If you’ve been paying any attention to Bozeman’s real estate market, you know it is a bit crazy! The number of people looking to move to Bozeman has increased significantly since the coronavirus, while the number of homes for sale has remained extremely low.
As a result, our real estate market has gotten very competitive, making it difficult for homebuyers to purchase homes in Bozeman and the surrounding areas. Bidding wars have become common, and if a home is listed below a certain price point it can be hard to even get in the door due to so much interest. We’ve seen homes go for anything from $1,000 to $100,000 over the asking price this past year, and the prices of homes being listed on the market now are reflecting that.
So, how can you buy a home in Bozeman right now? Here are 5 tips from one of our real estate agents.
Rather than having a pre-qualification letter when you go to make an offer on a house, have a pre-approval letter ready instead. What’s the difference between the two? A pre-qualification letter is what you get after an initial meeting with your mortgage lender. You fill out an application, declare your assets, income, and debt and you get a letter stating the estimated loan amount that you will be pre-qualified for. A pre-approval letter means that the lender has gone through your W2’s and income to verify the actual amount that you will be able to borrow. Many sellers and agents in Bozeman have seen deals fall through due to the buyer not being able to secure financing, so presenting your offer with a pre-approval rather than a pre-qualification letter will make your offer stronger.
Typically, an offer will be submitted with standard contingencies like a home inspection, appraisal, and financing contingency. These contingencies are expected and often necessary, especially if you are taking out a mortgage to purchase the property. In order to remain competitive in Bozeman’s real estate market, you want to avoid adding any additional contingencies to your offer, like a contingency stating that your offer is dependent on the sale of your existing home.
This one can be surprising to many home buyers. Who you work with matters, especially when your offer is one of many. If the agent you are using has a positive reputation, a strong network with title companies, lenders, and home inspectors as well as a positive working relationship with the listing agent, you stand a better chance of getting your offer accepted. You will also want to make sure that the agent you are using is a full-time agent in Bozeman. In this market, you can’t wait hours for your agent to be available to show you a house or to let you know when one comes on the market.
If you are using Zillow, Realtor.com, or Trulia to search for homes in Bozeman, you are already a step behind. That is because these websites are 3rd party websites that pull homes that are for sale from the Multiple Listing Service (MLS), the system real estate agents use. It can take up to 15 minutes to 24 hours for a property to pull from the MLS system to any of these 3rd party websites, which in Bozeman's real estate market can be too late.
So how can you get around this? Ask your agent to set you up with listing notifications through the MLS system. If you do not have an agent, you can sign up for the new listing notifications on our website. This will send you an email notification the minute a home that fits your criteria comes on the market.
An escalation clause is something you can submit with your offer saying you will go a certain amount over the next highest offer. Escalation clauses are a good way to compete in Bozeman's competitive market, but you do want to make sure that you have qualified financially for that amount. If you do use an escalation clause, be prepared to get a response from the sellers asking that you waive the appraisal. This happens when there is a chance that the home will not appraise for the amount that you are willing to pay. If you are taking out a mortgage for the home, the bank will still require an appraisal to determine the value of the home. If the amount that you agreed to pay is higher than that appraisal amount, you the buyer are usually responsible for making up the difference.
We know it is crazy out there in Bozeman's real estate market, but we are here to help. Send us a message and let us help get you into a home!
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