First-Time Homebuyer Tips: Submit a Fair Offer on a House

Submitting a “fair” offer on your dream home may seem difficult, particularly for a first-time homebuyer. Lucky for you, we’re here to help you determine what it takes to submit a fair offer on a home that increases the likelihood that a home seller will accept your proposal without delay.

Now, let’s take a look at three tips to ensure that a first-time homebuyer can submit a fair offer on a house.

1. Study the Housing Market Closely

Are you preparing to submit an offer in a buyer’s market or a seller’s market? Ultimately, the current state of the housing market may help you define a fair proposal based on the sector’s conditions.

For example, a buyer’s market frequently includes an abundance of top-notch residences and a shortage of homebuyers. In this market, you may be able to submit an offer at or below a home seller’s initial asking price and receive an instant “Yes.”

On the other hand, a seller’s market usually features a shortage of high-quality houses and an abundances of homebuyer. As such, you may need to submit an offer at or above a home seller’s initial asking price if you want to secure your dream residence.

For first-time homebuyers who analyze the housing market closely, they should be able to differentiate between a buyer’s market and a seller’s market. That way, a first-time homebuyer can determine fair market value for a residence and submit an offer that corresponds to it.

2. Evaluate Your Homebuying Budget

There is no need to overspend for a house, regardless of the current housing market’s conditions. But with a homebuying budget in hand, a first-time homebuyer can resist the urge to pay too much to acquire an outstanding residence.

Getting pre-approved for a mortgage often provides a great option for those who are uncertain about how much they can spend on a home. This budget will enable a homebuyer to narrow his or her home search based on the finances at his or her disposal.

Meet with a variety of banks and credit unions to learn about all of your mortgage options. Then, you can select a mortgage that matches your budget and move one step closer to acquiring a terrific residence.

3. Work with a Real Estate Agent

A real estate agent is a must-have for a first-time homebuyer, and for good reason. This housing market professional can teach you about the intricacies of buying a house and help you submit a fair offer on a residence any time you choose.

Furthermore, a real estate agent will guide you along each stage of the homebuying journey and help you overcome any potential pitfalls along the way. And if you ever have homebuying concerns or questions, a real estate agent is happy to respond to them at your convenience.

Take advantage of the aforementioned tips, and by doing so, a first-time homebuyer should have no trouble submitting a fair offer on a residence.

How to Avoid Overspending for a Home

Have you found the home of your dreams but are overwhelmed by the price tag? This is a no-win situation that challenges even the most patient, resourceful homebuyer, and perhaps for good reason.

Finding the perfect home may take days, weeks, months or years. And if you discover a residence that meets all of your needs but falls outside your budget, you’re likely to be tempted to overspend to acquire this residence.

However, you’ll want to take a step back and think carefully about your decision, and those who weigh the short- and long-term ramifications of their decision ultimately will be able to make the right choice.

Furthermore, you should consider the following factors as you try to resist the urge to overspend on a house:

1. Your monthly mortgage payments

Although you may be able to handle a higher monthly mortgage payment in the short-term, you’ll want to think about your long-term plans before you finalize your purchase.

For example, do you plan to raise children? Or do you anticipate a career change over the next few years? You’ll want to consider any plans that could impact your budget and determine whether you’re ready to handle your monthly mortgage payments both now and in the future.

2. The quality of the home

Although your dream home likely is of the highest quality, you’ll want to ensure this residence won’t require any immediate improvements.

The quality of the home will dictate whether this residence will require substantial short- and long-term maintenance and repairs. And if you find there are many home improvement projects that may need to be completed soon, you may be better off considering other homes on the real estate market.

3. Your wants and needs

Ideally, you’ll want to find a home that fulfills all of your wants and needs instantly. But in today’s highly competitive real estate market, only a fraction of houses may come close to meeting all of your demands.

Differentiating between your wants and needs, however, is critical, as this will allow you to distinguish what you need to enjoy your home versus what you’d like your home to include in a dream scenario.

For instance, your home needs electricity, running water and other everyday essentials. On the other hand, you may want a home with a pool, a spacious back yard and other distinct features, but you should not rule out homes due to the fact that they lack some of these non-essential amenities.

Take a close look at your priorities and your budget, and you’ll be able to make the right compromises to find a home that won’t require you to break your budget altogether.

Remember, your home is what you make it, and overspending to acquire a house may leave you satisfied in the short-term but struggling to pay your bills over an extended period of time.

Make the right compromises as you explore the real estate market and set realistic expectations for the houses you check out. By doing so, you can improve your chances of finding a high-quality residence that meets your personal and budgetary needs.

Establish a Homebuying Budget

Buying your dream home should be simple. Unfortunately, challenges may arise during the homebuying journey, particularly for those who fail to budget accordingly.

Establishing a budget before you begin your home search is paramount. With a budget in place, you can explore houses that fall within your price range and move closer to finding a great residence that you can enjoy for years to come.

Ultimately, creating a homebuying budget can be easy – here are three tips to help homebuyers establish budgets.

1. Consider your utility costs.

Although you may be able to get pre-approved for a mortgage and determine exactly how much you’ll need to pay for a house, you’ll still need to account for utility expenses month after month.

Electricity, heat and other utility costs can add up quickly. However, a diligent homebuyer should have no trouble estimating his or her monthly utility fees.

Examining your current utility expenses can help you understand how much you may wind up paying in utility charges at your new address. Also, don’t forget to consult with your real estate agent, as this professional may be able to provide details about the average utility costs associated with a particular residence.

2. Manage your debt.

If you decide to purchase a “fixer-upper,” i.e. a home that requires extensive home repairs, you’ll likely need to commit substantial time and resources to complete home renovation projects. Thus, you’ll want to consider any home repair tasks that you may need to complete at a new address and budget for them before you make an offer on a house.

In addition, knowing your credit score can help you understand your debt. You are entitled to a free copy of your credit report from each of the three major credit reporting agencies (Experian, Equifax and TransUnion), and each report will provide information about any outstanding debt. That way, you can learn about your debt and find ways to minimize it prior to purchasing a residence.

3. Account for closing costs and miscellaneous expenses.

Home closing costs will include your loan origination, title insurance and appraisal fees and often range between 3 percent and 7 percent of your total loan amount. You’ll want to account for these expenses as you establish a homebuying budget to ensure you can secure your dream house without delay.

Spend some time learning about all of the expenses that may impact your monthly home expenses too. For example, if you purchase a condo, you may face monthly homeowners association fees in addition to your mortgage costs. Or, if you plan to have a baby in the near future, you’ll want to consider how the costs of raising a child may impact your ability to cover your mortgage expenses.

If you ever have concerns or questions about establishing a homebuying budget, be sure to consult with your real estate agent. Remember, your real estate agent is available to help you in any way possible and will do what it takes to ensure you can establish the right homebuying budget.

Buyers May Lose Out

According to Lawrence Yun, the National Association of Realtor’s chief economist, the spring housing market is starting off strong. “If activity is sustained near present levels, existing-home sales will see their best performance in five years. The NAR expects sales to rise between 7% and 10% in 2012.

What does that mean? Strong demand has melted away inventory in some housing markets with investors and first-time buyers vying for bargains, homes are being snatched up as soon as they hit the market.

Prices may not be shooting up, but homes are once again selling at a rapid clip in many markets, draining the multiple-listing services and turning up the competitive pressure on buyers. Multiple offers and bidding wars are back.

Lately if a buyer is not there the first day a home comes on the market, it’s gone. When a quality property that is priced accurately comes on the market, it’s not going to sit around. In some areas the competitive environment has already begun to nudge prices up slightly.

Bargain prices and historically low interest rates are bringing buyers back. The belief among buyers is that the housing market has already turned the corner and that there won’t be a better time to land an affordable home.

National Association of Realtors President Moe Veissi, broker-owner of Veissi & Associates Inc. in Miami, says market conditions are improving as supply and demand have become more balanced.