Money Mindset - Buying a home in today's market
Getting in the right mindset for buying a new home is the first step. Looking at your finances, determine what you're comfortable spending. When determining this, be sure to keep your financial lifestyle in mind. How often do you eat out or go to the movies? How often do you go out of town? If you want your lifestyle to remain pretty much the same, you'll want to include these things in your budget.
Bidding wars do not mean it's not a good time to buy! Interest rates are at historic lows and home prices are trending upward. Now may be the best time to buy as interest rates and prices will certainly go up in the foreseeable future. Danielle Hale, chief economist for Realtor.com, says prices will increase another 5.7% in 2021 over last years already high levels.
Think about how long you want to stay in your new home, but don't bet on it. Whether you're looking for a starter home, a forever home, or a place to retire, remember that the real estate market changes. Especially if you're a first time home buyer, be prepared to stay long-term if things change.
Think experience over instant gratification. We often pull up to a house, all shiny and new, and get excited about the entry way or a large living room or kitchen. Take a step back and think about your day to day life. Do you cook? If not, a big kitchen with a double oven is not on your must list, no matter how beautiful it looks. Do you have kids and a dog? The backyard and/or a nearby park are important. Maybe you're retired and looking to enjoy your neighborhood? Location might hold more weight than a fireplace. No house is perfect. Make a list, and number it! Or create an "if/then" list. If it has a large backyard, we don't need a park nearby, and vise versa. Again, thinking about your everyday life and how you want your home to fit in to it.
Don't fall in love....yet. In a competitive buying market, you may put offers on multiple homes before a buyer accepts. You need to be prepared for this. This is tough because when you put down the offer, you may already be picturing your furniture in the space, your dog running in the backyard, swimming in your new pool, but resist the urge...for now. Try to keep your right brain quiet while your left brain works its logical magic. Your right brain will have its day when it's time to decorate.
Speaking of offers, put your best foot forward. In a seller's market, there is no time to counter offer. Someone else will get there first. Put down your best offer right away. Looking for homes $10-$20K under your budget will give you the wiggle room to offer over list price for a property, putting you in a better position as a buyer.
Lastly, find a great Realtor. It's tempting to go with one of those quick online companies promising to make the process fast and easy, but easy isn't better when it comes to such an important purchase. My father has a saying: "Every time I try to be cheap, I end up spending more money." I've experienced this many times. A Realtor like those here at Polly Mitchell Urban Realty really know their stuff. They act as advisers. They know the market, the neighborhoods, even the legal differences in different states or cities. Any question you have about the home buying process, they can answer, or find the answer.
With these things in mind, you're ready to begin your new home buying journey.