Homebuyer Prep

Tim Ford  |   Wednesday Mar. 1st, 2023

It’s been a real winter again in Bozeman; we’ve finally had a great snow pack to play in, and some fun days on the slopes. The Real Estate market has started to court buyers a bit more, but we could still use some more inventory. With spring around the corner, we’ll likely start to see more buyers and sellers in the marketplace.

For buyers considering a home purchase in 2023, one of the first steps should be to meet with a lender to qualify for financing. Meeting with a lender may not seem like the fun part of the process, but it is extremely important to tackle this obstacle early.

Agents have stressed this over the years and are often told by would-be buyers that they’ll have no issues qualifying for financing, and this is generally the case. However, the purpose of the pre-qual goes beyond assuring the buyer and their agent that the buyers can get financing.

The strongest reason for getting pre-qualified is to be in a solid position when making an offer. In the Bozeman market, many homes are still generating multiple offers, sometimes within a matter of days. If a buyer does find that right home, they may not have enough time to start the pre-qualification process from scratch if they want to get an offer in the mix.

Additionally, a lot of offers get written on Friday afternoons or over the weekend. If a buyer finds that perfect home and they’re putting together an offer at 5:00 pm on a Friday, and haven’t yet met with a lender, it’s unlikely they’re going to be able to get anything done until Monday at the earliest. In a fast-moving market, that may not be soon enough.

As rates have risen from their historic lows, lenders are getting creative with rate buy down options. A knowledgeable lender can help determine if a temporary or permanent rate buy down makes sense for the borrower. If so, some buyers have had success in getting the seller to help pay for these rate buy downs, but they’ll want to ask for that as part of their initial negotiations when offering on a property. Again, if a buyer waits to meet with a lender until after they’ve offered on a property, it may be too late to go back and ask the seller for these types of concessions.

The pre-qualification process can be even more important for high income or HNWI (high-net-worth individuals). Many of these folks have complicated tax returns and various sources of income. In these scenarios, a lender may need some time to find the best route to get them approved.

Another important reason to meet with a lender early in the process is to ensure that the buyer’s credit score is accurate. It is not unusual for a consumer’s credit report to contain inaccuracies that may lead to a lower credit score. The earlier in the process that this is discovered, the more quickly it can be resolved.

I have included recent sales data for the first month of 2023, including the median and average sold prices for the last three months. In addition to the 40 homes sold in January, another 64 homes are currently under contract or pending as of the date of writing.

The included data reflects sales of homes in the greater Bozeman area, including Four Corners, Gallatin Gateway, Bridger Canyon, and Bozeman city limits. The data includes home sales reported through the local Big Sky Country MLS, and does not include private party sales, condominiums, or townhouses.

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