NASHVILLE, Tenn. (WKRN) — Let’s face it, buying a home is hard. It’s even harder for a first-time buyer.
Without equity and cash on hand, those looking to buy a home for the first time are feeling out of options due to an influx of all-cash offers and record prices. According to Greater Nashville Realtors, the average residential home in Greater Nashville now sits at $415,000.
Kevin Watson, a senior loan officer at Churchill Mortage says he’s seen houses go for more than 20 percent over asking price.
“It’s so tough for first time buyers,” Watson said, comparing it to survival of the fittest, so Watson is walking us through four ways cash-strapped buyers can compete and compete well in this red-hot market:
- Have an Appraisal Gap Strategy: With listing prices well above appraisal in many markets, you’ll have to make up the difference. Watson says a lot of people are writing offers not contingent to the appraisal, or they’re making up the gap by selling a “toy” like a boat, or an extra car. In addition, you could ask a family member to help you pay with a financial gift. Think about negotiating with the seller on concessions/closing dates are other options.
- Get Fully Approved Early: Churchill and other lenders now offer certified homebuyer programs that enable clients to be fully approved by actual underwriters. Watson says it’s almost as if they’re offering cash. “It also makes you a stronger borrower,” Watson said. “If they’re pre-approved and you’re certified, you can close two weeks faster and it’s a stronger offer.”
- Personalized Communications Program: Sending a personalized video message to the seller’s realtor is a common tactic for Watson and other lenders, which has been the differentiator on more than one occasion. “When you’re competing with a dozen or more buyers, you have to find a way to stand out,” Watson said.
- Be Willing to Downsize: “It’s a little tough to swallow sometimes, but it’s true and it’s working,” Watson said. “Make sure if you’re a first-time buyer that you’re willing to move a little further out than you’d like to or you’re willing to buy a smaller home than you’d like to.”
Other suggestions Watson makes is to practice making mortgage payments. If your mortgage will likely be $500 more than what you’re paying in rent, start putting $500 extra away for 6-12 months to make sure you’ll be able to handle that payment.
Watson also added that a conventional loan is going to be a stronger loan choice than an FHA or a VA.
It’s a tough market out there, don’t go at it alone. Watson says it’s best to go with a buyer’s agent.
“They’re worth every penny,” said Watson. “It’s that good communication that makes a big difference and the reputation of the agent makes a big difference today if you have a great agent.”