Buyers who heard about the crazy competitive market of last year should be advised: homes are now sitting on the market for longer, so if you’re not sure about a property, you likely have time to think it over. December ’23 saw homes on market for a median of 61 days.
If you know one thing about the 2023 real estate market, you know it was turbulent. Would-be home buyers are entering 2024 with a healthy dose of skepticism. They’re not going to buy a house sight unseen, and they’re not going to bid 20% over-asking and hope for the best.
Experts are predicting that the average home price will likely remain about the same as 2023, with the potential for a slight drop—which may signal some relief for exhausted homebuyers.
If you’re planning on buying a house in 2024, it helps to be prepared. Here are 9 real estate tips for buyers looking to get a leg up on the 2024 market.
1. Improve your credit score
Many buyers are unaware of how much of a difference their credit score can make when it comes to they can be approved for, as well as their monthly payments.
From How do People Afford Houses?, here’s the difference between a low and a high credit score when it comes to monthly mortgage payments for a $430,000 loan with 10% down (updated for 2024):
- 740-759: $3,183/month
- 680 – 699: $3,286/month
- 620-639: $3,405/month
The good news is that you can improve your credit score over the course of a single year—and some changes can make a difference within a few months.
It’s a good idea to work with a credit counselor or mortgage advisor on this, though, because sometimes the things that make a better credit score are counterintuitive. Asking your credit card company to raise your maximum limit, for example, doesn’t look bad—it actually helps your credit because it improves your credit utilization score.
2. Choose your agent carefully
Homebuyers tend to underrate the role of the real estate agent in the transaction, assuming that their own research and home searches on sites like Zillow and Realtor are replacing the bulk of their agent’s work. Finding a house, though, is a small fraction of an agent’s potential duties.
The difference between a good agent and an unprepared agent is never so stark as when there is a snag with the home sale—and it’s almost impossible to get through a real estate transaction without some problem(s) arising.
An inexperienced agent can also cost you thousands of dollars in savings if they drop the ball on negotiating. For example, if the listing agent has a lot of experience, they may try to push around a newer buyer’s agent. As a buyer, you’ll want to work with someone who can adequately advocate for your best interests.
3. Be patient
Inventory is down right now—it’s easy for homebuyers to feel anxiety when they check out the local real estate market and there are only five homes available that fit their “must have’s.”
The key is not to panic and rush into anything. If your initial search is only showing you homes that are an okay-fit at best, don’t get discouraged. Take note of your wants, needs, and deal breakers as you look through homes.
4. Shop around for a loan
Not enough home buyers know that shopping around for a loan and exploring multiple loan options can help lower your interest rate and/or monthly payments. With the mortgage rate far higher than early in the pandemic, it’s prudent to know your options.
Lenders offer slightly different rates from each other, and surprisingly it’s not always the big banks who offer the best rates. Buyers today can also explore alternative loan options, like ARM loans.
While many people have a gut reaction of “heck no!” to adjustable rate mortgages, what’s important to note is that ARMs are front-loaded with a set fixed rate.
A 10/1 ARM, for example, comes with a 10-year fixed rate. For many people buying a starter home—who weren’t planning on owning their home for the entire 30-year term—this is more than enough time. In the meantime, you’ll benefit from the lower fixed rate ARMs receive.
A lot of would-be homebuyers are wondering how mortgage rates will shake out in 2024. The truth is, no one knows for sure. We saw plenty of industry experts under-predict last year’s meteoric rate rise, and the same will likely be true this time around. Here’s what some are saying:
- Realtor.com predicts that interest rates in 2024 will average 6.8%
- The Mortgage Bankers Association is forecasting an even better 2024, with interest rates potentially reaching 6.1%
- Wells Fargo’s prediction is similar to the MBA, calling for interest rates to hit 6%
And the truth is, high interest rates aren’t all doom and gloom for buyers. High interest rates knock some of the competition out of the market, so buyers will have a bit more negotiating power. Buyers can also plan to refinance once rates go down.
5. Don’t ignore your agent’s advice
Your Realtor’s advice comes from years of experience and from working on countless deals—so don’t ignore it. Plenty of buyers get frustrated with the homebuying process precisely because they have a pre-set idea of what their buying experience “should” be like—and have trouble adjusting to reality.
It can be easy to get caught up in what everyone is saying about the real estate market—whether it’s your preferred news station or your outspoken uncle. However, your best source is going to be a trusted professional. When you work with an agent, they can tailor a plan to best fit your needs and timeline.
6. Understand the local market
Now more than ever, it’s good to know what direction your potential neighborhood is going in. Are there new developments or new storefronts nearby that could continue to draw people to the area—or are there visibly neglected areas? A neighborhood that’s drawing people in will help increase your home’s property value.
It’s also important that you keep an eye on how quickly homes in your preferred areas are moving. Knowing how long homes are remaining on the market will give you a good idea of how quickly you need to set up showings or make offers. As always, planning with a trusted real estate agent is going to give you the best chance at success.
7. Opt for a smaller home than you planned, if necessary
If you’re worried about monthly mortgage payments, sometimes the solution can be as simple as buying a smaller home than you originally planned on. Most buyers today aren’t looking for their forever home anyway, so dealing with a little less storage space than you planned on—or a slightly less luxurious kitchen—can be a way to get a house closer to your ideal price range.
Purchasing a home that’s slightly below your price range is also advantageous in other ways. For example, if you’re able to make a higher percentage down payment, your monthly payments will likely be lower.
8. Negotiate, negotiate, negotiate
Although it’s still a seller’s market on paper, sellers are definitely nervous about the market right now—which means it’s a great time to push for what you want and get the contingencies that benefit you. A year ago, many home sellers had 20 offers to choose from and would go for the buyer offering no inspection, all-cash. Today, that same home seller is receiving a handful of offers at best.
What you negotiate for ultimately depends on what matters most to you. If the house’s kitchen is hopelessly outdated, offer under asking. If you’re worried about not having enough money to cover the 15-year-old HVAC if it dies next year, ask for a 1-year home warranty.
With that said, be realistic about what you’re asking for.
If you notice a home has been on the market for months, you may be able to come in with an offer below asking. However, if you come in significantly under asking price, the seller will likely get insulted and not consider negotiating. It’s important to know what similar homes are going for in that area to come up with a fair—but smart—number.
9. Figure out your home buying timeline
2024 can feel overwhelming, but it doesn’t have to be if you have a plan in place. Understanding your home buying timeline can help you figure out your game plan.
Questions you should be able to answer include: how long will it take to get pre-approved? How long will it take to find a home, on average? How long will it take to close? And if you have a rental lease, how will that impact your deadlines?
2024 is… a lot. Should I wait to buy a house?
Is 2024 a good year to buy a house? If you’re looking for the ideal market conditions for a buyer, the short answer is not necessarily. The trouble with waiting for the perfect scenario or market forces, however, is that it might take a long while to arrive—if it ever does.
The better plan is to educate yourself on the current market, figure out your budget and start plotting out your home buying timeline. Buying a house now allows you to build equity today—rather than waiting until tomorrow.