Home buying and selling typically hits its peak during the spring and summer months. Most people are ready to buy a home during spring, and sellers are prepared to flood the market with new listings.
In most markets, the spring real estate season signals a dramatic increase in the amount of inventory available. This should bode well for buyers, right? More inventory means less competition and fewer bids.
In most cases, it would bode well for buyers. However, the spring real estate market is a different animal altogether. In almost every housing market in the U.S., there are more buyers than sellers during spring. With so much competition from buyers, spring could actually be the worst time of year to buy a home.
To help you navigate the choppy waters of the spring buying season, here are five things to know to help you find the best deal and avoid paying thousands more than a house is worth.
Get Pre-approved By a Lender
It’s simple; home sellers will take your offers more seriously if you have pre-approved financing in hand. So, start applying for a mortgage before you start shopping for your next home. Remember, spring is the hottest time of year for real estate, and sellers will only consider serious offers.
If you’re worried that applying with multiple lenders will hurt your credit score, don’t. Any inquiries you make about mortgage financing during a 30-day period only count as one inquiry. So, if you apply for a home loan with 10 different banks in 30 days, it only counts as one inquiry on your credit report.
Declutter Your Financial House
Before a lender pre-approves you for financing, you’ll need to have your financial house in order. Unless you can buy your next home in cash, you’ll need to paint your entire financial picture for lenders.
Unfortunately, painting that picture for lenders requires you to provide a significant amount of financial paperwork. You’ll need to prove to lenders you can repay your home loan.
Lenders want to know your employment history, debt-to-income ratio, credit score, your willingness to repay past debt, savings, assets, investments, and so on. Imagine trying to provide this information if your financial house is in disarray.
Taking Advantage of Low Rates
Mortgage interest rates fluctuate daily, but they still remain at historically low levels. When rates are low during the spring buying season, you have more buying power. Lower interest rates obviously mean a smaller monthly payment.
If you have a good credit score, you can expect to pay less than 5% interest on a 30-year, fixed-rate mortgage. Also, the Federal Reserve announced early in 2019 it will not raise target interest rates for the rest of the year. If you plan on buying in 2019, you should still have access to a low-interest rate environment.
Get a Comparative Market Analysis
Sellers can list their homes for whatever price they want. That doesn’t mean the house is worth what the seller is asking. However, many sellers know that competition heats up during spring, and that leaves you with less negotiating power. So, prepare yourself to pay the seller’s list price — assuming sellers list their homes at market value.
To determine a home’s market value, you need to have a comparative market analysis completed. Known as a CMA, the analysis gives you the estimated value of a home you're interested in buying by comparing the sales of similar properties located nearby.
You can complete a CMA yourself using tools available online, but keep in mind those values tend to be inaccurate. Your best bet is to hire a real estate agent who is an expert at placing the correct market value on a home for sale.
Hire a Great Agent
There is no replacing the value a great local agent brings to your home buying efforts. The intimate knowledge agents bring about specific neighborhoods is priceless. You need that knowledge more than ever when you’re trying to purchase a house during peak-buying season.
Avoid trying to buy a house alone during spring and contact us today for a no-fee initial consultation. Our representatives will connect you with one of our Partner Agents so you can immediately start discussing how your home buying goals align with your financial picture.