It's a bit like Black Friday, but for home instead of 72-inch TVs.

"We've actually been looking since I found out I was pregnant," said Jill Steffen, a Sioux Falls homebuyer.

Her 1-year-old daughter has now grown out of this pregnancy.

"It actually took us that long to find the right home," says Steffen.

Home buying is so competitive now that anyone looking for it needs to plan ahead, right up to their maximum offer.

With more and more young shoppers competing with the trend of suburban growth across the city, it's harder to get a quote than in previous years. And with the fall season approaching, home buying is likely to pick up again after a slowdown in July, industry experts said.

More:Home sales in the Midwest are still the hottest in the country and the Sioux Falls market remains tight

So now is the time to start planning your home purchase.

Sioux Falls had already grown but was booming in 2020 with the onset of the pandemic, part of a national trend of people flocking to buy spacious suburban homes. In June, inventories were down 43.5%, according to the Brokers' Association of the Sioux Empire. Buyers are still looking for apartments.

Since the beginning of the pandemic, the number of suburban apartments on the market has fallen well below typical levels according to data collected over the past 20 years.

"Home ownership is the big American dream," said Kathy Ann Larson, mortgage broker at Fairway Independent Mortgage Corporation. "Buying a house is still worthwhile."

Before doing this, however, preparation is critical to bringing the finances together and approving a quote. A historic period of low interest rates on monthly mortgages means it is still a great time to prepare to buy.

"Most countries don't have the credit facilities we have to get (a house with) 3% less," said Larson.

And the Federal Home Loan Mortgage Corporation, known as Freddie Mac, shows that Sioux Falls is still relatively affordable compared to the US in general, or even the greater Rapid City area.

More:Real estate as wild as it seems? We followed an agent for a day to find out.

The FreddieMac Housing Index shows that Sioux Falls is still relatively cheaper compared to the US and Rapid City, SD.

For anyone looking to move into a home long term while benefiting from low interest rates, contacting a mortgage broker and a real estate agent are two important steps.

Then there is planning a listing, or how much a potential buyer is willing and able to take out on a home loan.

According to the National Association of Realtors, nearly 10% of first-time visitors bought in the Sioux Falls metropolitan area within the past year. And with a steadily growing population, there is a likelihood that competition for housing will continue.

There's a lot to learn about buying a home, and the South Dakota Department of Labor and Regulations (DLR) has a guide to real estate terms.

More:Is there a real estate bubble in Sioux Falls? Yes and no, say experts

Here's a look at how you're progressing in this year's seller market

The population of Sioux Falls has been increasing steadily for years, according to the Federal Reserve.

How to prepare

"Since the 1980s, the lack of austerity has been handicapped by Americans," said Larson. "You need to save or have assets. That's the first. "

For millennials, while they may want to own property, they may compete with baby boomers who are shrinking and therefore looking for the same size house, Larson said.

The March 2016 NAR Home Buyer and Seller Generational Trends report shows that first-time home owners account for 32% of all buyers, compared to a historical average of 40%. Millennials haven't saved up at the rates required to pay the typical 20% down payment on a home, let alone a cash-only offer. If possible, saving early and often is a good first step.

Then follow the next steps:

Plan early: To save, it's best to plan and pay off debts a few years or months in advance, Larson said. If a lender buys a home, which the majority of home buyers do, the credit score for the South Dakota Housing Development Authority loan program must be at least 620. And to be approved for more, the incomes for certain programs must be high enough.

Get a credit check: Credit scores may be incorrect or a fixed error could not be corrected in credit reports due to delays due to the pandemic. Start with a free website like CreditKarma and then move on to a broker.

"If you give this lender time to take out loans and look at the income, you might be surprised by something that you can fix now, not later," said Josh Osborne, Mortgage Officer at The Osborne Group.

Work with a credit advisor: If the credit score is too low for the type of loan and home a buyer wants, the next step is to get in touch with a licensed credit counselor and create a rating improvement plan.

Start conventionally: Conventional or compliant loans are less than $ 548,000 when they go through the government.

Conventional loans sold to the two state programs, the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac), are said to be safer and offer credit to a larger number of people through the secondary market, or to be resold.

Get prequalified: Buyers can take the first step by finding a mortgage broker or bank and bringing together proof of income, pay slips, assets like car titles, and more to see what they pre-qualify for. After this process, which takes anywhere from 30 minutes to an hour or so, buyers can see what type of home they can afford.

Some lenders also recommend obtaining pre-approval, which is a more thorough process for serious buyers.

What buyers do

"First-time home buyers are absolutely shocked at how fast the market is moving," said Blaine Fopma, a 12-year-old mortgage banker at Reliabank Dakota. "Maybe they'll get approved for $ 300,000 and offer $ 275,000 and be rejected; we want them to be approved (for this) offer, which is their maximum (to get this home).

The Steffen family spent several months moving from Harrisburg to Sioux Falls to be closer to their relatives. In the end, they had two offers for two houses under contract at one time and had to get out of one within 36 hours and sign for the other.

Jill and Dustin Steffen spent over a year looking for their dream home in Sioux Falls after entering a highly competitive market.

When working with Fopma, they were able to insert an escalation clause in which they agreed to pay up to the maximum if the seller so requested and to forego an inspection of the new building, said Steffen. The Steffens topped their first bid by about $ 5,000.

"My advice is not to commit yourself. Your perfect house is out there, you have to trust your broker and get creative, "said Steffen.

How To Buy A Home In This Market

The Steffen family was able to generate US $ 100,000 in equity for their home in Harrisburg to buy their dream home in Sioux Falls.

Set a budget: According to experts in the mortgage and real estate industry, buyers need to know what they can actually pay and what a bidding war might make them pay. Sellers can look at property taxes and what things really cost in the end by working with experts like the Steffens did.

Offer discounts: Some common expectations now are that once the deal is closed, it will take the seller seven days to move out. Then there is an escalation clause that the buyer puts in a listing that says they are willing to outbid and pay more for the home. Refraining from home inspections, while risky, is a more common practice to help drive a sale as well.

Be patient: Although the number of homes on the market is fewer, realtors are still working to attract buyers and sellers. However, having a home in mind will help buyers get a loan approved and help them come up with a quote. So buyers have to work quickly and look again to see if something fails.

"Interest rates are expected to stay low here for the remainder of the year," said Osborne.

For first-time visitors vs. homeowners

Selling home can be stressful, but not impossible, according to local agents.

For the Steffens, the additional $ 100,000 for selling their Harrisburg home gave them the freedom to move to a more expensive location in Sioux Falls. Without that and the three years they spent in their home start-up capital, they wouldn't have been as competitive in the market.

Homeowners looking to buy a new home have an advantage in this area.

However, first-time home buyers in the state have the South Dakota Housing Development Authority (SDHDA) and their top three programs to get them to market.

The South Dakota First Time Homebuyer Program helps approve new buyers for a loan. They even offer a pre-qualification calculator at https://www.sdhda.org/.

In addition, SDHDA offers a second loan worth up to 3% of a first mortgage at a fixed rate for those who qualify. And there is also a tax credit for homes up to $ 250,000.

Finally, the industry urges newbies to be patient and anyone else looking for a home to take the time to develop personal home buying goals and invest in their future or current entry into the market.

"Not giving up is the biggest thing," said Fopma of finding or getting a loan. "I'm ready to look at your situation, and sometimes we do that every six months until you're approved."

source https://seapointrealtors.com/2021/07/27/heres-your-home-buyers-guide-to-sioux-falls-2021-real-estate-market/

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