Navigating Omaha’s Housing Market in 2018
Buying a home can be an exciting and sometimes stressful experience whether it is your first time or your fifth time. To add to the normal stress of buying a home, the housing market in Omaha is very different in 2018 than it was a few years ago. Home buyers have to be much more prepared and ready to act in a moments notice as homes are selling within hours of going on the market. Here are a couple important things to consider when buying a home during the spring or summer months in Omaha this year:
1. Be financially prepared.
While it’s always a good idea to be pre-approved before beginning to look at homes it is even more important in today’s market as homes are selling incredibly quick. Even though it doesn’t take a long time for a mortgage lender to complete a pre-approval for a buyer it can sometimes be too long in a scenario with a house that is going to sell quick. You don’t want to fall in love with a home and miss out because you weren’t pre-approved and couldn’t get it finished in time to put an offer in. Additionally, you don’t want to be looking at homes outside your approval amount as that can cause disappointment and unrealistic expectations. The same goes if you are a cash buyer as you will need to have a statement of funds available to show you are able to purchase the home. Often times in today's market many sellers won’t even review an offer that doesn’t have a pre-approval letter or statement of funds available enclosed with the offer. Most pre-approval letters are good for 90-120 days, which gives you time to find the right home while being financially prepared.
2. Be ready to act quick.
With how quickly homes are selling buyers need to be prepared to view homes as soon as they can. This can be difficult with work schedules but many times you will need to be flexible as if you wait until 5pm when you are off work a home might be gone by then. To ease the stress be open with your employer by explaining you are looking at homes and see if they can be flexible with lunch breaks or allow you to come in late or leave early. If you are relocating and looking to purchase a home in another city or state communication with your real estate agent is going to be key. You may find a home on a Wednesday that you want to see but by the time you drive or fly in to look at it, it’s gone. We are seeing an increase in buyers that are purchasing homes via Facetime as they cannot get in to look at the home in time.
3. Know your budget limits and stick to them.
With homes going well over asking price this can cause issues with buyers getting stretched over their desired price limits. It may be smart to begin looking at homes well under your budget that way if you need to go in at the asking price or higher you are able to comfortably. An item called an escalation clause is becoming very popular as it essentially allows you to offer one amount but then give a secondary amount that you are willing to spend up to should another offer be similar in amount to yours. The escalation clause goes up in increments to that maximum amount while competing with another offer. This can be beneficial to buyers as they can offer more without having to potentially spend that maximum amount if it is not needed.
For those getting a loan on their home the bank will usually require an appraisal to make sure the home is worth what you are paying. This is important to know as some homes may be overpriced due to the lack of inventory and the last thing you want to do is over pay on your home and then have trouble trying to sell many years down the road. Also, some buyers are willing to waive the appraisal meaning that if the home doesn’t appraise for the purchase amount that they will pay the difference between appraised amount and purchase amount and this difference must be paid in cash. Bottom line is don’t be afraid to walk away from a home that is more than you want to spend.
4. Identify your wants versus your needs.
With inventory being low it’s more important than ever to clearly define your wants vs. needs. Important items such as specific neighborhoods, style of home and number of bedrooms or bathrooms might be key factors in your decision and should weigh heavier on your decision versus items that can easily be changed such as color of appliances, hardwood vs, carpet, paint colors and more. It’s much easier to change the colors of your home versus the location of your home.
5. Limit your contingencies on your offer.
Contingencies are conditions added into an offer to help protect either the buyer or seller and must be met in order for the agreement to become binding. Some common contingencies are home to appraise at or above purchase price, home to pass a home inspection(s), contingent upon the buyer’s current home selling and/or closing, etc. While it may not be recommended to waive some of these contingencies it is smart to limit them if possible. Another common condition is closing date which can be a deciding factor if multiple offers are similar in price and other contingencies. Being able to close on a home sooner can often be beneficial but it’s a good idea to find out when the seller would ideally like to close as they might want to do later versus sooner.
6. Work with a real estate agent.
A real estate agent is a local professional who is knowledgeable in not only the market and it’s trends but also in specific neighborhoods and more importantly negotiating. It can be tempting to try to take on the daunting task of purchasing a home without the help of an agent in an effort to save money but sometimes it can end up costing you more. As a buyer you are not responsible for your agents commission. The only time this may happen is if you are purchasing a for sale by owner home who is not willing to pay them a commission then your agent might ask for you to help pay that amount, otherwise it falls on the seller. An educated real estate agent takes care of helping you get into homes to view, all paperwork, negotiating aspects of an offer, and coordinating other items such as a home inspection. Your agent is working in your best interest to help you get your ideal home at the best price and best terms.