Topic 5 of My Little Secrets for Buying a Home

Buying a home, especially if it’s your first time, can be complex and confusing at times.  You are not alone!

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!

I hear from my clients all the time about their concerns and questions when buying a home in today’s market.  That’s why I’m here to provide answers to some of the most common questions we hear. You will be better informed and feel more reassured.

The questions 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’ve heard your question before. Even if I haven’t, no question is ever a “dumb question,” so go ahead and ask!  And, if you have any questions that aren’t listed below here, try me!

Even though each buyer’s situation is unique, you’ll find the question/answer sections below insightful as to 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?

There are no guarantees, but we can look at clues and historical data as good indications of future performance.  One thing that drives home values in the Atlanta metro area more than anything else is the continued growth. Atlanta and its 29 county metropolitan area is the eighth largest and remains to be one of the fastest growing areas in the nation.

Generally speaking, 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.  Be on the lookout for projects that have actually gone through the planning, development, and funding stages.  

Atlanta is home to dozens of major corporations, professional sports teams, airlines, and more projects are starting every day. Check out this article from AJC about the latest $2.6B plant coming to the metro Atlanta area.

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?

The short answer is yes, but this 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.

 If a seller is not anticipating multiple offers or perhaps just wants less inconvenience or a need for a quick sale, moving quickly with an offer and having a deadline for a response can be a useful strategy.   

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.  We have found that 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—perhaps a higher price than asking and favorable terms such as no or short contingency periods.

In some situations, a deadline will not make the seller respond, so be prepared for that outcome as well!

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.  We are still in a period of historically low interest rates and we don’t expect them to spike any time soon.

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. And, when interest rates rise a lot, that often times leads to a slight cooling of prices.

Q:  How do I get a good deal in this market?

Good question and one we focus on for each and every one of our clients!  There is a saying, “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. Use comparable homes that have sold over the last six months to a year.  

There will be a range in price based on condition and changes in the market, but 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 get a lower price.  

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!

Q:  If the house I want is $20k over my price range, does that mean I can’t afford it?

Maybe, maybe not…

I tell my clients to 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 $60 per month (based on 6% interest rate).  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 $120 per month.  Is that something you can handle? If 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 an uncomfortable way.

On the other hand, if you buy something not as nice for less money, you might have to spend money on repairs, etc. Weigh the pros and cons of each situation when determining what is affordable to you.

Next, check out Is the “Paradox of Choice” Derailing Your Home Search? You’ll find 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!