For first-time homebuyers, purchasing a home is becoming increasingly challenging due to high home prices. Many first-time buyers do not have the resources to help them secure a property in such a competitive market. A great deal of buyers are losing out to investors who have more cash to spend.
The good news is, there are ways that buyers can work around this situation that allow them to pursue their dream of buying their first home in 2021. Let’s take a look at some of the steps that first-time buyers can take to compete with investors in the current market.
How to Compete with Investors as a First-Time Homebuyer in 2021
Research shows that investors snatch up one in five of all starter-priced homes. This is because it is difficult for first-time buyers to compete with the price and buying practices that investors can afford.
But this doesn’t mean that it can’t be done. Many people have been successful in buying their first home this year. However, it may require you to put in some extra effort. You will need to get preapproved for a loan, put forward your best offer, and understand the seller’s wishes.
Apply for Loan Pre-Approval
Most investors steal the property by presenting an all-cash offer. As a first-time homebuyer, you most likely do not have the luxury to do the same. But what you can do is get pre-approval for a loan.
A pre-approval letter shows that the lender has reviewed your financial profile and has agreed to fund a specific mortgage amount. With this document, you can let the seller know that you have the funds to pay for the property.
Present Your Best Offer
A great way to avoid a bidding war is to present your best offer before anyone else. Often, sellers are looking for a quick sale. Therefore, if they find your offer reasonable, they’ll be more than happy to close the deal as soon as they can.
So, determine your maximum budget and go all-in with an attractive offer. Keep in mind, you may have to make a full-price or above-asking offer to stand out. However, it should still be an offer that you are comfortable with and can afford.
Build a Relationship with the Seller
Understanding what the seller wants is key to winning a bidding war. While some sellers want to make a quick sale, others may want to sell their property to someone they feel deserves it. Therefore, you must take the time to get to know your seller and present an offer that they can’t resist. Consider writing a personal letter to send in with your offer that tells the seller more about who you are and why you’re interested in their home.
The Bottom Line
With investors taking over the real estate market, first-time homebuyers must take extra steps to secure a suitable property. Understanding the current market and the steps you need to take to put yourself in a good position is key to your success. If you have questions or concerns about your situation, you may want to consider chatting with a real estate professional.
Ready to Buy Your First Home?
If you are a first-time homebuyer and are interested in exploring your loan options, we’d love to hear from you. Contact our office today to get started.