Creative strategies to buy a house in 2022

January 10, 2022 - 7 min read

Want to become a homeowner in 2022?

The 2022 housing market looks a lot like 2021: bidding wars abound, houses are getting snatched up in record time, and demand still outstrips supply.

How can home buyers succeed despite the obstacles?

Get creative, say the experts.

Following the status quo when home shopping and making an offer just won’t cut it in today’s market.

Read on for pro tips that can help you score a deal, outmaneuver your rivals, and achieve your homeownership dreams.

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What to know about the 2022 housing market

Sure, the market is tough. That’s no secret. But homes sold at a record pace in 2021 — which means millions of buyers were successful in their quest.

So how did they do it? What tactics can you use to score a home when competing against many other buyers?

“If you want to own a home, and believe that homeownership is a strong financial move for you, then you must be prepared to fight for the available inventory,” says Glenn Pizzolorusso, a licensed associate real estate broker with Compass in Connecticut. “Winning a multiple offer situation takes creativity today.”

“Rising house prices require buyers to be smarter about what, where, and when they buy a home.”

Jay Zigmont, a certified financial planner with Live, Learn, Plan, based in Mississippi, echoes those thoughts.

“Rising house prices require buyers to be smarter about what, where, and when they buy a home. This may require, for example, looking at smaller homes and different locations or buying with a partner to keep the house affordable,” says Zigmont.

But being inventive and resourceful doesn’t mean you have to go it alone.

Work closely with a trusted real estate agent, or at least a real estate attorney, who can help you devise the right approaches that can help you find and claim the right home. Once you have strong representation lined up, explore each of the following strategies.

Verify your home buying eligibility. Start here

Creative ways to save for the down payment and closing costs

You don’t need 20% down to buy a home. In fact, many buyers can get into a home with as little as 3% or even zero down.

But saving up for a bigger down payment can help your chances of scoring a home in today’s competitive market. Remember that the more money you put down, the stronger your offer appears to a seller and the more motivated they will be to accept.

If you’re having trouble coming up with funds for your down payment and closing costs — or want to boost the savings your already have — try these tips:

Tighten your financial belt

The ability to reduce your spending depends on your current income and financial situation, of course.

But, where possible, experts recommend that you stop eating out, cancel unnecessary subscriptions, shop around for cheaper insurance, choose a less expensive grocery store, and cut out unnecessary spending as much as you can.

These might feel like sacrifices in the short term, but even small changes can make a big difference in your long-term homeownership goals.

Look into a down payment assistance program

There are thousands of down payment assistance (DPA) programs available nationwide and locally that offer grants, loans, and credits to qualified home buyers. To help find DPA programs, check out these links:

Ask for help from loved ones

Most mortgage loan programs allow you to cover part or all of your down payment using gifted money from a loved one. Note that the donor will need to write a gift letter to the lender verifying that the funds are a gift, not a loan that needs to be repaid.

Use a low- or no-money-down loan

If your primary goal is to buy a home sooner rather than later, your best bet might be a low-down-payment mortgage. By lowering the down payment bar you can often buy much earlier than if you waited to save 20% down.

Conforming mortgages — the most common type of home loan — have flexible down payment requirements: You could put 3%, 5%, 10%, or 15% down if you don’t have the full twenty.

FHA loans are another great option with just 3.5% down. And qualified buyers should look into the government-backed VA and USDA loan programs, which allow 0% down.

Compare home loan options. Start here

Creative ways to find an affordable home

“Locating an affordable property in an area you prefer is the single most important box on the list to check,” says Pizzolorusso. “My advice? Find the worst house on the best street and take your time improving it into your own oasis.”

Evan Rosenblum, a Realtor with JMG Realty in Los Angeles, has simple advice.

“Look for homes that you can make perfect, not homes that are perfect right now that everyone else is fighting for,” he says.

“Find the worst house on the best street and take your time improving it into your own oasis.”

Keep in mind that the prices of homes tend to decrease the further you get from a city center or other similar location. So it doesn’t hurt to broaden your horizons and widen your map.

“Look for homes that are technically further away but are a short commute or near public transportation,” Zigmont suggests. “You might find considerable savings by adding a bit more to your commute.“

If you work from home, you can get more creative about the location.

“Living out in a country area further from a city may save you considerably, while you can still visit the city for fun occasions. Just make sure the rural location you choose has sufficient infrastructure, resources, and amenities, including broadband access,” notes Zigmont.

Creative ways to get the seller to accept your offer

Here’s where you’ll need to be extra clever and have the right timing.

“Choose a real estate agent or broker who understands game theory and valuation comparables,” says Nik Shah, CEO of San Francisco-based Home.LLC. “A quality real estate agent can be the difference between closing the deal or losing it.”

“Speed and simplicity will help you with your offer. In this market, you can’t wait weeks or even days to put in an offer on something you love,” Zigmont cautions. “Know your math going in, and then you can make informed decisions when you find the right house.”

For best results, consider these suggestions:

  • Focus only on the homes you truly want to purchase. “Don’t put in offers on every home just because you haven’t gotten accepted,” says Rosenblum. “Tighten up your criteria and be hyper-focused on your search”
  • Use an escalation clause. This clause says that you will offer “X” amount but beat any higher offers that are presented by the amount you specify. “This will allow you to always try and present the highest offer,” Rosenblum explains. “Just be sure to put a cap on your escalation to the max price you are willing to pay for the property”
  • Consider waiving key contingencies. “In a competitive market, you might want to rethink how many contingencies you include. Removing your financing contingency, appraisal contingency, and/or inspection contingency could give you a better shot at winning the offer,” Shah suggests
  • Request an appraisal waiver from your lender. “If you are putting at least 20% down, see if your lender can confirm that the property will qualify for an appraisal waiver; therefore, you can waive your appraisal contingency,” says Rosenblum
  • Ask your lender about tightening your terms. “Can you shorten the length of the escrow period? Can you get the loan pre-underwritten so that you can reduce the timeline for or remove your financing contingency completely?” Rosenblum asks
  • Ask your agent to reach out to the listing agent and establish a stronger relationship. “By developing a rapport, your agent can help you put a face to the name on the offer,” recommends Rosenblum
  • Write a love letter to the seller. Explain who you are and why you love this home
  • Explore an all-cash offer. Companies like Ribbon, Knock, and FlyHomes can lend you the money to make an all-cash offer, which should convince the seller to choose you

For more information, read How to make a winning offer on a house.

Creative alternatives in case you can’t find a home you want

Still no luck finding the right house or cinching a deal? Drastic times call for even more creative measures.

Buy a fixer-upper on the cheap

“Find a fixer-upper. You will be able to purchase at below-market prices and improve to above-market prices,” says Pizzolorusso. “If you can take an outdated home and bring it into the modern day, you will come out far ahead when it’s time to sell.”

To make this strategy easier, there are special loan programs that let you finance the home purchase and repairs with a single mortgage. If you’re considering the fixer-upper route, look into:

Build your home instead of buying

Alternatively, explore hunting for a parcel of land or infill site and constructing a new home on it.

The benefit here is that no one else will be bidding against you on your new home. And you can have it built to your exact specifications.

However, “the problem with this tactic is that building prices are still way too high to make this a wise choice in most markets. You don’t want to find yourself upside down on your mortgage upon completion,” Pizzolorusso continues.

Split the cost of buying

Or, get a partner to come in on the deal with you as a co-borrower or co-signer on the loan, which can come in handy if you’re having trouble qualifying for a mortgage loan or you’re worried about affording the costs of homeownership.

“Buying a house with a friend or other person you are not married to is an option, but you need to make sure you have a good lawyer to help on the paperwork,” says Zigmont.

Start your home buying journey

Are you ready to get serious about buying a home in 2022?

If so, then it’s time to connect with a mortgage lender and get preapproved.

Every prospective home buyer needs a preapproval to learn how much they can afford, which types of mortgage they qualify for, and how expensive their payments will be. Not to mention, your preapproval letter gives you the clout to make a serious offer on a home you love.

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Erik J. Martin
Authored By: Erik J. Martin
The Mortgage Reports contributor
Erik J. Martin has written on real estate, business, tech and other topics for Reader's Digest, AARP The Magazine, and The Chicago Tribune.