New York City real estate is ever-changing. Each year (or even quarter) can bring new changes in the market, requiring a different approach than those that worked before. 2022 is proving to be a year of more changes than usual as the city grapples through the pandemic and increasing competition in the buyer and rental markets. Buyers hoping to make this the year when they finally become homeowners should note how these changes may impact their approach to the market.
With that in mind, here are some ‘new rules that can improve your chances of becoming an NYC homeowner before the year is out.
Get Preapproved for a Mortgage Before You Start Your Home SearchGet Preapproved for a Mortgage Before You Start Your Home Search
It used to be that getting a mortgage was something you could do while searching for your dream home. In today’s fast-paced market, no longer the case. Time is of the essence now, so you must get yourself preapproved before you start searching. Important considering rates are expected to rise in the months ahead. Locking in a lower mortgage rate is in your best interests.
To get preapproved, you will need five things, proof of assets and income, good credit, employment verification, tax returns, and other documents your lender may require. Start getting all your paperwork in order and shopping around for a suitable mortgage lender. Be clear that you’re looking for preapproval, not prequalification, which is only a quick review that provides a general idea of how much you can expect to qualify for and under particular terms. By contrast, preapproval is a more in-depth credit review that provides sellers with a solid idea of your financial strength when considering your offer.
Search for Homes Priced Below What You Can AffordSearch for Homes Priced Below What You Can Afford
Once you have a preapproval letter in hand, it can be tempting to see that as your max budget. The lender approved you for this much, so surely this should be your starting point, right? Unfortunately, this is the wrong way to go about things and will likely only lead to disappointment and wasted effort. Demand is outpacing supply in the current market, with many homes selling higher than 10% of the listing price. Bidding wars are endemic, and if you get caught in one where the listing price is at or just below your maximum budget, then you will find yourself out of the race pretty quickly.
Consider looking for homes priced lower than your maximum budget -this will give you room to raise your offer if needed. Remember, just because you’ve been approved to borrow up to a certain amount does not mean you should borrow the total amount.
Act Fast Once You’ve Found the Right HomeAct Fast Once You’ve Found the Right Home
Ever heard the phrase, slow and steady wins the race? Whoever said that has never shopped for a home in NYC. Speed has always been a crucial factor here and has become even faster over the last few months. Once you’ve found a home that ticks all or most of your wish list, act quickly and make an offer right away. Delay submitting your offer, and you will find yourself losing out to other buyers.
Buying a home is a big decision, understandable if you may feel the need to weigh the pros and cons before making an offer. But you need to make a fast decision, probably within 24hrs, if you hope to secure an accepted offer. Be clear about your needs and wants before you start the home search. Know what you can compromise on or not. When not entirely sold on the home’s interior design, consider that you can always upgrade later. More critical is finding a home with good bones in a great building with no significant structural issues. The rest are just details.
Put Your Strongest Offer Out There from the StartPut Your Strongest Offer Out There from the Start
Expect to have some back and forth when negotiating. Once making an offer, a counteroffer is received, and so on until you have an agreement. With competition being as fierce as it is now, this situation is becoming rare. Instead, more common now for buyers to put their best offer on the table from the start. Doing so will make your offer stand out, and more likely, the seller will take it seriously. If your offer is too low, the seller and market conditions may not give you a chance to raise your offer.
Keep in mind that price is not everything. There are other factors the seller will consider when determining the strength of an offer. Sellers consider the buyer’s ability to finance their purchase, the size of their downpayment, contingencies, and their closing timeline. Your buyer’s agent can help you understand the most critical factors to the seller. Then, they can craft a firm offer that will be sure to grab the seller’s attention.
You, Will, Fail Many Times Before You SucceedYou, Will, Fail Many Times Before You Succeed
This one isn’t so much a rule as it is an expectation that you should carry with you. Patience and perseverance are the keys to home buying. Home buying can be a stressful ordeal, with many disappointments along the way. You will almost certainly lose out to other bids, a lot of offers perhaps, before you finally get an accepted offer. Discouraging it can be, starting the process again each time it happens. Accept it and press onwards. When finally finished and you have a home you can be proud of, you’ll know it was all worth it.
Final ThoughtsFinal Thoughts
Home buying, especially in NYC, has always been a snake pit. You need to be on your toes and bring your full A-game if you hope to succeed. To give yourself the best chance possible, ensure an experienced buyer’s agent always represents you. Give yourself a fighting chance as you compete with other buyers for your slice of the Big Apple.