It’s mid February in Chicago and the sun feels warm. I literally went on a 15 mile bike ride yesterday before the Super Bowl and the end of the big game and change in weather means the spring market in real estate is here! The fact is that we have been sort of “stealth busy” already as there has been a lot of activity, even if there are less closings and that’s made for a very interesting start to the year. Traditionally, the end of the Super Bowl is the start of the spring market and this year we are already warmed up a bit. So things are off and running and here are a few items of note.
First of all, inventory should improve, but that won’t last. When things got really quiet last fall and buyers went to the sidelines, only the most motivated of sellers stayed in the market. We heard from the Realtors we work with that not much fresh inventory was available and many sellers were waiting for the spring market before putting their homes back up for sale. In the last month, any quality new inventory (home for sale) has had multiple offers. We just had a buyer win a contract over 4 other offers this weekend. If a house shows well, it’s going to sell quickly and new houses should be coming to market quickly! If you plan to buy this spring, be aware of this fact!
This leads me to my second point which is LOCK DOWN YOUR PRE APPROVAL IN FULL! We had been talking to a potential buyer since late October when they were told by their Realtor to get their pre approval done. Long story short, we didn’t get much paperwork from them until a few weeks ago. But sure enough, they were on an MLS home search. Fast forward to the end of January and it turns out that they had a shift in income structure in 2022, have large sums of money moving in and out of their bank statements and have a MAJOR credit report issue reducing their score by at least 80 points that could take 60-90 days to clear up. They cannot get a new loan until this is resolved. Oh, and they have fallen in love with a house that is likely to sell out from under them in the next few days. This could have been avoided!
Finally, too often we end up with buyers who think to themselves one day, “I should stop renting and buy a place”. They reach out for a realtor who has listed a house for sale in an area they are interested in living in and the next thing they know…they are on a weeks-long conveyor belt barrelling toward a closing. Without much having been explained to them. They get introduced to a lender like me, see houses, get a contract and have written earnest money, home inspection and other checks totalling a few thousand dollars and yet, have only a partial understanding of the process they are in the middle of!
So one of the benefits of a pre approval is that you should be given an explanation of several things. You may not remember them all, but you then know where to go back and ask. At a minimum, especially with rates holding at these higher levels in 2023, you should have an idea of your maximum monthly housing payment, the down payment needed to buy the house and the cash needed at closing.
Above the minimum, an understanding of your tax benefit from the purchase, an idea of how taxes work and an understanding of the “flow” of the transaction should work ought to be a part of your pre approval. This will help you be an informed consumer.
So the spring market has started! Don’t waste any time. If you are a buyer…get your ducks in a row so that you get the house you want, on time, on budget and with no surprises!
