The Chicago real estate market is on a tear–which means navigating the road to a home purchase is changing quickly. The strengthening market means buyers and sellers alike need a new strategic approach.
A few things have changed: Homes in sought-after neighborhoods are selling in a fraction of the time they were not long ago. Consumer confidence is up as buyers move from the sidelines into full-on purchasing mode, creating more buyers than there are properties to actually buy. And mortgage rates are experiencing their first climb in recent history, and buyers are charging the market before another increase could take affect.
So, if you’re in the market a Chicago real estate purchase, what’s a buyer to do? First off, waiting on the sidelines is no longer an option if you want to avoid a “coulda, woulda, shoulda” scenario. If you’re looking to make a purchase, the time to act is now.
But in this changing market, there are a few things buyers need to know before they plunge into a purchase. Here are a few great tips from an article this month in the Wall St. Journal:
–Cash is (still) king. You probably know by now that cash buyers always have the upper hand. But like many, if you aren’t prepared to make an all-cash purchase, the bigger the down payment, the better. Jumbo loans typically require at least 20% down.
With bidding wars happening on many coveted properties, there’s a chance a lender’s appraisal could come in less than the purchase price. If that’s the case, the buyer and seller must agree as to whether the seller will lower the price or the buyer will pay the difference in cash (or something in the middle). So, having enough cash on hand could be even more important in getting the home you want most.
–Get pre-qualified. Even with the market’s comeback, mortgage lenders are still looking closely at borrowers, ensuring they can repay their loans. Sellers can also be hesitant to accept an offer that hinges on securing financing. Buyers who have pre-qualified are that much more attractive to the bank and the seller.
One caveat–buyer can’t lock in a mortgage rate until a contract is available. To avoid being surprised by a suddenly-raised rate, look for a lender that will let you lock in a rate for 30 or 45 days without an additional cost.
–Prepare for a bidding war. With some properties being overwhelmed with offers, some sellers have turned to this strategy: reject them all and simply ask for one best-and-final offer from each interested buyer by a hard deadline. That might mean a buyer might want to move right past an initial proposition and put their very best offer front and center.
That means having all of your ducks in a row in terms of the offer: price, any contingencies, closing date, pre-qualification and escrow amounts. Having all of these details nailed down paints you as a serious buyer, and can get your offer moved in front of one even with a higher dollar amount.
–Have a well-connected agent. Don’t simply pick an agent because you have a shared acquaintance. Your realtor should know the ins and outs of every neighborhood, building, and recent sale in the area or type of property you’re interested in. I’ve been in Chicago real estate for nearly 25 years and certainly know how important it is to be informed on the nuances of different floorplans, the differences in amenities and services between condo buildings and what certain neighborhoods can mean for resale value down the line. Those details are key in every part of the process, from finding the right property, to getting a fair deal, to making a sound investment in Chicago real estate.
To take a closer look at the market and how it lines up with your potential purchase, give me a call. The time for buyers to take advantage of still-low rates is limited, and this is a key time to start the process. Contact me at (312) 498-5080 or email me at [email protected]