There’s a lot of advice out there for first-time homebuyers, mostly young people who are new to the process of buying a home.

But what about second-time homebuyers? What obstacles do they face, and what do they need to know?

“The whole landscape of real estate has changed,” says Andi DeFelice, associate broker at Exclusive Buyers Realty in Savannah, Georgia, and the president-elect of the National Association of Exclusive Buyer Agents. “You just have to be ready to roll with the flow. It’s not all about you. The days of the deal are gone right now.”

Second-time homebuyers, whether they’ve moving up to larger homes or downsizing to smaller ones, will find their greatest challenge the same one facing first-time buyers: a lack of homes for sale in lower and medium price ranges, creating a fast market that requires quick decisions and offers little room for negotiation on price.

[See: 10 Secrets to Selling Your Home Faster.]

“They’re not used to this type of market with the multiple offers,” says Larry Kendall, chairman of The Group Inc. Real Estate in Fort Collins, Colorado, and author of “Ninja Selling.” He terms the current real estate atmosphere a “mosh pit market.” “You jump in and there’s a lot of pushing and shoving, and you hope you come out with a contract.”

While some challenges – such as the lack of homes for sale – affect first-time and second-time buyers equally, others are unique to the second-timers. Many, for example, need to sell their current home in order to buy a new one.

“It’s always scary to put your home on the market before you know where you’re going to go,” DeFelice says.

In a slow market, you might be able to make an offer on a new house contingent on selling your old home. In this market, such contingencies won’t fly – though you may be able to write a contract making the sale of your old home contingent on you finding a new one.

Kendall advises move-up buyers to work with their lenders to see if they can get a home equity line of credit on their current home for the new down payment, then qualify for a mortgage on a new home while keeping their old home as a rental for a few years.

Other alternatives are to sell the old home but rent back from the buyers for a few months or move into a temporary rental between homes.

Those who have not bought a home since before the recession may be surprised how much the process has changed, from the role of online services in the home search to the amount of paperwork you must provide to get a mortgage.

“It doesn’t matter how much money you’re spending,” DeFelice says. “The lenders have specific criteria you have to meet.”

Some second-time buyers are also surprised at how much they have to spend to get the property they want, especially if they insist on a home in move-in condition. “They’re stepping up in home price [but] the money that they bring to the table is not going to go as far as they thought it would,” says Richard Harty, broker-owner at the Harty Realty Group in the Chicago suburb of Highland Park, Illinois. “Everybody’s looking for turnkey. People are so busy now. You’ve got to pay more to get that condition.”

[See: 10 Terms First-Time Homebuyers Must Know.]

Here are seven tips for second-time buyers to survive this competitive real estate market:

Have a plan if your old home sells before you find a new one. That could include finding a buyer who will let you rent back, moving into a temporary rental or doing some house sitting while friends and relatives are on vacation.

Expect lots of mortgage paperwork. Mortgage lending guidelines created after the recession require lenders to document that you can actually afford your mortgage. That will require you to document all your income and debts. Before you start looking at homes, consult a mortgage lender or two to find out what you can afford. Your chance of actually getting the home you want increases significantly if you are preapproved for a mortgage.

Be open to homes that need work. There may be less competition for homes that have not been updated. While scraping popcorn ceiling is a messy job, it isn’t that expensive when you look at the price of the home. The same goes for other projects, like changing dated window treatments or removing ugly wallpaper. Even updating kitchens, replacing roofs and changing flooring may be worth doing if it means you can get a good home at a decent price.

Embrace technology. In a fast-moving market, homes often go to the first prospective buyers that get in to tour them. “They have email alerts, and they know about them as soon as they hit the market,” DeFelice says. You can also use the internet to research ahead of time what homes are selling for, what kind of homes are available and what neighborhoods you will consider.

Search at a slower time. In many parts of the country, spring is the top homebuying season, and more buyers are competing for the available properties. Around the holidays and during the winter, fewer buyers are in the market. “If they can wait until late August or September, there start to be more listings available,” Kendall says.

Make your offer strong. Kendall recently received 15 offers on a client’s home, 10 cash offers and five with financing. But none of the financing offers included preapproval letters, and only one of the cash offers included proof of funds. The sellers took that offer, even though it was not the highest. “That buyer had done their homework,” Kendall says. “It wasn’t the best price, but it was the best offer.”

[See: 10 Must-Ask Questions When Choosing a Real Estate Agent.]

Be flexible on closing terms. Price is only one element of the equation. Sellers also care about whether you can close quickly (or are willing to wait), whether you’re likely to pull out after an inspection and whether you’re approved for a mortgage. Not only does closing approach help to make your offer as strong as possible, you might beat competing offers if you’re willing to work within the seller’s timetable.

Tags: real estate, housing, home prices, money


Teresa Mears writes about personal finance, real estate and retirement for U.S. News and other publications. She was previously the real estate blogger for MSN Money and worked as the Home & Design editor for The Miami Herald. During her journalism career, she worked on coverage of immigration, religion, national and international news and local news, serving on the staffs of The Miami Herald, The Los Angeles Times and the St. Petersburg Times. She has also been a contributor for The New York Times and The Boston Globe, among other publications. She publishes Living on the Cheap and Miami on the Cheap. Follow her on Twitter @TeresaMears.

Recommended Articles

Do's and Don'ts of Buying Vacant Land

Devon Thorsby | Oct. 18, 2019

Buying a home can be complicated, but purchasing land to build on is a whole new ball game.

Decorating and Design Tips From Experts

Devon Thorsby | Oct. 17, 2019

Interior design and renovation professionals weigh in on the best practices for home design.

How to Buy a House Before a Recession

Dima Williams | Oct. 17, 2019

While an economic downturn can tank a home purchase, financial prudence and local market knowledge should guide homebuyers.

Home Architectural Styles to Consider

Lisa Larson | Oct. 16, 2019

Consider how different architectural styles change the way you live in a house.

How to Buy Your First Home

Devon Thorsby | Oct. 11, 2019

What you need to know about going from full-time renter to homeowner and the process in between.

6 Real Estate Agent Resources to Tap

Wendy Arriz | Oct. 10, 2019

Beyond the process of buying and selling your home, your real estate agent can be a resource for finding other professionals needed to make your move seamless.

How to Save Enough for a Down Payment

Devon Thorsby | Oct. 9, 2019

For most first-time homebuyers, securing a down payment is the biggest hurdle to homeownership.

10 Laundry Room Organization Ideas

Devon Thorsby | Oct. 4, 2019

Make doing laundry easier and more enjoyable with these tips for making a better space.

Affordable Metro Areas on the West Coast

Devon Thorsby | Oct. 2, 2019

If the Pacific Coast is for you, consider these more affordable options.

How Big Should a Real Estate Firm Be?

Wendy Arriz | Oct. 1, 2019

Take a careful look at how the size of a real estate brokerage may impact your agent's experience, time and marketing capabilities.

5 Home Security Tips

Robin Kencel | Oct. 1, 2019

These precautions will help you better protect your home, your family and your valuables.

8 Kitchen Remodel Costs to Consider

Devon Thorsby | Sept. 25, 2019

Before you start planning your dream kitchen, establish your budget and set realistic expectations.

What Attracts First-Time Homebuyers?

Deanna Haas | Sept. 24, 2019

What’s the best way to attract millennial-aged homebuyers? Just by doing the right home upgrades, it can make all the difference.

The Guide to Contemporary Design Trends

Devon Thorsby | Sept. 20, 2019

Here's how you can spot contemporary design, and bring it to your own home.

The Cost of Living in San Francisco

Devon Thorsby | Sept. 18, 2019

Here's what it takes to be able to afford a home in the San Francisco Bay Area.

Make Your Home Environmentally Friendly

Steven Gottlieb | Sept. 17, 2019

Here's how you can cut back on energy use, see lower utility bills and reduce the bacteria and toxins potentially entering your home.

The Best Places to Live in California

Devon Thorsby | Sept. 17, 2019

See how 12 metro areas in California compare to each other.

The Best Places to Live in Florida

Devon Thorsby | Sept. 16, 2019

See how the most populous metro areas in the Sunshine State compare to each other.

Your Guide to the Housing Market

Devon Thorsby | Sept. 13, 2019

Breaking down buyer's and seller's markets, forecasts for home prices and how the housing market affects your financial situation.

Tips for Making Your Home Holiday Ready

Lisa Larson | Sept. 11, 2019

Here are some tips for making your home safe, inviting and delightful from now until the end of the year.