Like most of us, buyers, especially first time buyers, tend to be dreamers and want the World. While there isn’t anything wrong with dreaming, sometimes you need a reality check to get your home search back under control.
Over the years I’ve had buyers send me images of a million dollar home letting me know they would like this type of home but for $300k, send me screenshots of what people paid for their home when they bought it 20 years ago and wondering why we can’t just offer them a tiny bit more than that now, and more. Trust me, I wish I had bought beach front property 20 years ago as well, but unfortunately that’s not how real estate works. So here are three tips to help you face reality during your next home search.
Yes, most buyers hate hearing this over and over, BUT it’s a MUST!!! You need to know how much you can actually buy, WE need to know how much you can actually buy, and most importantly, SELLERS need to know how much you can buy! This is the starting point, and despite the fact that we’ve gotten away from that and demand to see homes first, this is where you need to focus. Frankly, any agent worth their salt isn’t going to work with you without knowing you can actually buy a home right now, and that means getting a pre-approval letter from a lender. It’s not going to hurt your credit, you can have multiple lenders pull your credit within a 14 day window and your score will only be affect by a single point or two. No excuse, get it done!
Search Homes Online In Your Budget
Yes, you are probably already searching for homes, now take a good look at what is listed in your budget. How many of them are there right now? In the last 3-6 months? This will give you an idea first of all if you will even be able to find what you want, but also how much competition you will have! If you are in a budget where very few homes go on the market you will know you need to make a decision very quickly and be competitive in your offers! No low balling if you know you’ll be in multiple offers. Not sure what I mean here? Search for a home that has EVERYTHING you want. Is it in your budget? No? Figure out what you can compromise on because prices aren’t likely to go backwards.
Okay, last reality check, and this one is for my HGTV lovers. You might need the help and advice of your agent for this one. The basic premise is that there are two prices, what the seller wants and what buyers are willing to pay. Agents can determine the average percentage of list to actual sale prices and this will inform you on not only what you will likely offer (and get accepted) but also can expand your price range a bit when looking. So if the average list price to sale price ratio is 95% then you can likely look at properties 5-10% over your budget and potentially be able to negotiate it down to within your budget range. Trust me when I say, you are not going to be able to get properties for 50% off their list price in any location nearby.
Once you’ve checked yourself on those three points you should be in good shape for your house hunt!