Have you been struggling to get your offer accepted?
A lot of my clients are first time home buyers with low down payment. It is definitely possible to buy a home with 5% down or less. The trouble is that the current market demand is far out weighing the supply. Every new listing is generating multiple offers and new record sales prices for the condo building or neighborhood.
The Real Estate process can take weeks, months, or even years. Some buyers have the ability to buy right away, they know what they want and their desired property is available. Others struggle to find the right property and properties that fit their needs are few and far between.
When I work with new home buyers with low down payment I tell them, If you are serious buyers looking to get into a home you should be prepared to write between 5-10 offers on average. If we happen to get an offer accepted within the 1st 5 offers we got lucky.
There are a few reasons why:
- Competition – Most 1st time home buyers fall within the $300,000 - $500,000 condo/townhome market. The baby boomer generation is currently in the process of selling their large single family homes and downsizing. They are taking the equity they have built up for the last 20-30 years and are becoming strong, all cash condo buyers. These buyers added to the investors who are always looking and the millennials looking to buy their 1st home has created intense competition. On average I have seen between 8-10 offers on well priced condos in town or townhomes between Pearl City and Kapolei.
- Price – New listings coming to market are being listed at prices that will set new highs for a building or neighborhood. As a 1st time home buyer with low down payment it is very hard to compete for these properties because you don’t have the ability to overbid. Sellers are not willing to work with low down payment offers if they think the appraisal will come in short and they have the ability to work with large down payment offers or all cash offers.
- Time frames – As a new buyer you may want to take all the time you can to do inspections and think about the property. The issue is that sellers want to close as soon as possible. If you ask for a two week inspection period and the seller has another offer that is willing to have a one week inspection period you will most likely lose out if all other things are equal.
It takes time to get comfortable with the real estate process and time to feel out the market. I am happy to spend the time showing properties and writing the offers necessary for my clients but I want them to be mentally ready for the process as well. It can be discouraging at times but the end result is worth the time and the effort.
If you are a buyer with low down payment there are other ways to become a stronger buyer. See my blog post below:
