2022 Boise Idaho Real Estate Blog

How to Win As A First-Time Homebuyer in This Market

Main Treasure Valley Life

The real estate market in Boise (and the country at large) has been absolutely bonkers in the last 18 months. Home values are rising quicker than ever, mortgage rates are the lowest in history, and buyer interest is through the roof. As a result, there are many prospective buyers who have been caught out as prices rise—especially first-time homebuyers. So how do the buyers with historically the fewest funds compete? We compiled a strategy to put first-time homebuyers in the best position to compete in this market.

Earlier, this year in the Boise-area real estate market, listings were at their lowest point and nearly every home that went on the market faced multiple offers and bidding wars. For homebuyers who were able to pay all cash, or had large cash reserves from selling their previous home, it was easier to battle it out in a bidding war. For many first-time homebuyers, their highest-and-best offers couldn’t compete.

Despite the market showing signs of cooling (not crashing, but becoming more stable) buyers are gaining a little more power. But we aren’t out of the COVID-induced woods yet. Here are 4 steps that buyers (especially first-time homebuyers) can take to put them in a better position to buy a home in this current market.

Get organized

We’ve talked about this many times before. Doing your due diligence before even searching for homes for sale in earnest can pay off big time down the road. The first step is always to get in touch with a locally-based real estate agent from a local real estate company. A local agent will have better knowledge of the area and the status of the local real estate market

In addition, your agent can set you up with a local mortgage lender that they trust and have worked with in the past. The lender can help you get pre-qualified and pre-approved, which are two of the most powerful tools buyers can have to show their offer is serious. Once you are pre-approved, you will know your budget and can start searching for a new home.

Lower your maximum budget

Once you know your budget, it is important to consider how much home you can actually afford. Spending near or at your maximum can quickly become mortgage payments that are hard to make every month. Talk to your agent and your lender about what you can reasonably afford. A rule of thumb is to take 10% to 20% from your pre-approved maximum and make that lower number your upper end.

This way, it will be harder to ever-extend your purchasing power and still have money left over for closing costs, moving costs, and short-term repairs or improvements to the house. As first-time buyers who are likely planning on sinking most—if not all—of their hard-earned cash onto a massive purchase, it will be beneficial to hold some money back.

Don’t settle too hard

When buying a home, there is always a little give and take. Maybe you want 2 bathrooms but have to get 1.5; maybe you want an enclosed RV bay, but the house you want only has outdoor RV parking; maybe you want concrete countertops but the perfect house only has granite.

As a first-time homebuyer in a heavy seller’s market, you may have to set more reasonable expectations about what you can afford. You may have to add 15 minutes to your commute; you may have to get a home that needs a little TLC to be perfect.

These are fine, but don’t settle so hard that you end up hating your new home. It’s likely not worth it to buy a home that needs new siding, carpets, and bathroom appliances replaced in a year, or buying a home you can afford in Caldwell when you work in Kuna is probably not worth the cost of gas and maintenance on your car. Instead of giving up and settling for a home you’ll hate as soon as the honeymoon phase wears off, exercise some patience, maybe re-inspect your “wants vs needs” list, and talk to your agent about your offer strategy. The right home will come along with a little extra time. 

Be mindful of the frenzy

It can be easy to get caught up in the frenzy of the current market. Getting overly emotional is a recipe for some combination of overspending, settling, and making the incorrect decision. Getting beaten on multiple bidding wars, not being able to find the perfect home, or spending way too much time on the MLS is frustrating. Our agents have heard this a lot over the last 18 months. Take a breath, talk to your agent, and center your priorities. Like we said above: the right home will appear and you will get the winning bid. Just give it a little time.

Thinking to the future: when it comes time to sell your first home and upgrade your living situation, you will have already experienced what it is like to buy a home, and you will be prepared for what it takes to be a buyer in the real estate market—plus the extra benefit of extra cash from equity and the sale of your old home to help your offer. Nobody can guess what the market will look like down the road, but you will have already experienced a crazy market and will be ready.

Posted by AndrewS at 8/18/2021 3:35:00 AM

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