Experts offer tips on how to buy a house in hot market
Zoila Vieira and her husband began looking to buy their first home at the beginning of February. They are still searching.
“Trying to stay within our price point … turned into looking for more of a fixer-upper,” the project manager from Maitland said. “We started with a wish list that was three paragraphs long. We’re down to, ‘Can we have a backyard?’ ”
Vieira’s plans for homeownership have run into Central Florida’s historically tight housing market. Housing inventories are at historically low levels not seen since before the Great Recession in 2007.
According to the Orlando Regional Realtor Association, February saw a total of 2,063 homes for sale in the Orlando area, 59% less than a year ago. Prices are skyrocketing. The median home price in February was $280,000, about $30,000 more than a year earlier.
We’ve reached out to two real estate agents for advice on how homebuy
ers can navigate the competitive market. They are Lonnie Thompson, who works with Leerdam Properties in Winter Park, has been in real estate as an investor and an agent for a combined 29 years. Kimberly Zeidner has been a real estate agent in Orlando for four years.
Q: Why is the housing market so tight right now?
Zeidner: Inventory is incredibly low, and because interest rates are also incredibly low, there are so many buyers and there aren’t many homes for them to buy. Inventory was actually low before COVID. But because of COVID, fewer people are listing their homes. If they were to sell, then they become the buyer and now they’re in the same situation.
Q: So if I’m a prospective home buyer, what’s the first step I should take?
Thompson: First you have to answer the question, are you ready to buy a house? Is your employment stable? Do you have verifiable income? All of those things you need to have to qualify for a mortgage because in today’s sellers’ market, you have to have that pre-approval letter to submit with your offer.
Q: What’s a pre-approval letter?
Zeidner: It’s a letter from a bank that tells you how much of a house you can afford, and it tells the seller that you are qualified to go through the process and you will be able to get the loan. There will still be an appraisal necessary and you still need to finalize your documentation at the end, but the bank is saying, we will give you the loan as long as everything goes smoothly.
Q: What should I be looking for in a lender?
Zeidner: You can always go to a bank, and if you just want the pre-approval letter to know where you stand, then by all means, banks are fine. But using a local lender is the best route because they are more in touch with what is going on in the area. And each person’s workload is going to be less than what it is at the bank.
You want someone that’s actually going to be a part of the process instead of someone you’re going to have to keep reaching out to just to get information.
Thompson: If you’re a member of a credit union, they’ll probably give you a good deal and won’t have too much in fees. But check with your Realtor and ask who they work with.
If you’re a first-time buyer, you want to check on some programs to see if they can help with down payment assistance. You can get them from the city, county and state.
Q: OK, now can I start looking for homes?
Zeidner: Pay attention to the market and see what is out there for you because some people’s expectations are different than reality. If we start looking at homes right from the beginning, you might be disappointed. Whereas if you are seeing what’s out there, your expectations might be set differently.
Sometimes we have people with different budgets and they think they’re going to get a pool and big backyard and that’s not the reality right now.
Thompson: Ask your friends and relatives and coworkers for an agent recommendation. I think it’s important to find people who have had good experiences with their Realtor.
Be sure that they’re willing to work with buyers. Some only work with sellers or experienced buyers. If you’re a firsttime buyer, you’re going to take a lot more hand-holding.
Q: Alright, I think I’m ready to begin my search. What should I look for?
Thompson: Be willing to be openminded. You may have your heart set on Isleworth or Windermere but you’ll wind up in College Park or Pine Hills.
Also remember that houses in tip-top shape have tip-top prices. Being willing to do some of the work yourself can save you tens of thousands of dollars.
Zeidner: Something you might want to consider is looking at homes that have been on the market a little bit longer and looking at homes a little bit under your price range. That gives you room to negotiate up if need be.
Q: Now I’ve found a place I love. How do I make my offer stand out?
Zeidner: From the beginning, be prepared to make your best offer.
You’re going to want to make sure you shorten your inspection period. Standard has always been 15 days. Now we’re going in around seven. And you might want to make the inspection for informational purposes only, meaning you’re not going to try to negotiate anything during the inspection period. You’re going to decide if you want it based on that inspection and that’s it.
We’re also doing a higher deposit if we can, but also you might want to consider a non-refundable deposit, meaning if you walk away from it, the sellers would keep it. Or consider doing an additional deposit after the inspection to add a little boost to your offer.
Thompson: People are getting 100% of their asking price or close to it. Be prepared to give them what they’re asking, especially if the house is in great condition.
Q: What if I already have a house to sell? Should I sell first?
Thompson: You can try a sell-and-leaseback, which is where you sell the house but lease it back for a couple of months until you find a new place. That depends on the situation of your buyer, whether they need to move in or can be flexible on letting you have access to the property.
Q: Is there anything else that we should consider?
Zeidner: I tell all my buyers not to get discouraged. Once you don’t get your offer accepted a few times, you might start to feel very negatively about the situation. But it’s a numbers game. You’re going to get one.