savings

This one should more than likely be a last ditch effort. A few things should be considered here like your age, whether or not your IRA or 401k allows a one time withdrawal for down payment with no penalty and the like as replacing this money will take time of course. Your financial planner will be best to shed light on this option for you.

The process of buying a home can be an exciting time in your life while also somewhat emotionally complex. Moving is among the more stressful changes we make in our lives and with how the market is lately it may be helpful to try some exercises to help cope with any of the challenges that may arise. Here are some helpful tips on things to do while you try to locate that perfect home.

Expand your search

Similar to any larger purchase in life like an automobile, establish some criteria that you can and cannot live with. It is always going to be helpful to know what you cannot budge on so you can eliminate some possibilities while you work with others. Perhaps the home in question has an older kitchen but it may be something you can budge on until you can update it yourself later.

Work with experts

There are many experts out there in the field like myself who can help and guide you through the process of homebuying as well as through any snags that may arise. Get referrals on other professionals who can help you like local lenders, movers, insurance companies and even closing attorneys. These are all important team players for a successful transaction and it is helpful to work with someone that a friend or family member has positive experience with.

Identify costs

Take the guesswork out of the equation about what a true home’s cost will be. Your agent such as myself and even your insurance broker are good sources of information to help you identify things above and beyond the purchase price. While it is fairly easy to figure out what your mortgage payment will be with a mortgage calculator, insurance premiums and taxes are other variables that will play into your budget. Certain homes may have better insurance discounts than others for things like location, roof condition, windows and the like.

Ease your timeline

Everyone has some sort of goal with regards to the time they want to buy. However, sometimes your timing can pose challenges depending on what is on the market or even when is the busier time of year for real estate in the location you are looking. If you can ease the pressure on your situation that can make things better and you may even dodge making a hasty decision. Maybe you want to purchase before your lease ends but you could potentially move in with a friend temporarily if that takes off some of the pressure for example. 

Taking the plunge from being a renter into homeownership involves some important steps but it may not be as out of reach as you think. Having ample cash on hand and a good credit score are essential but there are many myths to clear up about what you need for the process. Here are some items to set the record straight.

Homeownership equals debt

Some people think that taking on a mortgage means you will be incurring a lot of debt. While needing to pay your mortgage regularly may be true, homeownership also comes with some big advantages. As you pay your mortgage down every month you essentially will begin to build equity. This can almost function like a savings account in some ways. You can oftentimes pull out equity down the road and use it towards other things, or cash out when you sell. Owning a home and gaining equity is often a part of one’s retirement plans.

Credit score needs to be perfect

While it is true that the better your credit score, the easier it will be to secure a lower interest loan. However, there are mortgage programs that have lower credit and income requirements that you can take advantage of. It is worth noting that once you secure a home loan this can help you improve your credit ranking overtime as well.

20% Down is a must

Many people think this because if you put down less than 20% then you will have to pay private mortgage insurance or PMI on top of your regular payment. Many people do this and put as little as 5% down on some properties and just have to pay a small monthly fee until their home has gained value to have more than 20% equity in it. Ultimately it is a small price to pay for being able to own a home sooner than later.

Now is not the time to buy

If rates are very low like they are nowadays, then it can be a great time to buy a home. If you are financially ready to make the purchase and if it is time to upgrade your home then these factors will play an important role in timing as well. Nobody has a crystal ball to know what is going to happen tomorrow, but if you are prepared now then it is the right time to make your move.

It will be hard to relocate

Some people think they don’t want to buy as they will be stuck in that home. First off, it is most often recommended to view a real estate purchase as at least a 3 year investment. This can help you weather any market shifts while you get a sense of your new space. Should the market remain strong, you can potentially sell much sooner than that or you can always consider renting out the home if necessary.

Saving for a down payment to buy a home can seem like an impossible task these days. Between your regular monthly expenses, lifestyle costs and any additional debt you may currently have it can feel like there is not enough money coming in to put aside. However, there are some great programs out there and some crafty ways to save. Here is a closer look at some ways you can prepare. 

Set a time goal

First thing to do is to make a timeline of when you want to realistically buy. Then you will want to calculate your budget and figure out how much you will need to save each month. Your timeline may shift depending on if you can save in the desired time.

Ditch some expenses

For a short time you may have to do things like skip the coffee out, that mid week restaurant visit and a subscription or two that you may have. It’s not forever, so just remember that! Also, monitor your grocery bills and consider some cheaper options like Trader Joe’s or Aldi! 

Designate a savings account

One of the easiest ways to keep track of your savings is to set it aside from your regular monies. There are some savings accounts where you can even set up regular transfers into them so you know you are staying on track.

Retirement contributions

You might even want to consider lowering or pausing your retirement contributions while you save. Check with your financial advisors on what may be best here. 

Temporary downsizing

Are you in a large apartment all by yourself? It may be wise to consider getting a roommate or moving in with a friend for a short time while you put aside the extra savings. 

Side job

If you have extra time during your week you may consider a temporary side job. Perhaps it is a shift or two at a restaurant or shop in the eves but you can allocate all of this extra income to your down payment.

Sell unwanted items

Take a look at all of your belongings. Were you planning on getting rid of that dining set or thinning out your closet? Consider selling some things on the various apps that make it so easy these days.

Pause on big ticket purchases

Now is not the time to buy that new car or upgrade your living room furniture. Aside from keeping this cash on hand for your down payment, big purchases can negatively affect your credit score which is crucial before buying a home.

Research down payment assistance

Your local lender may be a good resource for this. There are many nationwide programs too that can help maximize your down payment. Some are in the form of grants where you don’t have to repay them.