Buying your first home? Be ready to act fast

Nathan Hauck started thinking about buying his first home about a year ago.

The 26-year-old Sioux Falls financial analyst had saved up enough money for a down payment, and about a month ago, he got serious about his search.

He started working with a Realtor, and it didn’t take long to realize how frustrating the homebuying process would be in a city with low inventory, rising prices and homes selling the day they’re listed.

“Houses would come up on the market, it’d be one or two hours, and it’s already contingent,” Hauck said. “I just got discouraged.”

First-time homebuyers now need to be ready to act fast, offer high and steel themselves for potential disappointments along the way, said Realtor Destinie Marshall, an agent with the Discovery Realty Group under Keller Williams Realty Sioux Falls.

For Hauck, the story has a happy ending. Because he had flexibility in his current lease, he was able to purchase a town house that’s still under construction. It won’t be built for another four or five months, but he’s happy the search is over.

Others aren’t so lucky. Marshall works with many first-time homebuyers, and she said this year has been extremely tough. She has one client who has made offers on nine properties and been rejected each time.

“Right now, we are seeing homes selling within 24 hours,” she said. “I’m seeing between five and 15 offers on a home.”

That means first-time buyers have to be ready to act fast and aggressively if they see a property they like. Marshall also suggests doing whatever possible to make an offer more attractive to the seller.

Conventional loans are easier to navigate than federally backed FHA loans. Shorter inspection times and fewer contingencies also help, and, of course, there’s the purchase price.

Matthew Thompson, a 24-year-old Sioux Falls resident working in the financial customer service industry, said he made at least four offers that got rejected before finally finding his new home.

One house was listed for $150,000 but ended up selling for $180,000, he said.

Thompson finally got an offer accepted after adding an escalation clause, which basically said he’d offer a certain amount, but if the sellers saw a higher offer, he’d be willing to pay up to a specified higher amount.

He ended up paying $15,000 over the asking price.

The latest data from the Realtor Association of the Sioux Empire shows 2021 started with low inventory, especially in the $150,000 to $200,000 price range, where many first-time homebuyers find themselves.

That range had only a one-month supply of homes on the market in January, a 64 percent decrease from the year prior.

All boiled down, what it means is if there’s one thing first-time homebuyers need right now, it’s patience, Hauck said.

There were probably five or 10 homes he would’ve liked to make an offer on, but by the time he got off work and had a chance to view the home, it already had offers in.

It takes an emotional toll after awhile, he said. He’d see a house he liked, picture his future life there, mentally commit to making that significant investment and then find out the house was no longer available.

That’s where Marshall’s advice comes in.

“If people are looking to purchase their first home, my best advice is to start now,” she said. “Talk to a lender, and go to a first-time homebuyer class. Be ready to act fast when the perfect home hits the market.”