This is the time of year that many people reflect on their personal, professional, spiritual, and fitness goals as well as plans for buying their first home, moving up into a more spacious home, or downsizing into a smaller, low-maintenance home. No matter what your real estate goals are for 2018, you should ask yourself these questions to determine if now is the right time to act.
Determine your #homegoals
First Time Home Buyers:
As a first time home buyer you may not know what you don’t know yet, so here are a few questions you should be able to answer before purchasing a home:
- Are you in the right time of your life to purchase a home? You can of course purchase a home at any stage of life, but I’m finding that most millennials are wanting to wait later in life to purchase a home until they have found that special someone to share it with. Others may be moving in a year or two because of a job transfer. Depending on the market, it may not be a wise investment to purchase a home for just a year and turn around and sell it since you may not recuperate the selling costs. Since there is such a great demand for homes in Greenville right now, it may be possible to make money on a home purchased just a year or two ago.
- Are you financially able? How is your credit score (you can check for free at creditkarma.com)? Have you saved up some money? Even if you have some credit blemishes and have a low down payment, purchasing a home is still possible. There are loan program options available where you need no money down to purchase a home. Not sure how much money you will need to purchase your first home? Check out my other blog post here.
- Are you emotionally prepared? This may seem like a silly question, but some people may think they are ready to buy a home when they actually are not even close to being emotionally ready. Buying your first home is a HUGE decision. One that you should not take lightly. One that you should not make just because you think that it’s the “thing to do” because society thinks an adult in their 30s should be a homeowner. Owning a home isn’t right for everyone. Looking at homes on Zillow.com or Realtor.com and touring homes in person can be a very exciting thing to do, but make sure you are emotionally ready.
- Have you considered the ongoing costs of owning a home? So you’ve already looked at my blog post on how much it costs to purchase a home, but do you know how much it costs to maintain one? Since becoming a homeowner myself in 2016, I realized there are a lot of associated costs of homeownership that just creep up on you. However, I am probably an odd case because I want to constantly do home improvement projects. In the months following our home purchase, we spent hundreds more in getting the home ready: paint, blinds, new furniture, DIY projects, etc. Not only do you have to get your home ready for move-in day, but you also have to include costs of upgrades and repairs down the road. Our refrigerator is old, ugly, and still runs like a champ, but that’s another thing that I want to replace eventually. We also want to get a privacy fence to replace our chain link fence, we want to redo the sod, and the list goes on and on. A few months after moving in, our powder room toilet overflowed and a few months after that our AC started acting all funky. I say this not to scare you, but to make sure you are aware of the ongoing costs of the fun stuff like new furniture and appliances and the not-so-fun stuff like regular maintenance and repairs.
Are you ready to move out of your first home and into a larger, nicer one? Ready to downsize into a smaller one so that you can enjoy your retirement and not worry about maintaining a huge home? If you fall into one of those categories, you should consider these questions before deciding to move:
- Do you have enough equity to purchase your next home? This is a question that primarily concerns move-up buyers (buyers that are purchasing a more expensive home), but can also sometimes be necessary to consider even with a client who is finding a smaller, less expensive home. In order to answer this question, you need help from a real estate professional. First of all let’s make sure you understand the definition of equity. According to Investopedia, equity is “the difference between the current fair market value of the property and the amount the owner still owes on the mortgage.” In order to determine if you have enough money to purchase your next home, your realtor will need to perform a comparative market analysis (CMA) to suggest a price range in which your home would sell. Furthermore, you must consider the costs associated with selling your current home and the costs associated with buying your next home. I can send you spreadsheets on both and describe them in detail! Once you determine these three factors, you will have an idea if it makes financial sense for you to make the move.
- Are you willing to be realistic? I once had a listing presentation where the homeowner thought her home was the Taj Mahal. And it was really nice! However, she wanted to overprice her home. By a lot. Now I will just say this here: I want to make the absolute most money for your home as possible. I do not, however, want to overprice your home way above market value and have it sit on the market forever. So this is what happened. I provided her with my CMA and suggested a price range in which her home would sell and she wanted to go $10,000 above the highest suggested price. She was completely insulted by what the market was telling her. A week or so later I noticed she found a realtor willing to list her home way above market price. It eventually went under contract and then a few weeks later it was back on the market because guess what…it didn’t appraise. What did the realtor do? Lower it to the price I suggested in the first place. Her home sold, but with much more headache.
- Are you willing to listen to you realtor when they suggest necessary upgrades, repairs, or adjustments to your home? I met a customer for a listing presentation last year and recommended that he do a few things to make his home stand out among the competition. His home had a wonderful layout with a walk-in closet and bathroom attached to each of the five bedrooms. However, there was pink carpet. And tons of clutter. He was just not willing to make these adjustments, so I recommended lowering the asking price. He was unwilling to do that as well, so I did not agree to take the listing because I knew it would not sell. To this day it is still listed for sale at 336 days on the market (the average days on market in that same area last month was 39!). So, are you willing to listen to your realtor’s recommendations? If not, you may not be ready to sell.
- Are you willing and able to keep your home clean all of the time? It is inevitability stressful to sell your home. You have to keep it pristine and clutter-free almost all of the time and let’s be honest, no one lives like that. Most people have shoes at the door, mail on the counter, and dog/cat/kid toys lying around. Keeping the home clutter-free and bright throughout the showing process is a must.
- Are you willing to allow the majority if not all showings? Most sellers do not sell their home during the holiday season because everything is hectic and there is a ton to do with parties, buying gifts, family in town, etc. Even if you’re not selling your home in November or December, there are things that can come up that may not allow your home to be viewed at that time. Your child may come home with a fever and want to be on the couch in their jammies. You don’t have to allow all showings. However in order to sell your home, you must allow as many showings as possible.
- Are you willing to negotiate to sell your home? Although I do my very best to present you with data so you can make the best informed decision, there are cases where a home may not appraise (i.e. the offer price does not match what the home is actually worth). If this situation occurs and the buyer is financing the home purchase, then the buyer will have to pay the difference out of pocket since the lender will not cover it. If the buyer can’t afford to pay the difference or refuses to pay the difference, it is time to negotiate again. Let me give you an example. Let’s say a home is listed at $165,000 and the buyer offers $170,000 because they want to make sure they get the house (in this seller’s market, it’s not unheard of to get offers above asking price). The appraisal comes in at $165,000 on the dot. This buyer will have to pay the $5,000 in cash to cover the difference OR another agreement will have to be made. Maybe meet halfway in the middle and agree to $167,500. In that case, the buyer would only have to pay $2,500 out of pocket. Are you willing to negotiate if the appraisal doesn’t work out in your favor? If you don’t come to an agreement with the buyer, we will have to start the marketing process all over again and the home will be stigmatized. Buyers and agents alike think “What is wrong with that house? Why did the other buyer not buy it?” Is your goal to sell your home? If so, be willing to negotiate.
I hope this has been beneficial for you and helped you to consider some aspects of the home buying and home selling processes you’ve not thought of before! Please feel free to reach out to me at firstname.lastname@example.org or (864) 293-4470 for a free consultation!