The Struggle for First-Time Buyers in this Market
Last year, we blogged about the hot sellers’ market that many first-time buyers found themselves in. With a shortage of homes on the market, a backlog of buyers were bidding for the same homes. It was typical to see homes sell for $20,000 to $30,000 over asking. And, buyers often lost multiple bidding wars before securing a sale.
This year the market is just as hot, if not hotter.
Heading into the spring, this is still happening and on an even larger scale. We spoke to a first-time buyer in Waterloo, looking to secure her first home. Like many buyers, Jessica is growing frustrated with the difficulty to enter the market.
In 3 months, she has toured over 30 homes and found herself in two bidding wars. The first sold for $43,000 over asking and the most recent for $116,000 over asking.
Homes aren’t always being sold to the highest bidder.
With many homes going for more than $100,000 over asking, you would think they are going to the highest bidder. But it’s also increasingly common to see homes selling with no conditions. This is something Jessica finds difficult to compete with, even though she has secured financing and a sizable deposit.
Sellers want a seamless transaction, and an inspection can get in the way of that. Many buyers at any stage in life appreciate the peace of mind an inspection brings. And that especially rings true if it’s your very first home.
So what’s a first-time buyer to do?
It’s possible to do everything right and still find yourself losing bidding wars—the market is just that competitive right now. But, you should still make sure you’re giving it your best shot:
- Have your financing in order. Having a mortgage pre-approval shows you’re serious.
- Find a great agent. Here’s our list of tips for making sure you choose the best.
- Put down a large deposit. This mitigates the sellers’ risk, and it goes right towards your down payment if you get the house.
- Be flexible in closing date. If your current living situation allows you to be flexible, let the seller choose the closing date.
- Adjust your expectations based on the market. If you are drawing the line at spending $400,000, steer your focus from homes listed in the high 300’s. By going after homes listed much lower, you’ll have plenty of room in your budget to compete and win.
And of course, be patient. Losing multiple bidding wars can be disheartening. Many first-timers are buying whatever home they can land, instead of the home they want. Always be willing to walk away. There will be another house.