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If you've been waiting to get through the holidays and closer to warmer weather before beginning the search to buy your first home, you're not alone. The traditionally busy spring real estate season is just around the corner, meaning heavy competition looms. But there are things you can do as a potential homebuyer to get a head start.
The number of home sales in 2002 shattered records with 5.56 million existing and 979,000 new homes sold throughout the country, according to National Association of Realtors chief economist David Lereah. Home sales this year are expected to dip slightly, but remain robust.
So with that in mind, many indicators point to a strong sellers' market in parts of the country this spring, meaning the competition to buy may be fierce. It's already gaining momentum in some regions.
"The real estate market slowed down somewhat over the holidays, but is beginning to pick up again in and around Coral Springs," said Leanne Valdes, a Realtor in Coral Springs, Florida. "Because of the low interest rates, there are still more buyers looking to purchase than sellers wanting to sell. Properties that are in average-to-good condition and priced correctly from the day they are listed tend to go very quickly for full or near full price."
It's similar in Southern California.
"Buyers are returning to the market in force and interest rates remain low," said George Greiner, a Realtor in Newport Beach, Calif. "All the conditions that were in place last year (low interest rates, low unemployment rate, strong local economy and lack of available inventory) are in place again this year."
There are some things you can do to improve of landing in a home, including:
- Get a copy of your credit report. Potential lenders will view your credit history - how much debt you've accrued, how many accounts you have open, whether your payments are made on time, etc. - to determine whether they'll give you a loan. There are three credit reporting companies: Equifax, Experian, and Trans Union. You should get a report from each company to make sure they're accurate and clear up any problems before you apply for a loan or make an offer on a house.
- Determine how much you can afford. Don't consider how much a bank will approve you for, but how much you can afford given your other bills, expenses, and long- and short-term savings goals, including retirement, college for the kids, vacations, etc. Lenders generally say your mortgage should be about 25 percent of your gross monthly income.
- Figure out how much you have for a down payment. NAR says first-time buyers typically make a down payment of 6 percent on a home purchase, and 24 percent of down payment funds were gifts from relatives or friends. If that's not an option, there are many loan programs that accept down payments of 5 or 3 percent.
- Research on the Internet. Look at the MultipleListing Service to find houses you like in neighborhoods you're eyeing. This will also give you an idea of how much sellers are asking for listed homes.
- Start interviewing agents so you'll have a good one when the time comes to start looking. Get referrals and select someone who knows your market and the neighborhoods you prefer. A good agent will notify you as soon as a home that fits your criteria goes on the market and stays on top of the listings on a daily basis and calls you the minute a good match shows up, especially in communities where homes are listed and pending sale in the same week, or even same day.
- Pin down the basics, specifically the neighborhoods you like that will accommodate your family's needs, including commute to work, schools, recreation, shopping, and, most importantly, are in a price range you can afford.
- Have an open mind. It's easy to start looking at houses and get discouraged because you don't see anything that matches your vision of the perfect house. But be open to a home's potential. Remember carpet and flooring can be replaced, walls can be painted, and a dreadful kitchen can be updated. Think about whether the floor plan will work for your family.
- Find a qualified inspector. You'll want to find a qualified professional affiliated with the American Society of Home Inspectors or American Association of Home Inspectors to examine your Heating and central air conditioning systems, interior plumbing, electrical systems, the roof, attic, visible insulation, walls, ceilings, floors, windows, foundations, and basements are among the key inspection points. Inspections may also include appliances and outdoor plumbing. The inspector will provide a report and if there are any major problems, they can be negotiated with the seller. Or you can back out of the deal altogether.
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