The Tip Jar: How to buy your first home in this insane housing market

Demand is high and supply is low.

In case you hadn't noticed, the Twin Cities housing market is ridiculously undersupplied, to the point that we might as well start measuring the time it takes a house to sell in hours, rather than weeks.

That makes it especially challenging for anyone getting on the housing ladder for the first time, as not only will they have to deal with high prices, but they'll have to compete with a dozen other people also trying to land a home.

To help anyone who's looking to take the leap, The Tip Jar spoke with Coldwell Banker Burnet-affiliated real estate agent Joe Braman about how to maximize your chances in the current market.

Where to buy on a budget

For below $200,000, Braman suggests looking at single family homes in the 'burbs of Blaine, Bloomington, Brooklyn Center, Brooklyn Park, Richfield, and Shakopee, as well as North Minneapolis, Midway/Hamline and Frogtown in St. Paul, and East and West St. Paul.

If you can afford up to $250K (the metro average is $231,700, FYI), you can expand the search to New Brighton, Maple Grove, South Minneapolis, Roseville, South St. Paul, sporadic listings in Highland Park and Mac-Grove in St. Paul, as well as White Bear Lake.

Be prepared

Some houses are now being sold in mere hours, so if you're serious about buying then you need to first make sure you're in a position to make an offer on the spot.

Braman says this means laying the groundwork months before you write an offer, by getting pre-approved for a mortgage by a lender, finding and working with your real estate agent, and educating yourself on the market.


"When a first-time buyer sees a home they love, they typically need to write an offer immediately to ensure they can get the home under contract," he adds. "So, buyers need to think about when they want to move in, remember that it can take 30-60 days to close once they write an offer."

It should go without saying too, that you need to have your deposit saved up.

Be ready to compromise

If you have visions of the perfect, roomy, single-family home with a big yard and a white picket fence, get ready to have those dreams dashed.

At some point during the process, irrespective of your budget, you're going to have to compromise on something – whether it's location, square footage, yard size, layout etc., so go into the purchase process in that frame of mind.

Think over what you'd be willing to compromise on and widen your search criteria accordingly, Braman suggests.

How much to bid

Given the huge demand for homes costing around $250,000, you're likely to be up against several bidders. Braman says that means you'll probably need to submit offers that are asking price or even more.

You're also going to need to be flexible in terms of the closing date and have a "strong pre-approval letter from a reputable lender," he adds.

One note of caution though. So frantic has the market become that some are submitting offers that are not contingent upon a house inspection.

If you do this and you later find some serious structural deficiencies, you won't be able to pull out of the deal without a serious financial outlay, either that or you're stuck with expensive repairs. Investopedia has more on the importance of house inspections here.

How quickly do I act?

Well it goes without saying that if you really like the house and want to make an offer, do it straight away.

But you shouldn't feel pressured into making an offer because you fear it will otherwise sell in hours and another house you like won't come along.

"This is not something to rush into, or feel pressured into, and never let anyone tell you otherwise," Braman says, but adds that "once you feel educated, confident, and ready to move forward – you need to act immediately once you find a house you love."

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