How First-Time Home Buyers Can Be More Competitive

SACRAMENTO -- There was one big reason Thomas Bremser and Kristine Hunter now was the time to buy their first home -- their rent was increasing.

"We got a notice that our rent was going up 25 percent, and so we're like, 'Well, we're going to move somewhere, and now that we know we can buy a house. We should probably just buy,'" Bremser said.

The couple's 18-month-old daughter, Hildegard, loves to play outside. So even before their rent increase, Bremser and Hunter had enrolled in realtor Leanna Halldorf's first-time home buyer class.

"I think a lot of people, it's a little bit intimidating to actually start one-on-one, go to a lender, go to an agent," Halldorf said. "It's all a little bit overwhelming."

Halldorf says there are certain loans first-time home buyers can use that actually make their offers much more competitive, even when the buyer may not have as much money.

"Sometimes it's better to make a little bit less because at that point you'll actually qualify for certain grants or down payment assistant options that maybe someone who makes a little bit more doesn't have the access to," she said.

Jamal Bey is a broker with the Neighbor Financial Corporation. He says before even searching for a house, buyers should take care of their financials first.

"I think something like 69 percent of all transactions that fall out, fall out due to improper financing," Bey said.

He also says buyers should understand the difference between a pre-qualification letter and a pre-approval letter.

"The pre-qualification letter is not going to be suitable in a market like this," he said. "But the pre-approval basically says your file has completely been reviewed and pending you finding a home, you have a full loan commitment for this amount."

Halldorf says it's also helpful to let the seller know who you are. Often they'll prefer selling to a family over an investor looking to flip the property.

"I've had a client where we knew that there was an offer that was $5,000 above what we were offering but it was a family home they wanted it to go to a family and, in the end, they did choose our offer," Halldorf said.

That's what Hunter and Bremser did, and now they're in escrow on a house they love. But they say that without their daughter, that may not have happened.

"I think there were 3 houses that we put offers on and cash buyers took out from under us," Bremser said.

Realtors also suggest putting in offers on homes that have been on the market longer than a month. Those are the properties that are overpriced and sellers are more likely to negotiate the price down.