If you’re in the market to buy a home, I’d like to offer you a few tips on how to position yourself as a successful homebuyer. You’ll understand this a bit more later, but first, I want to share a few things with you that you may not know:
- First-time homebuyers are more likely to buy a home as a commodity instead of an investment.
- On average, a homebuyer will buy a home and sell it within 2 to 5 years.
- First-time homebuyers tend to stay in their home for only 2 to 3 years.
- First and second time homebuyers are likely to relocate because of a change in employment or growth in the family, rather than moving because of a desire to live in a new location and change in floor plan.
- The amount you qualify for and the amount you are comfortable paying each month are completely different. Make sure you know how much house you can afford, and how much you would be comfortable with paying each month for your mortgage.
- First-time homebuyers are not sure of what they want until living in a home for a few years.
Think about this:
If you knew that when you bought your first home that you’d be moving in the next 2 to 3 years, wouldn’t you want to position yourself to capitalize and be in a better financial position for your second home?
There is no wrong or right way to find and purchase a home that you and your family will live in. We can’t forecast the future. But, we can use some strategies that will benefit us in the long run.
The strategy can be one of the following, or a combination of:
1. Buy a property in a great location.
2. Buy an “ugly” property.
3. Buy the most “sellable” home in the area.
Of course reading these tips you’re probably thinking that these are ‘no brainers.’ But more often than not, first time homebuyers will start looking for homes and their eyes get big after finding a ‘nice’ house. They quickly forget about the tips and facts that will help strengthen their long-term financial position.
So why is it a good idea to embrace these successful homebuying tips?
Tip 1: Buy a property in a great location.
Location, Location, Location – we’ve all heard this line. This is an easy one. Every market has a ‘hot’ place to live. If you live in a place where everyone wants to live – whether it’s because of the school district, nearby stores, or many other reasons – you should be safe down the road.
But can location ‘hotness’ change? Yes. But, this change happens very slowly. Of course school ratings can change in quality, favorite, local businesses can shut down and foreclosures can start popping up. With all of these being a possibility, it is never going to be 100% that an area will remain popular. Thankfully, your Realtor can easily track these trends. Make sure you hire a Realtor who is up-to-date with neighborhood and area trends.
Tip 2: Buy an “ugly” property.
When I say “ugly” property, I don’t really mean ugly. What I mean by this is buy a property that is under market value, such as a foreclosure, short sale, or a home that’s in poor condition.
Most homebuyers start by looking for properties that are under market value, but quickly get distracted by what looks nice versus what is a good value. Many properties that are considered a good deal would require a lot of cash to fix-up and many first time homebuyers do not have this in the budget.
Finding a good deal on a home can seem like a difficult task. Finding a deal several thousands of dollars below market value, that don’t need a lot of put into them, are not hard to find – you just need to know where to look. Great deals are out there, but most don’t look as attractive as newer homes that are above or at market value. But gaining just $10,000 on the front end of buying could make all the difference later when selling.
Tip 3: Buy the most ‘sell-able’ home in the area.
A homebuyer may not always realize it, but certain types of homes sell better in certain areas. It makes sense, right? For example, a 3 story, single home with an upper level master bedroom won’t be attractive to homebuyers in a retirement community – unless, of course, there’s an elevator.
When hiring a Realtor, make sure that he or she knows the area and can help guide you in determining the best area for you and your family’s needs.
Additional tips to make your life easier as a homebuyer
As a first-time homebuyer, these tips can be especially valuable:
Start saving money right away.
The earlier you start saving for a down payment, the easier it gets. The more money you save, the less you have to take out for a loan on the home.
Don’t rush things.
There a lot of factors to consider when buying a home. Don’t settle for the first home that you like. Keep your options open.
Pay attention during the home inspection.
Follow the home inspector to each room, take notes and ask questions. Most importantly, take a look for yourself. You wouldn’t want to end up having to replace an old water heater a year after you move in because you didn’t notice its old age before moving in.
Shop around for homeowners insurance.
It can really pay off to shop around for the best homeowners insurance. Don’t be afraid to move your policies and bundle them together. Most insurance companies will offer a discount if you bundle your auto and home together.
Don’t go shopping for furniture the day after you move in.
When you’re a first time homebuyer, you can forget that buying a new home will come with a whole bunch of different expenses – like filling every room with furniture. Before you go on a furniture shopping spree, determine what your new budget will be and what you actually need for your new home.
Be aware of what you can and cannot change.
Every home is bound to have issues. Some of them you can live with, while some you can’t. Some of them you can change, and some of them are permanent features. One thing you cannot change about your new home is the location. When you buy a home, you’re not just buying the home, you’re buying the neighborhood. Explore the neighborhood and surround area before making an offer on a home – make sure it is somewhere you can see yourself living for the next 3 to 5 years.
More tips for homebuyers:
- Make sure your credit is in good shape.
- Pay down your debts. – Check with your lender before doing this!! There may be some debt that is NOT worth paying off before buying a house. If you have a collection debt that’s an old debt from 2014, and you pay it off this year, it will become a NEW debt. Please check with your lender before making any financial decisions! This is important.
- Avoid new debts.
- Resist the urge to buy all the home that you can ‘afford.’ – just because you can ‘afford’ it doesn’t necessarily mean you’re comfortable with it.
How to position yourself to be an attractive homebuyer
1. Before starting your search, get pre-approved and have a down payment ready.
2. Plan ahead by checking your credit score for accuracy. Avoid making any large purchases or taking on any debt while home searching.
3. Cash is king. The more cash you have the more appealing you are as a buyer. Although it’s not necessary, putting down 20% or more makes you appear financially stable and gives the sellers comfort that you, the homebuyer, will qualify for a mortgage.
4. Being reasonable without being difficult until an offer is signed, sealed, and delivered. Other buyers can still make offers on a property.