Getting Ready to Buy A Home
Credit: PJ Wade (Realty Times)
Once you decide that you want to buy a new home — or your first house — the question is, "Where do we start?"
The answer lies in two sets of decisions:
#1. Start With Success
Begin by deciding what success means to you. Clarify what you really want and why, not just what's "in" right now. Explore this practical side before viewing properties. What matters is not the number of homes you see, but zeroing in on genuine good matches. For instance, a couple who wanted to add a mortgage-paying basement suite to their next home, decided to search for houses with an existing basement bathroom since this would be the most expensive part of creating a rental unit.
#2. Who's "We"?: The other essential to a good start is to decide who "we" is going to be:
- Will friends or family come along to share their construction or real estate ownership expertise?
- Will you have a contractor on-call to provide renovation-cost estimates to back up your offer price?
- Who will you select as your local real estate professional to be sure you see all the best matches without being dragged through definite "nos." For instance, a condominium specialist may not be the best match if you are intent on a detached house with rental suite potential. How much do you need to learn about real estate before you will be comfortable when it's time to sign on the dotted line? If you have a steep learning curve, you'll benefit from a real estate profession who is well equipped to inform as well as provide access to the best-fit real estate. Then there's the professional negotiation skills you'll want to tap into.
If you want to buy, when should you start?: How quickly you can find a home to buy and move into it, depends on many factors:
- The transition from searching for an ideal property to moving in can be condensed into a few weeks. This is often the pace for corporate relocation. Frenzied decision-making may not generate the best long-term results unless you are ultra-prepared and an experienced real estate buyer.
- At the other extreme, stretching the search for that "perfect forever home" over many seasons or even years may work for those who want a specific location or type of property and are not displeased enough with their current home to accelerate the process.
Somewhere in between those extremes lies your ideal time line:
- Buying within a market cycle, enables your real estate professional to identify specific properties that present the best return in that buyers', sellers', or flat market.
- If you have a busy work and personal life, carving out time to consider listings, view properties, explore neighborhoods, investigate financing, and deal with all related details can be a stressful juggling act. Your priorities coupled with how quickly new listings sell will determine how you prioritize your home search. Consider how well you make major decisions when under stress.
- When the goal is to enroll children at the start of school year or to arrive at a new job on time, back calculating with your real estate professional will reveal when the search should begin. When in doubt, start sooner, so you don't end up faced with time-pressured decisions.
- Hot real estate markets are the hardest to plan timing in. You may be eager to purchase, but lose out on property after property in multiple offers. Decide what your worst-case scenario would be and act accordingly.
- Waiting for your local real estate market to change gears so prices drop is risky. Timing the real estate market is no easier than timing the stock market. The best advantage in any market lies in selecting ighly-knowledgeable, experienced professionals fully committed to working with your best interests as their top priority.
- You may not be 100% certain you want to plunge into the market, but if you're more sure than not sure, invest time finding the right professionals. If the timing is not right for you, that will become evident and you'll discover what your options are and why.
Real estate professionals, committed to understanding market pace in areas they work, can help you manage timing. One thing they may suggest, is not to wait for the Spring Market, but to get ahead of the mass of spring buyers and jump into real estate now. For instance, sellers who are listed now are serious about selling and, depending how long their property has been on the market, they may be more receptive to negotiation.
Whether you decide to wait until Spring or jump in now, here are Five Savvy Buying Tips that ensure you'll get the best property for your needs, at the best price, with the minimum amount of hassle and disappointment:
#1. Apply Smart Buying Rules: If you consider yourself a smart buyer when purchasing a car, a phone, or travel, apply that savvy to buying real estate. Understand what you need and why. Set a realistic budget. Learn how things work. With all these issues, the right professional should save you time, stress, and money.
#2. Ensure Location Overrules Features & Decor: Real estate is an immoveable object. That reality dictates that where you buy is the prime value concern. Smart buyers look for the least property in the best area, so their real estate improvements result in increased market value. Values within a neighbourhood or community are not uniform. There are specific streets, even ends of streets, that represent the highest local value just as boundary streets and other locations may represent lower prices. Particularly in urban areas, proximity to the most highly-regarded schools, popular shopping areas, and sought-after local features like parks dictates price, as your real estate professional will explain.
#3. Maximize Move-In Timing: The more flexible your move-in date, the more room to negotiate with sellers. Agree to their ideal move date and that may generate concessions in price or inclusions. When you have a fixed move-in date, you may find yourself paying more to buy what you want, when you want it. Timing is a significant consideration when deciding whether to buy your next home before you have sold your current property, that is, taking the risk of paying on two mortgages at once. Since the market where you are selling may be different from that where you want to buy, timing decisions should involve the experience of a real estate professional or two.
#4. Own The Money Factor: Affordability encompasses costs ranging from purchase price (including legal fees and other costs), mortgage financing, and the cost of customizing the living space to including ongoing expenses like heating, cooling, commuting, and anything else that matters. With mortgage rates on the rise, reducing consumer (car) loans and credit card debt may open up borrowing room. Mortgage professionals can help you shop a wider range of lenders. These money experts can also explain why there is so much more to consider than just interest rate.
#5. Face Reality Head On: Compromises to your "must have" list can maximize value and returns.
- You may want four bedrooms, but if two younger children share a large room until the eldest child goes to college, maybe that 3-bedroom with significantly-better location and greater appreciation potential will really work for your family.
- If cosmetic or minor renovations don't daunt you, this could also provide a location advantage and may even mean a larger home is affordable.
- Compromising on location can also mean more living space, just be sure that commuting costs, including needing an extra car and possible lower appreciation rates, don't swallow up that saving.
- Your buying perspective is also an important consideration. Do you expect to stay until a second child appears or until all the kids finish school or are you in for the long haul? Shopping for a "forever home" is a popular approach. Just take care that projections are fact based and not fantasy that leaves you buying more home than you can comfortably afford in a rising interest-rate world.
Most people have more real estate choices than they realize. Have questions? We're here to help.
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