My Dirty Little Secrets for Buying a Home
When buying a home for the first time there can be a lot to think about. That’s why the tips and strategies you’ll find in my 8-week series will set you on the right path. It’s my own unique approach and a “behind the scenes” glimpse of what you should look out for and consider when starting your own search for a home. Buying a home, especially if it’s your first time, can be complex and confusing at times. But, you are not alone! Today we will review some of buyers most frequently asked questions.
Just like most first-time homebuyers, you want to make sure you don’t do something wrong. Or, you might worry that you don’t know what you don’t know! Thats why todays article This Buyers’ Most Frequent Questions … Answered is a must read!
I’ve heard these concerns and questions when buying a home in today’s market from past clients, people I meet, and even was feeling the same way as a past first time home buyer. That’s why I am here to provide answers to some of the most common questions I get so you can become better informed and more reassured.
The questions swirling around in your mind are likely the same ones that other buyers, like you, want to ask too. And, more than likely, it was the same questions that buyers who went before you have also asked!
I have heard your question before, and even if I haven’t, no question is ever a “dumb question,” so ask away! And, if you have any questions that aren’t listed below here, reach out and ask!
Even though each buyer’s situation is unique, you’ll find the question/answer sections below helpful in giving you some insight into most buyers’ most frequently asked questions &what steps might be best for you.
Plus, maybe you’ll also learn something “you didn’t know you didn’t know”!
Q: How do I know the property value will increase?
Although there are no guarantees, there are clues and historical data that are indicative of future performance. The three most important words in real estate are location, location and location and with California that principle is proven again and again. Homes near urban centers, jobs, and amenities have the highest demand and result in the highest valuations. Often seniors are limited in how far out they can go, needing critical services such as medical centers close to where they live. Los Angeles is one of the major CA cities triggering rising home valuations beyond just the attractive coastal communities with an ocean view.
If you know the area is changing and is going to increase in density or desirability, you are likely to see an increase in value over time, perhaps more than other areas. I always tell my clients to not to always listen to what they hear through the grapevine, but to look into projects that have actually gone through the planning, development, and funding stages.
Here is an example of a few coming to LA by 2030:
- https://www.commercialsearch.com/news/top-projects-that-will-reshape-los-angeles/
- https://www.westharborla.com/
The good thing is that Los Angeles is the largest populated cities in CA. Having 3.8M residents (https://www.california-demographics.com/cities_by_population). With the growing population, stable companies that create great jobs, tourism, continual growth of diversity (and amazing weather) are strong contributors to home prices increasing/hold value.
However, you still need to buy smart — each neighborhood, block and/or building can be different and it’s important to understand that you don’t overpay.
There is an old saying that says you make money in real estate when you buy, so focus on that and you’ll be fine when you sell.
Q: Should I put a deadline on an offer?
This is a tough question to answer and really depends on the specific situation of the home you are bidding on.
In more competitive neighborhoods, most sellers want to give their home full market exposure to get the highest price possible. That means sellers tend to have their own deadline for any and all offers.
According to Redfin, in November 2023 homes in Los Angeles sell after 43 days on the market compared to 49 days last year. In this current market ( winter 2023), a seller is may not be anticipating multiple offers. Each market is different which is why it is best to go with the flow of the market. I have two articles that go over with which you can check out below to get a better understanding.
If you are going to put in a deadline, make sure to give one that allows for enough time for the seller to respond, but not long enough for another offer to swoop in.
Again, it depends on the particular situation. 8-12 working hours (not sleeping hours) is often a good time period for a deadline. Often times, this could mean avoiding a bidding war.
But you’ll have to make it worth the seller’s while to want to take their home off the market quickly. Maybe a higher price than asking and favorable terms such as no or short contingency periods. Work with your real estate agent to determine the best strategy for your market.
In some situations, a deadline will not make the seller respond, so be prepared for that outcome as well!
At the end of the day it depends on the time of the year that you’re looking to by the home. Work with your agent to determine what time of market you are in to best strategize the best offer contingencies.
Q: Is it worth it to find something faster when interest rates are low?
No! Don’t let interest rates dictate your time to buy a home. Focus on home much you can afford on a monthly basis. Lower interest rates could mean higher prices and more competition. Higher interest rates as we are seeing now are causing prices to “ normalize” and creating less competition than in 2021 for first time home buyers.
A slight increase in your interest rate is not going to make the home you want unaffordable. And, just like buying and selling other investments, such as stock, timing the market is never a good idea.
Buy and sell when the time is right for you. Speak with an expert about perhaps which month is best, but always go based on your own timeline and schedule.
One thing we know for sure—there will always be homes to buy.
Q: How do I get a good deal?
Good question and one I focus on for each and every one of my clients! I always say, you make money when you buy in real estate, so making sure you buy right is HUGE.
The one and only way to make sure you are getting good deal is to look at the specific neighborhood, building or block you are buying in and compare your home to what has sold over the last six months to a year.
There will be a range in price depending on specific location (for example, a condo with no laundry in unit will sell for less than one that does) and condition (just renovated ,especially bathrooms and kitchens, will sell for more). Compare the home you want to buy with what has sold recently to make sure you are not overpaying.
Also get information from your agent about whether it’s a sellers’ market or a buyers’ market, and make your offer accordingly. The longer a home sits on the market, the more likely you can negotiate with the sellers.
And please keep this in mind—just because something is “cheap” doesn’t mean it’s a good deal. Be sure not to make this crucial mistake! Sometimes you get what you pay for.
Q: If the house I want is $20k over my price range, does that mean I can’t afford it?
Maybe, maybe not…
As I said above and I’ll say again focus on your monthly payments, not just on a purchase price. By doing this, you’ll know what you may or may not be comfortable paying for a home every month.
In other words, focus on the fact that you want to pay, say, $2,500 per month on your new home and NOT on a somewhat arbitrary price point.
Why?
Because for every $10,000 change in price, your monthly payment only goes up about $75 per month with the current interest of say 6.75%-7%. When you look at it that way, you might be able to afford the home of your dreams or that home you just fell in love with.
So, that extra $20,000 price tag equates into an extra $140-$150 per month. Is that something you can handle? If so and it’s a home that has everything you’d ever want, go for it…as long as it doesn’t break the bank or make you need to change your lifestyle in any way that is uncomfortable.
On the other hand, if you buy something not as nice for less money, you might have to spend money on repairs, etc. You’ll need to weigh the pros and cons of each situation when determining what is affordable to you.
Next week article we will be talking about Is the “Paradox of Choice” Derailing Your Home Search? We tell you the secrets from this book that can help you focus on making a decision and not being overwhelmed by too many choices. You don’t want to miss it!
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