What to Look for When Buying a House in a Hot Market

Jun 16, 2022

The surging real estate market shows no signs of slowing down and that creates opportunities and challenges for buyers. When looking to buy a house, a hot market can take home prices and the competition to a new level. Buyers can tell when the real estate market is hot when they see increased home prices, fewer affordable listings, more bidding wars (more buyers competing for the same property), and homes remaining on the market for less than the average length of time.

While the flurry of activity in the housing market is welcome news, experts tend to agree that the country is immersed in a “seller’s market.” That label typically means that there are more active buyers than inventory. If you are considering applying for a home loan, it is essential to know what to look for when buying a house. It is also crucial to avoid common mistakes that prove costly.



What to Look for When Buying a House

In a seller’s market, listing prices tend to uptick for a couple of reasons. One is that interest rates have gone down. Another is that there are far more buyers chomping at the bit than listings.

Given that real estate agents are advising sellers to list a little higher, you will be tasked with finding good value. There are some broad factors that you, as the buyer, should consider and investigate before gaining a mortgage pre-approval

Here are some broad factors to look for when buying a house:

  • Does the neighborhood work for you? You must prioritize the location and find a neighborhood where you feel safe. You’ll want to make sure it offers the sense of community you are looking for and is convenient for commuting to and from work.

  • How do the school systems rand? When buying a house, you must check the school systems. There are plenty of online resources to vet school systems. Beyond general ratings, consider items such as graduation rates and how many students attend college.

  • What is the crime rate in the area? Consider looking at these statistics thoroughly. Many provide numbers based on incidents per 100,000 people. Consider how that compares to small towns versus urban populations. At the end of the day, ask yourself if you would feel safe in a neighborhood.

  • What is the Property Value Trend in the Area: It may seem redundant to talk about property values in terms of, well, value. But there are multiple ways to look at increased, static, or decreased worth in the area. If you are a first-time home buyer who expects to sell and purchase a larger property, fast increases are good. But if you are downsizing and plan on making this your last home, a static market could help tamp down property taxes.

  • Does the home require a secondary investment? Some home buyers look for homes that require rehabilitation. The strategy is to buy below market price and gain quick equity after fixing it up. If that sounds like you, be sure about the difference between your ability to complete DIY projects and need to hire a contractor. The costs add up quickly.

  • What are your must-have home features? When you decide which home features are a must, keep in mind that according to Zillow, the average homeowner stays in their home for 14 years before moving to another home. Make sure you think long-term when it comes to the space you need for your growing, or shrinking family.

  • What is the current condition of costly items? If the outside of the home looks to be in good shape, there is still more work that needs to be done. Having an inspector check the major systems such as the furnace, oil tank, water heater etc. as well as check for mold, uneven floors, plumbing issues and leaks can prove beneficial. Consider asking the seller to repair any issues before closing, or offer to take a credit so you can fix them yourself.

Current key factors to consider when buying a house in a hot market:

  • Pre-Approval is Essential: A mortgage pre-approval is one of the best ways to increase your chances of getting the house you want because it can speed up the process. Some sellers may not entertain offers from prospective homebuyers if they don't have pre-approvals. Additionally, some realtors have taken to requiring proof of preapproval before they even work with you.

  • Price May Not Always Win: There are other considerations when buying a home in a seller's market besides price. You may be able to offer the seller some financial incentives or assistance that can help win you the deal. Closing earlier, offering to pay all closing costs, waiving all items the inspection found that need repairs—anything that lets you get ahead of other buyers can help.

  • Act Quickly in a Hot Market: When you are buying a house in a hot market, homes are selling quickly, which means you'll need to act fast if there's a property you like. If you see a home that appeals to you is listed, don't wait until it's convenient to go for a showing. Your convenience often means the difference between catching a property and missing the boat entirely in seller's markets. 

  • Have a Clear Budget: Finding your dream home is great, but if you can’t afford it long-term, your situation will quickly change from bad to worse. Be sure to research “how much house can I afford” before shopping for your home. Consider using an online Home Affordability Calculator and getting a mortgage pre-approval to help you stick to your budget.

  • Work With a Strong Real Estate Agent: Real estate agents can be invaluable when it comes time to buy a home. With a finger on the market's pulse, they can show you properties you wouldn't otherwise find. Even more important? Relationships. They have insight into what properties are going to come to market and they can also speak to the seller's agent if there is a property you have your heart set on, to see what it will take to get the deal done. 

  • Work With the Right Lender: There are many mortgage lenders and mortgage options available. However, working with a trusted local lender that can guide you through the home buying process and offer reliable advice for your local community can prove invaluable. Be sure to consider Finex Credit Union when you search for the best lender and mortgage for your home buying journey. 

    If you are trying to buy a house in a hot market, being prepared and having done some research about the market and your finances will make the process easier and improve your chances of getting into a great home for you.




What Mistakes To Look For When Buying a House as a First Time Home Buyer

If you are on the cusp of experiencing the American dream of buying a house, the excitement can be almost electric. And when people are moved by emotion, sometimes they make assumptions that prove costly. First time home buyers are more likely to skip certain safeguards when they know multiple offers have been submitted on a property they love. These rank among the biggest mistakes.

  • Skipping the home inspection
  • Putting in an offer without getting pre-approved for a home loan
  • Providing excessive earnest money to sway the seller
  • Not vetting mortgage lenders recommended by your realtor 

Failing to have the structure and mechanical systems checked appears to be an obvious faux pas. It is surprising how many inexperienced people feel satisfied after looking at a property themselves. The other errors in judgment often seem like reasonable strategies in a hot market to avoid having a house scooped up by another home buyer.

For example, putting in an offer on the spot knowing you have a full 20 percent for a down payment seems to make sense. That is until other factors such as a few tardy credit card payments of excessive student loan debt diminish your credit rating.

Plunking down a large earnest money deposit when buying a house may seem like a good way to get a seller’s attention. But if your circumstances change and you need to pull out of the deal, the seller usually keeps your money. Lastly, submitting an offer above market value could result in you having to make up the difference — in cash — to reduce the home loan so you are not underwater.


To discover your maximum house-hunting budget, download our free guide:How Much House Can I Afford in Connecticut?


Apply For Your Mortgage with the Right Lender

If you really want to know what to look for when buying a house, consider working with an experienced real estate professional who can guide you through the process. Their advice about how to negotiate in a hot market could prove invaluable.

When it comes to finding the best mortgage for your needs, Finex Credit Union is here to help you every step of the way. Get pre-approved for your mortgage today.


For more tips on what to look for when buying a house, download our "How Much House Can I Afford in Connecticut?" guide.