Some people are anxious to shop for a house and want to do it quickly, before they are financially able to afford it. If you have already started talking to sellers before having a hard talk with home loan lenders, you are making a mistake. It should come as no surprise, but not many sellers will want to work with you if you promise them a certain amount and then can’t fulfill that promise. Your assessment of what you think you can afford and the amount the bank is willing to lend you may not agree, especially if you have poor credit or unstable income. Ensure pre-approval for a loan before placing an offer. If you don’t, you’ll be wasting the seller’s time, the agent’s time, and your own time if you enter into a contract and then discover the bank won’t lend you what you need, or that it’s only willing to give you a mortgage that you can’t or won’t accept.
DISREGARDING LOCAL HOUSING MARKET TRENDS
Like other financial markets, the housing market fluctuates over time. Sometimes it favors buyers, and sometimes it favors sellers. This can change dramatically over a three- to six-month period. A number of factors affect housing marketing trends, including the ratio between supply and demand, interest rates, and the overall condition of the economy. It’s important that you consider how the housing market changes in your ideal location, as home prices vary from one location to another. Stay alert to comparable sales (comps) in the area. If they sell for below listing price, it is a buyers’ market. If they sell above listing price, it is a seller’s market. This information can be important when making offers, allowing you to calibrate your proposal to better suit the market and — if you’re lucky — your budget.
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