Sales of new homes set a decade-long record in 2016, and millions of more homes will change hands in 2017. According to the National Association of Realtors, home transactions totaled 5.5 million in 2016, up from 5.25 million in 2015. Although residential real estate sales are expected to shrink by 1.2% in 2017, according to the U.S. Census Bureau and Trading Economics, demand for new homes remains high but inventory is low so far this year. To get an inside edge, U.S. homebuyers should snap up these ten tips from real estate gurus on the best ways to buy a home.
The Property Brothers dished out the biggest mistake Millennials make when buying a home.
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The most important tip when buying a home is to select your realtor carefully, says Jennifer Beeston, vice president of mortgage lending at Guaranteed Rate Mortgage, in Santa Rosa, Calif. Beeston says that buyers underestimate the skill range of realtors. "Some realtors save their clients thousands of dollars and know how to protect them throughout the transaction, while others are just in it for a paycheck or have no idea what they are doing," she notes. "The best move there is to do your research. Read reviews and talk to past clients. This is the biggest purchase in your life and you'll need the best realtor representing you."
Get fully preapproved before searching for a new home, Beeston advises. "Have it tied in with your lender so that all you have to do is say "go" when the contract is accepted," she says. "People who wait to choose a lender until they are in contract are putting themselves in harm's way, as purchase contracts do have timelines."
"Decide how you will respond to a counter-offer prior to receiving one," advises Ryan Hardy, a luxury real estate specialist at Gold Coast Realty in Chicago. "Take the emotion out the situation."
Research the comparable properties in the neighborhood and note any differences that would affect the price, says Brian Letendre, licensed associate broker at Bohemia Realty Group in New York City. "Make sure you are researching either recently sold properties -- within the last year -- or properties that have just gone into contract," Letendre advises. "Those are your best bets to get a true read on what the property in question should be going for." Letendre also advises paying attention to how long the property has been on the market - and why. "In addition, ask if there have been any offers and why they were rejected, and set an alert or check daily to see if there are any price adjustments," he says. "The more you know, the more lined up your offer can be."
"While your home buying competition is swooning over the subway tile and wide oak plank floors of their next dream house - you need to be seeking out the shag carpet, the avocado kitchen, and the pink bathtubs," notes Emily Beaven, a real estate agent at Compass in San Francisco. "Fixers almost always go for less and the cost of upgrading it usually puts you ahead. Plus, you'll get the chance to totally customize your home to your personal preference - not today's latest design fads."
Have an anticipatory mindset when hunting down a new home, says Beaven. "For example, you're a young couple today - but do you think you might have kids in the next four years?" she says. "If so, push yourself to spend a bit more to get the home with the extra bedroom and space. You'll want to hold onto this home for at least five-to-seven years and if a baby comes - you won't be happy if you're in a loft apartment." It's the same thing if you're older, she states. "Maybe a home with a lot of stairs makes sense today, but a home that has one floor or has an elevator would be smarter."
"First and foremost, this is a very tough market to be purchasing a new home," says Sam Harris, a real estate agent with Massada Home Sales, a boutique real estate brokerage in New York City. "But there's a creative move that most buyers are not aware of - pocket listings." Harris says there are many real estate agents that have relationships with property owners, and some of those owners are considering selling, but are not ready to put the property on the market. "If you reach out to the right real estate agent, he or she may have a property that is good for you," Harris notes. "The only way you will get into this property is through that agent. There is a very high statistic of off-market properties being sold regularly."
If you are a desperate buyer, you are in a weak position and won't be able to effectively negotiate a good deal, says Harris. "Make sure you're in a comfortable position so that no matter the outcome of the negotiations, you will be O.K.," Harris explains. "This makes a huge difference in the outcome of the process and as important, it allows you to make decisions that you won't second-guess."
The time of year affects home pricing, the most desirable time to buy a home is in the spring and summer months says Randall Yates, founder and CEO of The Lenders Network, in Dallas. "It's warm and allows families to get settled into their new home before the school year starts," Yates explains. "This means the pool of buyers is larger and asking prices are at their highest. According to NerdWallet, buyers can save as much as $20,000 on a home by buying in December and January."
Your credit score is directly tied to the interest rate you'll receive on a mortgage, Yates adds. "Just a half a percentage point can add up to savings of hundreds of dollars a month," he says. "The amount of available credit you have used up is called your credit utilization ratio which makes up 30% of your overall credit score. If you have high credit card balances you should pay them off before applying for a loan to maximize your score so you can secure the best mortgage rates."
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