There it is...the home of your dreams. Sparkling like a diamond on a mound. But wait. Is it the right time to buy?
Being a prominent Realtor in the ultra-glamorous real estate market of Los Angeles, I quite often see the unglamorous side of neurotic decision making when it comes to purchasing a home. Buyers sitting on the fence who are listening to their cousin's-brother's-uncle on real estate advice who lives in Russellville, Arkansas. (Sorry Russellville, no offense.) I have seen many a buyer pass up amazing deals because of listening to the wrong advice from people who do not understand the real estate market, or buying into the constant barrage of negative news stories that permeate the airwaves. How does a buyer know when the right time to buy a house is staring them in the face? Well I have some advice that can help.
1. Hire a real estate professional that knows the area in which you want to purchase. You cannot depend on family advice from people who do not live in the area you want to purchase! You must have faith in the Realtor you align yourself with because this person is your lifeline to understanding the true value of a property. In addition you must release your own ego that you know all about the real estate market. (Yes I mean you.) Realtors live, breathe, eat & sleep real estate. Would you trust getting a kidney transplant from a butcher? Nope. You would go to the best professional doctor you can find. The same thing goes for real estate.
2. Understand the value of the neighborhood in which you are looking to purchase. Review the comparable sales your Realtor has provided you and do your homework! Drive by the homes that have sold, and go to any open houses in the neighborhood. Once you start to get a feel for pricing, it will become clear when a property is priced correctly. You will then not need to solely depend on your Realtor's opinion. You will have the knowledge to confirm it yourself.
3. Get pre-approved by a lender in advance. Before you write that offer, make sure you have spoken with a lender and know what is a reasonable and comfortable price point you can afford. Don't always go for a home that is the highest price in your range. Take into consideration that you want to have a life outside of your mortgage payment. If you choose a price that is comfortable, you will not stress at the end of each month, and you have the ability to ride out any bumps in the real estate market down the road.
4. Plan to purchase a home that you can live in for at least 5 years. Nobody has a crystal ball that can foretell future economic conditions. At the same time you need a place to hang your hat. If you purchase a home at current market value or below, you are in good shape. It does not mean the market may not decline in your area, however if you plan on holding on to a house long-term, then you should be able to ride out any bumps in the short-term. Remember... the value of your home only matters when it is time to sell. Don't get freaked out by what is "on paper". Place yourself in a position that allows you to determine when you want to sell, and there is nothing to worry about. Historically the real estate market always goes up and advances higher than any of the lows.
5. Just breathe. Yes, buying real estate can be scary. Yes, we live in uncertain economic times. Yes, it is the biggest purchase you will ever make. However home-ownership is one of the great joys of life and living the American dream. Why do you want to deny yourself that? Sometimes in life we have to take chances. Of course there is always risk involved. There is risk when you step out of your front door everyday. If we lived in constant fear of the unknown, we would all be paralyzed and never experience what life has to offer. If you carefully think through the options, get professional advice, and let go of fear, there are some amazing opportunities to purchase real estate right there in front of you. Many which will reap huge financial gains in the future, which will allow you to increase your own personal wealth.
Hopefully there are some good tips in this blog for the buyers out there. Interest rates are still extremely low and so are prices. If you follow all of these steps and trust in the future, then it is a GREAT time to pull the trigger.
Happy House Hunting!
Frank Bruno is a Realtor with Keller Williams Realty in Los Angeles. Please visit www.SoldByBruno.com for more news, advice and interactive map searching to find your next dream home!