10 Quick Tips for Navigating the Real Estate Market and boosting your performance in the market.
The real estate market can seem daunting, whether you’re a first-time home-buyer or looking to upgrade to a new home.
Understanding real estate market conditions and arming yourself with key knowledge can make the process smoother. Use these 10 quick real estate tips to help you make informed decisions.
Real Estate Market Tips
- Location Matters Most
One of the age-old adages in real estate is that location is everything, and it still holds true today. Desirable locations usually see greater home value appreciation over time compared to less ideal areas. When evaluating potential neighborhoods and properties, look at factors like:
- Proximity to employment centers, entertainment, shopping, and recreation
- Quality of the local school district for families
- Crime rates and general safety
- Convenience to public transportation and major highways
- Future development plans for the area
Ideally, you want a neighborhood that is safe, convenient, and has potential for appreciation.
Drive around the neighborhoods you’re considering at different times of day and night.
- Understand Supply and Demand
The relationship between housing supply and buyer demand is a major factor impacting real estate prices.
When supply is low and demand is high, home prices tend to rise in a seller’s market.
Conversely, when supply is high and demand is low, buyers have more negotiation leverage in a buyer’s market.
Track listing inventory in your desired locations to gauge supply and demand trends.
Low inventory levels usually translate to higher prices, quicker sales, and more bidding wars.
High inventory gives buyers more selection and negotiation power.
You want to time your entry into the market based on these conditions.
- Get Pre-Approved for a Mortgage
Being pre-approved for a mortgage before starting your home search gives you a major advantage as a buyer.
First, you’ll know your exact mortgage budget and limits.
Second, sellers will view you as a serious buyer who is ready to move quickly. Getting pre-approved involves:
- Comparing mortgage rates and lenders
- Submitting financial documentation for underwriting
- Securing a conditional approval on a loan amount
This puts you in a strong position to make competitive offers, especially if you’ll be bidding against other pre-approved buyers.
You’ll be ready to proceed once your offer is accepted.
- Find an Experienced Real Estate Agent
A savvy real estate agent can help you navigate the entire housing search and purchase process. Interview several agents before selecting one.
Look for an agent who:
- Has in-depth knowledge of your desired locations
- Specializes in buyer representation
- Has strong local reviews and references
- Communicates regularly and answers questions
- Knows how to write winning offers in competitive markets
Leaning on an experienced agent provides guidance and reduces headaches.
They’ll help you avoid overpaying while negotiating optimal terms.
- Make a Strong, Competitive Offer
Timing your entry into the market is critical.
Once you find the right home, be ready to make a competitive offer, especially in seller’s markets.
This may involve offering over the listing price and waiving certain contingencies and financing requirements.
An agent can advise you on crafting a solid offer based on the local market and the property.
To compete, it helps immensely to:
- Have your financing pre-approved
- Make a down payment over 20% to avoid mortgage insurance
- Keep contingencies to a minimum
- Have funds to cover appraisal gaps if it comes in under offer price
- Be flexible on closing dates to accommodate the seller
In multiple offer situations, the strongest offer on paper wins. So put your best foot forward.
- Inspect Before You Buy
It’s critical to have the home thoroughly inspected prior to finalizing a purchase. Work with qualified professionals to inspect:
- Roofing, siding, windows
- Electrical and plumbing systems
- HVAC and appliances
- Foundation and framing
- Pool/spa if present
- Attic, basement, and crawl spaces
Secure inspectors as soon as your offer is accepted. You want ample time to review inspection reports and negotiate credits or repairs if issues arise.
Having inspections done proactively can prevent unwanted surprises later on.
- Review Important Disclosures
When reviewing listings, pay close attention to seller disclosures about the property’s condition.
Many states require sellers to fill out detailed disclosure forms with home defects, material facts, permits, HOA rules, and more.
In addition, be cognizant of other notices like:
- Lead-based paint disclosures on older homes
- Flood plain status that impacts insurance
- Known environmental hazards in the area
Don’t take a seller’s word at face value – verify anything that raises concerns. Review disclosures carefully before finalizing a purchase.
- Secure Title Insurance
Title insurance protects buyers against errors and omissions in the property’s title and ownership history that could present legal or financial issues later on.
It’s a one-time fee well worth the peace of mind. Make sure to:
- Purchase both lender’s and owner’s title policies
- Understand covered scenarios and exclusions
- Review title search results for any red flags
Title issues like encumbrances, unknown liens, improper deeds, and undisclosed heirs can wreak havoc down the road if not properly insured against. Title insurance defends your claim to rightful home ownership.
- Factor Closing Costs
Closing costs include lender origination fees, points, appraisals, credit checks, taxes, title fees, insurance, legal fees, and more.
Estimate your total closing costs by checking with lenders.
Closing costs typically run 3-6% of the total loan amount. The seller also incurs closing costs.
It’s customary for the buyer and seller to split certain expenses like title fees and transfer taxes. Discuss cost allocations with your real estate agent.
Having an accurate estimate of your closing costs allows you to budget accordingly. Factor these in when determining how much house you can afford.
- Evaluate Investment Potential
If buying with an eye toward investment, run the numbers to determine the property’s rental income potential and prospects for appreciation over time. Consider:
- Market rents in the neighborhood
- Demand for single-family rentals or multi-unit properties
- Opportunity to add rental units like basement apartments
- Future development plans that raise property values
Newer homes and upcoming neighborhoods often see the highest appreciation. Work with a financial professional to crunch the investment figures and maximize returns.
This overview provides a solid foundation for navigating the real estate market.
Let the tips here guide you in buying a home, investment property, or land for development.
With proper preparation and research, you can position yourself to achieve real estate success.
