Smart Moves by Ellen James Martin

Tips for Buyers in a Tough Market

Mortgage rates are spectacularly low, yet many wannabe homeowners are feeling anxious about their odds of scoring a successful purchase. The list of their fears is growing ever longer.

Buyers are fretting about the steady rise in home values, causing them to fear they’ll be priced out of the market. As of December, prices across the country rose 3.8% on an annualized basis, and many popular metro areas reported even bigger jumps, according to the widely watched S&P CoreLogic Case-Shiller National Home Price Index.

Meanwhile, economists say buyers are now petrified they’ll lose out to fellow purchasers due to a serious shortage of available property -- a shortage that’s especially acute in metro areas where first-timers wish to live and where the job base is very strong.

“Low mortgage rates have brought buyers back into the housing market, but a lack of listings means buyers are having to compete with one another to secure a sale and lock in a mortgage rate,” says Daryl Fairweather, the chief economist at Redfin, the real estate brokerage firm.

Added to these concerns among wannabe homeowners are general uncertainties about the U.S. economy.

“It’s not as carefree as it once was to contemplate a first-home purchase, which many still consider the centerpiece of the American dream,” says Merrill Ottwein, a longtime real estate broker.

Yet Ottwein -- who works primarily with buyers, not sellers -- says many young owners who faced their fears squarely are glad they bought as soon as they could.

“Don’t let worries divert you from your basic objective of homeownership,” says Ottwein, a past president of the National Association of Exclusive Buyer Agents (

Here are a few other pointers for buyers:

-- Take counsel from your elders who bought homes years ago.

Ottwein, who’s sold homes for decades, encourages you to listen to older friends and family members who bought property years ago. It’s very likely your parents were happy they bought a place as soon as they did, despite fears about paying too much.

Also, with mortgage rates hovering near record lows, your elders will likely remind you there’s no guarantee that rates will always remain in the low single digits.

Of course, no adult American of any age can forget the real estate downturn that occurred around 2008, causing properties to drop in value and foreclosures to occur in numerous cases. But the reality is that foreclosures are now rare and that in most neighborhoods, property values have more than rebounded in the intervening years.

-- Look to a trustworthy mortgage lender for guidance.

In this era of conservative lending, most mortgage lenders are going to great lengths to ensure that the loans they originate are solid. This means borrowers must be very prepared to respond to the lender’s requests for documents.

“The right lender will help make sure you assemble every single document needed to get your loan approved,” says Sid Davis, a real estate broker and author of “A Survival Guide for Buying a Home.”

As proof of income, many lenders now insist on much more than the customary pay stubs and W-2s. For example, they’ll likely ask you for tax returns. In addition, they’ll probably want assurances that the funds you’ve amassed for your down payment have been in your savings or checking account for some time and weren’t borrowed from a family member five weeks ago.

“Lenders are more risk-averse now on how much they’ll lend. But the good ones can offer you a lot of guidance as you go through the process,” Davis says.

-- Hold out for the right property, even in a tight market.

In the most coveted neighborhoods -- especially those that are considered “walkable” to restaurants, stores and public transit -- many buyers feel under pressure to bid quickly on homes that surface in their price range and to offer even more than the asking price to outdo rivals.

“Competition pushes up prices, which means that even though buyers can get a good deal on a mortgage now, they are often paying a higher sticker price,” says Fairweather, the Redfin economist.

Still, veteran real estate pros caution against competing for any home that’s an obvious poor choice for you. For example, no matter how attractive the neighborhood, a couple with three kids is unlikely to do well in a two-bedroom house.

“Those of us who’ve worked with buyers for many years know that you don’t want to jump the gun on property selection, regardless of the market. Have faith that if you wait a short while, a house that’s a better fit for your family will soon become available. I’ve seen a reasonable level of patience rewarded countless times,” Ottwein says.

(To contact Ellen James Martin, email her at