If you're trying to buy a home while the market is hot, you run the risk of getting burned, especially if you don't know what you're doing. While it's true that you've got to strike while the iron is hot if you want the right house, it's also true that sometimes you need to proceed with caution. That can be particularly true in a hot market. Here are three things you should never do when buying a home in a seller's market.
Act on Impulse
When it comes to buying a home in a seller's market, the worst thing you can do is act on impulse. Watching homes go off the market before you even get a chance to look at them can give you the feeling that you need to buy the next house that pops up. Do that, and you might end up with a house you really didn't want in the first place. To avoid a bad case of buyer's remorse, don't act on impulse just because houses are selling quickly. Take your time, and wait out the market. You just might end up with the house of your dreams, for a whole lot less money.
Wait Until the Last Minute to Gather Your Documentation
Not being prepared for the bid is on the other end of big mistakes. The last thing you want is to find the perfect home, only to have someone else swoop in and make a bid because your paperwork wasn't prepared. Before you begin shopping for a home, make sure you have everything in order, including all the documentation you'll need. You might even want to spend some extra time getting pre-approved for a home loan. By preparing in advance, you'll be ready to place the bid, and proceed with the sale, as soon as you find the right house.
Step Outside Your Budget
You need to know exactly how much house you can afford. You need to sit down with your financial planner and create a realistic budget that will help you narrow a price range for the houses you're looking for. Be firm about your budget when you talk to your realtor. Letting your real estate agent know that you're firm on your budget will reduce the chances of them showing you homes that you simply can't afford. It's also important that you avoid bidding wars. Getting involved in a bidding war may result in you going higher than you're comfortable with, just so you can come out on top. Protect your budget. Let your real estate agent know that you want to walk away as soon as a bidding war erupts.