In the U.S. a right of passage for many adults is buying a home, and for most people, there will be more than one home buying journey in their lifetimes. While every home buyer has different goals and their experiences may vary, there are a few key things that every home buyer should consider.
As someone who has bought and sold multiple homes (bought 7 and sold 6) in the last 15 years, here are some good tips.
Talk to a Lender and get Pre-Approved
Most real estate agents will give you the same advice and there are multiple reasons to take this step before you start looking at homes. Admittedly, this doesn’t apply if you are a cash buyer, but we’re assuming that you would need a loan to buy your next house.
You don’t know for certain how much you can afford until you have a lender run the numbers based on current interest rates, your credit score, and other financial factors. Once you know what you qualify for, and what that means for a monthly mortgage, you can actually set your home buying budget.
This helps you focus on homes you can afford and not waste your time looking at homes outside your budget. In a hot market, it also lets you move quickly to make an offer, once you find the right home.
Understand your Market
Speaking of hot markets, you should probably have an understanding of your local market before you jump into the home buying process. Is it a hot seller’s market or do buyers have more leverage? The home market is largely a matter of supply and demand. While it’s a bit of an oversimplification, more homes on the market tends to mean more choices and more leverage for the buyer. Fewer listings means buyers are competing for fewer homes, giving more leverage to sellers.
The reason you want to understand this going in, is that you should understand whether you should expect competition for homes you might want to buy or if you can take your time in evaluating every listing.
Set Realistic Expectations
Once you understand the market, you can set some realistic expectations for your home search. Are there many listings to look at or just a few that meet your criteria? Should you expect to have to come in with a top dollar offer to win a bidding war or do you have time to strategize a bit more carefully before making your offer?
This is an area when working with a real estate agent can be extremely helpful. They should be able to help you understand your market and then have you prepped for the types of situations you are likely to encounter in making an offer.
Decide What you Really Want
What is most important to you in your new home? Open-concept? An eat-in kitchen? Location near a great school district? A chef’s kitchen? A fixer-upper where you can add value? 4 bedrooms? These are just a few of the MANY things that might be important to you in the home you buy. It’s a great idea to make a list of all the things you want and then identify the ones that matter most.
Most home purchases involve at least some compromise. Unless you have an unlimited budget and plan to build your dream home, chances are that the home you buy won’t deliver every single thing on your wish list. So, think about what is most important. But, don’t forget the last tip - set realistic expectations. Remember that you may need to compromise based on many factors like budget, location, and simply what’s available.
Stay Positive
While some people love the home buying process, it can be very stressful. It’s the largest purchase you are likely to make which naturally creates tension. A competitive market can also create a lot of stress, especially if you end up losing some homes to other buyers.
So, if the process doesn’t move as quickly or smoothly as you would hope, stay optimistic! Sometimes it is just a matter of persistence.
