First-time homebuyers might well wonder: Where are all the starter houses? With housing inventory low and soaring home price, starter homes are becoming increasingly scarce in many housing markets. What’s a first-time buyer to do?
Here are five tips for finding a starter home:
1. Be realistic about today’s market
Sellers clearly have an advantage in the current market. Inventory is low, which keeps pushing home prices to record levels. Buyer competition is fierce, as homes in the lower price ranges fly off the market. Unfortunately, that leaves many first-time buyers (especially those with tight budgets) on the sidelines. If you’re searching for your first home, be realistic about what you can afford and what amenities come with that budget. Don’t get carried away by amenities you see in more expensive homes — those things are probably not as expensive to put in as you might think. A starter home isn’t necessarily your forever home. Be prepared to make some compromises to get your foot in the homeownership door.
2. Adjust your wish list
Buyers shopping for their first home need to be open-minded about the location, size and condition of the home they want to buy. For many buyers, a classic starter home, which traditionally doesn’t have many amenities, is more achievable. Look for an older home in a well-established neighborhood. Older homes typically need more maintenance and repairs, which offset some of the savings; however, buyers who choose a used home might be able to do repairs and renovations over time, pacing themselves to make the cost manageable.
3. Rethink location
If you’re thinking about starting a family in the future, don’t focus too much on your home’s location, size and school district just yet. If you sacrifice location for affordability you might find yourself in a neighborhood far from major job centers with a long daily commute and expensive transportation costs. Sometimes that trade-off makes sense, sometimes it doesn’t. Look at how much you make and how much you can afford to spend for gas. You might actually be better off buying a house that’s closer to town so you have more cash flow for property taxes, insurance and living expenses.
4.Make a strong offer
When a well-priced starter house comes on the market, you want to make a strong offer. One way to strengthen an offer is to present a loan pre-approval that includes everything but a title search, appraisal and hazard insurance, offer above asking price (if you can afford to), keep repair requests to a minimum, make a larger down payment or give them more time to move after closing.
5. Hire the right real estate agent
When you’re up against stiff competition, working with an experienced real estate agent who knows the local market is key. Look for an agent who specializes in the neighborhoods you’re interested in. Savvy agents should be able to answer your questions about neighborhood amenities, local schools and nearby home values. Ask friends and relatives to recommend agents they have used and were happy with. Also, interview two or three different agents. Find out how they prefer to communicate with clients and how often you’ll get updates. Finally, research the agents you’re considering online to see what past clients have said about their work.
When you are ready to buy your starter home, we would love to talk to you about how we can help you find the right home and what strategies we would use to win in a competitive market.