Hot Real Estate Market: Tips for Buyers
Know your Budget
It’s a risk for any buyer to get in over their head with a too-high investment. That risk can go wild, though, when there’s a bidding war underway – you could end up $20,000 or even $50,000 over your budget price!
Should you find yourself in a bidding war, remember to factor in all costs associated with buying a home and owning a home. You’ll need to make the mortgage payments, pay the utilities, do household repairs (which will run you an average of 1-3 % of your home’s purchase price every year), plus shell out for all your other regular expenses. Walk away if the price gets too steep.
Plan Ahead For Future Rates
Interest rates are at a low; inevitably, they will rise. Before you sign a deal, calculate how much you’d be paying a month for your mortgage if rates rose by 2-3 %. Chances are, you’ll sign a 25-year mortgage – so you’ll want to avoid paying a higher interest rate for the majority of those years.
Separate From The Pack
Some houses attract a big group of buyers and provoke a bidding war. Nicely renovated homes and those just steps from public transit make people crazy. Get out of the group mentality and look for a house that’s a 15 minute walk to transit, needs some renovation work, has a shared driveway or another feature that other buyers might shy from.
Know Your Needs
Make a list of what you truly need in your new home (ample backyard perhaps; maybe an office space), as well as a separate list for wants (fancy kitchen, hot tub!). Don’t sacrifice your needs, or buy a house you truly don’t like, simply because you can get it. Remember: you can only make a house bigger if there’s enough land (and money) and while you can renovate, you can’t fundamentally change a home’s layout or its location.
Choose an agent who can help you navigate bidding wars and keep your head when things get intense. Make a pact with your partner (or find a close friend if you’re buying alone) to keep your price and needs list in mind at all times.
Lay low and wait for the right house or the right offer to come your way and snap it up when it truly makes sense for your heart and your budget.