Plan to buy your first home in 2021? It’ll probably take months instead of weeks, and you might feel demoralized at times.
That’s not negative thinking. It’s an acknowledgment that the road to homeownership has potholes. The journey can be bumpy, but the destination is worth it. When you know at the outset that you’re in for emotional highs and lows, it’s easier to shrug off those lows and keep on truckin’.
Here’s why 2021 will be a rough year for first-time home buyers — and how to manage your emotions during the process.
Why buying a home in 2021 will be tough
There aren’t enough homes for sale to meet demand. At the end of October, the most recent month with available data, 1.42 million existing homes were available for resale. At that month’s sales pace, it would take just 2.5 months to sell every home on the market — an all-time low, according to the National Association of Realtors. The supply of new homes for sale was enough for 3.3 months, tied with the previous month for a record low. Search Homes HERE.
Supply is low because buyers are pouncing whenever homes become available. Most existing homes sold in October — 7 in 10 — were on the market less than a month, according to the NAR.
With a slender stock of homes selling fast, buyers have little power. “The control is in the seller’s hands due to the supply and demand,” says Melissa Hill, Broker of Blanton Davy Properties.
Set realistic expectations
Expect months to elapse between the first step of checking your credit reports to the final step of closing on the home. This is not an overnight process. It typically takes five to eight months to buy a home. Understanding that homebuying timeline “prepares them mentally, emotionally and financially to see this process through.” Would-be buyers are prone to burnout if they expect the process to take a month, he says.
Everyone wants a bargain, but buyers need to recalibrate the meaning of that word so it applies to today’s competitive environment. A bargain, if I were to redefine that, is the home that you want for the price that you’re willing to pay.
Know where you’ll compromise
More than three-quarters of home buyers in their 20s and 30s made compromises, according to NAR’s 2020 Home Buyers and Sellers Generational Trends Report. The most common compromises had to do with the condition or price of the home.
So before you start seriously looking at homes, decide what you need and what you won’t budge on. You may have a maximum price and commute time, a minimum size or other requirements. Those are your deal breakers. Write them down. Resist the temptation to compromise on deal breakers, even when you feel discouraged. For all else, keep an open mind.
Make decisions fast
In today’s market, many homes are on the market for less than a month, so it’s important to make an offer quickly once you find one you like. Let your list of deal breakers be your guide. If a home meets your criteria, including an acceptable price, it may be worth making an offer. Again, quickly, because many sellers field multiple offers within a day or two of listing the home and planting a “for sale” sign in the yard.
Even as a first-time home buyer, they may have to make a quick decision whether or not to buy a home. To have the offer taken seriously, have a preapproval letter from a lender and make a competitive offer. Get pre-approved HERE.
Don’t take rejection personally
Typically when first-time buyers make offers, they will be rejected many times. As rejected offers pile up, buyers can take it personally or feel worthless, so they just need to breathe and realize it is not personal.
You might get lucky and have your first offer accepted. But don’t count on it. Realize that for the seller, this is a business decision.
Wait before you celebrate
Your offer was accepted? Great! Just remember that the home inspection and lender’s appraisal are coming next, and either of them can knock the deal awry. The more excited you get about the seller giving your offer a thumbs-up, the more disappointed you’ll be if you have to give the deal a thumbs-down after the inspection or appraisal.
Think about the seller’s needs
You’re focused on your own needs and problems. That’s understandable, but there’s a benefit to thinking about the seller’s needs, too.
Focus on making the offer attractive to the seller. That might mean keeping the inspection period short: maybe just three to five days, so the seller can put the home back on the market promptly if you’re dissatisfied with the inspection and decide to move on.
Having a preapproval letter from a reputable mortgage lender like Jennifer Hernandez, paying all of your own closing costs and paying some or all of your agent’s commission are other ways to meet the seller’s needs.
Have a backup plan: Don’t buy yet
As fervently as you want to buy a house in 2021, your best option might be to wait until fortune favors you. By putting homebuying on hold for a few months, you give yourself time to save for a bigger down payment and build your credit, and for your local housing market to become less competitive.
Melissa Hill of Blanton Davy Properties understands the stress and emotion that are often involved in a real estate transaction and ensures the smoothest process possible for her clients. Call Melissa today at 281-450-3623 to make a plan on how she -can help you make your homebuying process.