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

Demand is high and supply is low.
Author:
Updated:
Original:

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.

via GIPHY

"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."

Next Up

Lindsay Guentzel

For The Week: What's harder than making a meal plan? Sticking to it!

Lindsay Guentzel says you shouldn't give up on your meal planning routines.

Screen Shot 2019-12-17 at 11.15.34 AM

Two people fatally shot by police in Wadena County, two officers injured

Another man was shot in the altercation, which police claim started when one of the suspects opened fire on officers.

snow, plow

Winter storm warnings issued as snow system shifts in Minnesota

The worst of the snow will now hit further north, affecting areas including St. Cloud and the I-94 corridor.

Matt Dumba

Matt Dumba beats the clock to give Wild sixth straight win

Dumba scored as overtime came to a close for another Wild victory.

Karl-Anthony Towns

Bradley Beal terrorizes Timberwolves in loss to Wizards

Beal and the Wizards handed the Wolves their seventh straight defeat.

Marcus Carr / Gopher basketball

Gophers tourney hopes take another blow with loss to Nebraska

Marcus Carr scored a career-high 41 points, but Minnesota is still winless on the road.

St. Paul police

St. Paul police arrest teenage boy in carjacking crackdown

This comes amid a dramatic spike in Twin Cities carjackings.

snow

Snow latest: Twin Cities set for up to 4 inches

A narrow system will travel across Minnesota overnight.

Blake Fredrick / Lake City Basketball

Lake City boys basketball player signs contract, honored on senior night

Frederick had a special call-up to the Tigers' varsity basketball team.

Related

The Tip Jar: Why your credit score matters, and how to boost it

Want a mortgage? You'll probably need a solid credit score.

The Tip Jar: How to stop yourself spending $27K on your wedding

Seeing the average cost of a wedding is arguably more of a disincentive to get married than a crippling fear of commitment.

The Tip Jar: How to make your groceries last as long as possible

A bit of forward planning and knowing how long food lasts will help cut your waste and save you money.

The Tip Jar: Cheaper ways to make your home more valuable before you sell

Think twice before that $50,000 kitchen remodel, there are most cost-effective ways to boost your home's value.

The Tip Jar: How to save some money on your internet service

I did it to save money. And now I want to help you save money as well.

The Tip Jar: Now is the cheapest time of the year to buy a TV

Retailers slash prices in the weeks leading up to the Super Bowl.

The Tip Jar: How to have a cheap staycation in Minnesota

Don't want to stray too far or spend too much this summer? The Tip Jar has you covered.