- - Thursday, November 29, 2012

House hunters in the Washington area, eager to lock in a housing payment at today’s low mortgage rates, are bumping up against an unexpected obstacle: competition.

While not a problem for every buyer, bidding wars are firing up the market in a variety of locations and price ranges. The main driver for multiple offers is an insufficient supply of homes to meet increasing demand.

According to Real Estate Business Intelligence (RBI), a division of MRIS, there were 1,416 active listings in the D.C. area in October 2012. Last year, there were 2,219 active listings — and the average number of listings in October for the past five years was 2,506.

“Buyers have to change their attitude about the way the market is,” said Carol Hooks, a Realtor with Coldwell Banker Residential Brokerage in Alexandria. “Many still think it’s OK to make a low offer and to ask for closing-cost assistance, but they really need to come up with a good, realistic offer and be prepared to pay their own closing costs.”

Pre-shopping prep

Not all buyers will face multiple offers for the home they want to buy, but Eldad Moraru, a Realtor with Long & Foster Real Estate in Bethesda, said buyers should be prepared to compete before they find the home they want to buy.

“All of your financing should be in order before you look for a home,” Mr. Moraru said. “You need to go fully through the mortgage-approval process, not just get a lender’s prequalification letter.

“Your cash for your earnest-money deposit and your down payment should also be ready to go. A lot of buyers will have some money in stocks to sell and some money in a checking account and will tell me they need a few days to get it together,” he said. “You need to have that money consolidated and accessible in one account before you find a house.”

Your choice of lender is extremely important in any real estate transaction, but it becomes even more crucial if you must compete with other buyers.

“You need to shop around and pick the lender you know will be able to provide you with a new approval letter within an hour of finding the home you want to make an offer on,” Mr. Moraru said.

“Some lenders will tell you it will take a day or so, but if you have gone through the mortgage-approval process to determine your maximum loan amount, a lender should be able to generate a lender letter with the address of the property and the exact amount you are offering so that you can attach it to your offer.”

Ms. Hooks said listing agents and sellers often are concerned that the financing will fall apart before settlement, so she suggested finding a reputable local lender.

“Buyers should clear up any credit issues and make sure they have the cash for closing costs and a down payment,” she said. “The bigger your down payment, the more realistic it is that your loan will go through.”

Phil Bolin, a broker with Re/Max Allegiance in Alexandria, said buyers not only need a local, accessible lender but also need to educate themselves about the market so they can make a decision quickly.

“Buyers need to know what they want in terms of the house and the location,” Mr. Bolin said. “They should look at open houses and get as much information as possible ahead of time so they understand home values and what to expect in terms of the condition and price of a home.”

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