My husband and I were newlyweds fresh off our honeymoon when we decided to take on yet another major life milestone: becoming first-time homeowners. It was late summer 2023, and the area in upstate New York where we wanted to buy had a hot real estate market. So hot that homes were selling within a week — sometimes just a few days — and it wasn’t uncommon for them to sell far above the list price. We’d heard horror stories from friends and family trying to buy a house for months, but we were ready to jump in and give it our best shot.
The experience was stressful, and at times even emotional. The market conditions required us to shift our homebuying strategy and persevere through several challenges. But in the end, we were successful (as well as extremely lucky) and are now proud homeowners. Here’s how we did it, steps to follow so that you can do it too, and what to prepare yourself for when buying your first home in a competitive housing market.
Shop around for lenders and rates before house hunting
Most homebuyers, and especially first-time buyers like me, will need to get a mortgage in order to afford the purchase. It’s really important to shop around for lenders and get a preapproval letter before you start touring homes, and even more so in a high-rate environment. Different lenders might offer you different interest rates, and even a slight difference in rates can save you a lot on your monthly payments and the overall loan cost.
Before you make an offer on a home, you’ll need a preapproval letter from a lender to show that you’re likely to get financing for the sale. Without one, home sellers might see you as a risky buyer and may not even consider your offer.
Putting in the extra time and effort to compare lenders and their offers can pay off. Take it from me: My husband and I compared 30-year mortgage rates from three lenders — a national bank and two local credit unions — and were thrilled to land an extremely competitive rate.
Ask the right questions when choosing a Realtor
In a competitive housing market where sales move fast, it’s even more important to have a responsive real estate agent who has the availability to take you on as a client. Before choosing the agent we worked with, we interviewed her to ensure she would meet this criteria and others, asking questions such as:
- How many clients are you currently working with?
- Do you have the bandwidth to take on more?
- Are you able to share quick updates and give house tours as soon as possible?
- Do you work full time or part time?
- Are you available on weekends?
- How long have you been a real estate agent?
- What’s your commission rate?
Keep in mind: Because home sales move fast in a competitive market, having a responsive agent who can get you in for showings immediately can make all the difference between you potentially getting the home or being too late to the table.
We chose our agent mainly because she worked full time, had the capacity to take us on and had weekend availability. As another bonus, her husband worked in contracting, which was really helpful during house tours — she was able to point out what looked solid and what would probably need some work or be a cause for concern.
Get organized so you can move quickly
One thing became clear to us just from browsing listings in our desired neighborhoods: If we saw a home we liked, we needed to move fast. People were scooping up homes in our market within a few days, meaning there was very little time to schedule a showing, tour the home, decide if we liked it enough to drop a huge chunk of our savings on it and submit an offer.
Bring a checklist of what to look for to each home you tour, and take note of red flags and desirable features. You may only get to see the house once, so keeping good notes to refer to after you leave can be crucial in deciding whether you want to make an offer or pass.
Even with a preapproval letter in-hand, looking at the first house we were interested in was overwhelming. Our agent kindly let us know that all offers on the home were due by the end of the day — yes, that same day. I walked through the home and furiously went through a checklist of red flags my dad had given us (Were there broken seals in the windows? Did the sump pump have too much water in it?). Any of these factors could have resulted in expensive repairs or upgrades. We viewed one home that had bowed and cracked walls in the basement and, knowing that the home was in a flood zone, we quickly crossed that property off our list.
Be flexible — you’ll likely need to compromise
Unfortunately, buying in a seller’s market meant that we had less negotiating power in the transaction. We were even told that, since houses in our area got multiple offers, we would need to waive the home inspection if we wanted our offer to be seriously considered.
Buying a home without an inspection made us very uncomfortable, so when we found a listing we really liked, we knew we had to get strategic: We brought our parents with us to the open house and gave everyone certain red flags or dealbreakers to look for, like water damage discoloration on the ceilings and visible exterior foundation or roof issues. This allowed us to cover more ground with the little time we had, and while none of us are professional inspectors, it gave us a fairly good idea of what we were dealing with. We also asked the sellers for a copy of their inspection report from when they bought the home, so we’d at least know what condition the house was in five years ago.
In a competitive seller’s market, you might not have the leverage to ask for contingencies like a home inspection. Be flexible, be creative and leave some cushion in your budget to account for unexpected factors.
In addition to waiving the home inspection, we made two more compromises in order to score this house. My husband and I had originally wanted a bigger home, but we made the hard decision to purchase a starter home in lieu of jumping straight to our forever home. In the end, this freed up more funds in our budget to go toward any needed repairs or expenses that came with waiving the inspection.
We also had to compromise by agreeing to let the sellers stay in the home for one month after closing, until their new home was ready. That meant we had one month where we had to pay both rent and a mortgage payment. But the home had six other offers besides ours (yes, six!), and we knew that if we didn’t agree to the sellers’ terms, they’d just accept another offer instead.
It was incredibly frustrating to feel like we had no negotiation power. But again, because we downgraded our desired home size, we had more wiggle room in our budget for these costs, and we were highly motivated to get out of our apartment. So we conceded on this term.
Try to keep your emotions in check
Before we finally signed the contract on our house, I had made the classic mistake of falling in love with the very first house we put an offer on. Unfortunately, that offer was steamrolled by another one from an all-cash buyer for $60,000 over the asking price. I cried for a whole day when my dreamy vision of our life in that home was shattered. How could we possibly compete with offers like these?
But the drama didn’t stop there: When we found the home we now own, the sellers initially didn’t accept our offer. We’d included an escalation clause, which allows a home bid to be raised incrementally, up to a preset maximum amount, when competing offers come in. But our Realtor informed us that, once again, there was an all-cash offer standing in our way. Even though the cash offer was lower, the seller saw our offer as riskier since we’d need to secure financing through a mortgage (despite being preapproved). Unless we agreed to go straight to the max figure in our escalation clause — which would have meant paying another $10,000 — they were going with the all-cash offer.
While it was painful to do, we declined. We were worried about home values falling and losing money when it came time to sell, and if the home appraised lower than the sale price, we didn’t want to pay that money out-of-pocket.
Set firm financial boundaries. No matter how tempting it can be, you should never put your financial health on the line just to get the house.
Once again, I was crushed. Getting rejected in a competitive market was tough, but somehow being the one to reject and walk away was even harder. But I knew how important it is to set firm financial boundaries when house hunting. No matter how tempting it can be, you should never put your financial health on the line just to get the house.
However, about an hour later, our Realtor texted with an update: The seller’s agent had made a mistake, and if we still wanted the house, it was ours — at the original price that won escalation, not the max price. I went from being devastated to elated in a matter of an hour.
Bottom line on buying my first home
The lesson here? Buying a home is an emotional journey, and buying in a competitive market can amplify those emotions. My best advice to survive it is to be smart about who you work with, stick to your affordability boundaries and be prepared to make compromises. Be patient and persevere: My home was out there, and yours is out there, too.
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