Last week I shared my resolutions for home sellers, so I figured I’d balance things out by offering resolutions for home buyers this week. If you are looking to purchase a new home this year, you will be in a great position: the abundance of inventory coupled with low prices and interest rates have combined to create a fabulous buyers’ market. If you’re ready to jump into that market, take note of my recommendations below:
1) Have your financial ducks in a row
Make sure you know your numbers–what you can and cannot spend. Think about the taxes, moving costs, closing costs and costs of improvements to the new home that will be involved in your purchase. Make sure you speak with a reputable lender and get pre-approved before you begin your home search–-having a pre-approval letter ready to go will expedite the process once you find the home you’d like to pursue.
2) Create a “wish list.”
Know what your priorities are and, if you are purchasing a home with a spouse or partner, make sure you are on the same page! Is a first floor master what you’re looking for, a large backyard, a fireplace, an attached garage? Define what’s non-negotiable and what you can compromise on.
3) Work with a Realtor®
It costs you nothing to work with a Realtor®. Nada. It’s free. You get someone to do your homework for you, provide access to homes for sale, negotiate the deal, and basically provide expertise, guidance and education throughout the entire process. For free. And, you’ll probably get a gift from your agent once you close on your new home (I give really good gifts…just sayin’…)!
So, why wouldn’t someone use a Realtor®? Many people are under the impression that they will save money if they try to purchase without one. Not true. If you work without an agent, but buy a home that is listed with an agent, the seller is still paying that agent a commission, say 6%. That entire 6% will just end up in the seller’s agent’s pocket because s/he won’t have to split it with your agent. If you purchase by owner, realize that the seller has most likely lowered their asking price to make it as attractive as possible and has already factored in the savings. Plus, the risk of costly mistakes that can be made by not having a professional looking out for you can be high.
4) Be realistic about pricing
Now, we all know there are a lot of bargains out there right now. And I completely understand the theory of throwing out an offer to see if the seller will bite. But a bargain (plentiful in today’s market!) and a “steal” are not the same thing. So many people have the idea that you can buy a home for $.50 on the dollar, and that’s just not realistic. Your realtor will show you homes in your price range and comps for those homes to determine what is a reasonable amount to pay. My goal when helping buyers find a home is to get them the absolute best value for their money.
5) Commit to buying a home
With the crumbling of the market of the past few years, we have learned one important lesson: our homes are a place to live, laugh, love, raise our families and create memories. Our homes are not meant to be a bank or ATM. Look at this purchase as a long-term one, meaning don’t buy now unless you plan to stay in that home for at least five years. From 1999-2004, the US real estate prices increased more than 56%. The market peaked in 2006, but by 2008 had experienced the largest price drop in history, according to the Case-Shiller Index (the most reputable, 20 city gauge of housing prices). Prices are still on a downward trend, pushed down by the oversupply of homes. Look at your home as a long-term investment, but even more so as a place to live.
Now that you are armed with your resolutions, get hunting!
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