In recent years, the extent to which first-time buyers have started to seriously drive the housing market in the wake of the recession has been impressive. However, one of the biggest issues that many first-timers have faced during this time is that there often just aren’t a lot of options out there for them to be able to simultaneously buy a home and stay on budget.
That could be the case in Minnesota this spring and into the summer, because the state – like many others – is facing something of an inventory shortage. Fortunately, there are a number of ways even inexperienced home shoppers may be able to gain an edge on the competition in what’s sure to be a heated market – whether they’re looking to buy in and around the Twin Cities or the Arrowhead region, according to the Bemidji Pioneer. It is therefore incumbent upon agents to impart some of the wisdom they’ve cultivated over their years of experience.
WHERE TO BEGIN?
Agents should stress that the first thing any hopeful homeowner should do, before they even start looking at houses, is get pre-approval on a mortgage. Doing so will help potential buyers get a good idea of not only what they will be able to afford, based on what kind of credit lenders will extend to them, but also what their mortgage rates are likely to be. As part of preapproval, it’s important that would-be buyers be able to bring a strong credit score and sizable down payment to the table, because this will only further improve their long-term affordability.
Real estate pros should also advise that “a large down payment” does not mean buyers will have to put down 20 percent, but the bigger the dollar figure, the more likely they will be to get approved and obtain a favorable deal. It’s also vital, however, to make sure first-timers know to shop around for the best possible deal on a mortgage. Roseann Lund, senior vice president of mortgage lending at a financial institution in Bemidji, told the newspaper that most banks understand consumers can’t always save up the tens of thousands of dollars necessary to make a 20 percent down payment, but every little bit above and beyond a payment in the low single digits can really pay off down the line.
THE LAY OF THE LAND
One thing agents will often see from first-time homebuyers is that they get their hearts set on a specific home, one that might be out of their price range or likely to generate a lot of interest from other shoppers. This is what some agents refer to as “buying on emotion,” and can potentially sidetrack an otherwise strong chance of getting a good deal, according to Pro Team Minnesota. Here, too, agents can impart some serious advice about what actually constitutes great terms and which homes are more likely than others to garner bidding wars.
This can be particularly important for agents who can go through a home and spot potential trouble areas that inexperienced buyers might otherwise miss or even justify to themselves. For instance, if homes have older appliances or systems, haven’t updated insulation in a while, need a new roof, or, have other troubling characteristics, real estate pros can advise their clients to dial back expectations or even the quality of their bids. Partnering with a reputable home inspector to better highlight these issues can also go a long way toward helping clients keep a clear head about what to expect.
KNOW WHAT TO LOOK FOR
For any first-timer, the prospect of being able to buy a home can be extremely exciting, but agents have to set expectations based on current market conditions. Right now, Minnesota is a lot like the rest of the country, experiencing serious declines in the number of new listings and skyrocketing property values, according to the latest data from the Minneapolis Area Association of Realtors.
Indeed, in the 16 counties surrounding the Twin Cities region, new listings were down nearly 8 percent year-to-date on an annual basis through the end of February, and prices were up 11.5 percent. Homes are now spending less than 70 days on the market, and the number of sales being completed has dipped 4.5 percent.
Generally speaking, when agents can tap their wealth of business knowledge and experience, they will be able to provide a trusted voice in helping new shoppers navigate the market.