How to Set Realistic Expectations When Buying a House?

Buying a new home is an exciting time! Your loan is approved, you have dedicated time to hunt your new home, and now you are on your way.

First of all, congratulations for deciding to buy your first home. We are writing this article to assist you with the purchase of your new home. Like every shopping decision, this step will begin with careful research, market analysis, planning, and requirement setting. Most buyers start searching for their new home with unrealistic expectations. Some of us, do not have any idea about the exact cost of buying a home.

Do you know how much do you have to pay for a new home?

Is it just mortgage & interest rate? What about the property taxes, closing costs, agent commissions, property repairs, inspection, and the cost of finding a new home? You should consider these expenses before hunting for a new residence.

Other than these factors, we would like to discuss a few more key concepts in this article.

What You Want, What You Need (And What You Do not Need!)

Every real estate agent should tell their clients, “you cannot have everything.” Way too many real estate agents say, “it is a great time to buy a home” which is not always true. In this economy and market conditions, you cannot always find your dream home. Perhaps, there is no such thing as a dream home. All we want is a good-enough home that can help us create our dreams and beautiful memories.

If you want to do that, you must prioritize your wish list. A sample list can look like this one:

• 1-A: Must have a functional and beautifully built kitchen. (Must Have)
• 2-A: 3-Rooms (Must Have)
• 3-A: Should be Close to Your Office and Top Schools ( Must Have)
• 1-B:  Extra space in basement (Should Have)
• 2-B: A Nice Balcony (Would Be Nice to Have One)
• 3-B: Luxury Master Bathroom (It Will be a Nice Feature)
• 1-C: A Swimming Pool ( Do not Need and There is No Need to Spend an Extra $12k On this Feature)
• 2-C: Personal Bowling Alley ( Do not Need This Feature)

Get Pre-Approved and Consider All Buying Costs

When buying your first home, you must get pre-approved to know how much can you afford for a home. Banks can take several weeks to approve your application. Submit your application earlier, talk to at least three lenders, compare their estimates and choose one mortgage product. Without a pre-approval letter, you cannot have a good estimate of your buying power. For instance, you might be looking at homes within $400k-$550k range, but the bank may only lend you $375k.

Furthermore, you must calculate the other buying expenses and plan accordingly.

Hire a Realtor

More than 88% people cannot buy a home without expert advice. You need the support of a realtor to help you find properties within your budget and buying criteria. So unless you are a real estate expert, do not expect to do it yourself. At some point or other, you will need the help of an attorney, title company, and insurance agents. Plan earlier instead of deciding at the last moment so that you can work with the top-notch talent in your area.

Buying a Home Takes Time

Many buyers start finding new homes at the beginning of April and the official house hunting season usually lasts until the end of September. So even if you find an excellent property, expect to wait for 1-3 months before you can start living in the new home.

Fixer Upper Vs. A Remodeled Property

Watching home renovation videos on Youtube is easy. The excitement, nervousness and the desire to create your dream home are great triggers to buy & renovate a home. However, it is a challenge to remodel a home while you are living in it. Fixer upper properties also come with a great level of risk because these homes are mostly in a rough shape. For this reason, I do not recommend buying a fixer-upper especially if you are buying your first home.

Having said that, housing supply is tight in the entire US, and you may not find a great home except a fixer-upper. Before making the purchase, please carefully consider the pros and cons of buying such homes.

Educate Yourself on the Local Real Estate Market

National trends do not represent the local housing market. General websites cannot help you make informed decisions. If you want to study the local market, partner with an agent and visit at least three open houses. Read the latest sales data and see how homes are priced in the market. Having a strong understanding of the local market will help you set better expectations which in turn helps you buy your dream home with minimum effort.

For any questions or comments, please contact us here.

[Photo Credits: MarkMoz via Flickr Under CC 2.0