If you’re buying your first home, or buying your first home in the San Diego area, you might just find the process rather overwhelming. With the amount of competition there among buyers for real estate right now, it’s very easy to find yourself priced out of the market. All across the country, listings are going up, and within a week you’ll find the property has been closed on. How are they doing it?
#1. Get Pre-Approved for a Loan
This is the first big step in closing on a home of your own. If you go into a bid with a pre-approval letter, or at the very least, that you’ve been pre-qualified it shows the broker and the seller that you’ve come to the table with all your financial ducks in a row, and are fully capable of closing on the home immediately, if you’re interested. As a buyer, you’re going to be facing stiff competition from other buyers, so if you come to the table without proof that you can close immediately, the broker and seller likely already have someone else lined up who they know can.
#2. Find Yourself a Buyer’s Agent
Buyer’s agents can be a valuable resource to those that are looking to find a property. Once you’ve been pre-approved for a loan, and buyer’s agent will help you find a home in your price range, and they’ll also be able to determine what kind of competition you’ll be facing. The issue for buyers in this market is that they’re often finding themselves in bidding wars for homes. This is due in large part to the fact that there are far more interested buyers than there are houses on the market. A good market for sellers means a tough market for buyers. Expect to find yourself in a bidding war.
#3. Escalation Clause
Most buyers are going to find that San Diego real estate listings are going to have multiple interested buyers bidding on a property. To date, it isn’t the 6 million dollar mega-properties that are seeing this kind of interest, it’s the mid range homes in the $500,000 to $800,000 range here in San Diego that are seeing the most interest. An escalation clause stipulates that you’re willing to match and raise any bid up to a specified amount. It shows that you’re seriously interested in a property, and for properties that are hotly contested, it may be just the right card to play. So set a maximum price, and an interval to raise. On a $500,000 property, a $5000 up-bid with a maximum of $600,000 may help you lock down that dream house.