Should I or Shouldn’t I -When to Stretch Your Pricepoint
You’ve found a house, you’re engaged in negotiations, and the seller is standing firm at a pricepoint beyond your comfort level. Do you stretch your pricepoint and guarantee yourself the house or stand firm and risk loosing it? This is a very common problem, and I want to give you some things to think about if you’re ever faced with this tough decision.
1. Do you have job security? Are you expecting an increase in income or a decrease in debt over the next five years? If the answer to each of these questions is “yes” then stretching your pricepoint now won’t be much of a financial risk. If the answer to either question is no, you probably want to stand firm.
2. Is this house truly unique? If you haven’t been finding many homes that you like, or if this house has a special feature that you want and can’t find elsewhere, stretching may be worthwhile. However, if there are many similar homes for sale in the area, you’re likely to find one that is willing to accept your pricepoint.
3. Will you have enough money to make any necessary alterations after closing? If the house is pristine and there isn’t anything you would change, it might be a good opportunity to move up your pricepoint. However, if you’re looking to make any additions or alterations, you need to make sure you leave yourself with the necessary financial resources. No one wants to live in a fixer they can’t afford to fix!
4. Are prices in your target market increasing or decreasing? Don’t listen to general news broadcasts about market trends. Also, don’t take broad information about an entire zip code when making a decision. Ask your agent to provide you with a detailed 6-month market analysis for the specific market in which you’re looking to buy. If prices are holding steady or increasing, you may be running out of time to snag the quality of house you’re looking for. However, if prices are decreasing it may be prudent to wait 6 months until the market drops down within your budget.
5. Where are loan rates? Talk with your loan officer to determine current rates and the security of the loan program you’re looking to use. If rates are low, this could be a good time to extend yourself. Also, if your loan officer doesn’t know whether or not the loan program you need will be around in 6 months, now may be a good time to buy.
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