BUYER’S ARTICLES – FOR THE SMART CONSUMER
When you are ready to purchase a new home, you need to consider not only the appeal of potential homes, but also how those homes will appreciate or depreciate in value over the time that you own the home. There are a number of factors to consider when evaluating the future worth of your dream home. Knowing what to look for in your home search will allow you to reap the benefits of your investment in the future.
Investment may seem like the wrong word to use when talking about a home purchase, but anyone who has purchased a home will tell you that it is probably the single largest investment that you will make during your lifetime – or at least until you buy your NEXT home.
Any investor will tell you that investments without returns are senseless. Therefore, you will want to invest in a home that can provide a solid financial future for you and your family. Here are some tips to help you become fairly certain that your new home will appreciate in value.
Buy in a Good Area
Lower prices may tempt you to buy a larger home in a less affluent area . In some cases, when the area is “up and coming,” this may pay off. However, you are usually far better off purchasing a small- or medium-sized home in an area where property values are unlikely to depreciate significantly.
Be Prepared to Make Updates and Maintain the Property
When you purchase a home with the hopes that its value will appreciate, you must be prepared to invest in your home to upgrade it and make it more attractive to future homebuyers.
Consider the importance of installing a new, updated kitchen with the latest amenities. The condition of the kitchen alone will often sell a home and homes with new kitchens have higher selling prices. Bathroom updates are also attractive features for new buyers. Why? Because kitchen and bathroom remodeling projects are among the most costly endeavors undertaken by homeowners, and they are also the most disruptive to families.
Maintenance is important for many reasons. Buying a home that has been well maintained is a good way to ensure that your own maintenance costs and time requirements are minimal. Therefore, when you decide it is time to sell the home, having a solid maintenance record is extremely attractive to potential buyers.
When you are shopping for your new home, look for evidence that the home has been taken care of well. Ask friends or family members to join you when you look at a home that you are considering purchasing. They can be very helpful, because they are less likely to be mesmerized and will point out potential problems that you may not see.
Always request a home inspection prior to purchase. A certified home inspection can determine whether the home has indeed been well maintained. Keep a copy of the inspection report on hand if you plan to sell the home in the future. This way, you can provide a future buyer with information about the condition of the home as it was when you purchased it. The report will also point out to them updates and improvements that you have made in the home.
Buy in the Off-Season
For maximum value appreciation, you need to buy when housing is least expensive. Buying during the winter is a good option, because most wintertime sellers need to sell their home in a hurry. Also, many of the homes listed for sale in the winter are not new listings, and consequently have price reductions.
In either case, sellers are more willing to negotiate. Also, when you shop for a home during the winter months, you will find less competition, because most people do not want to move during the winter months.
Another benefit to buying during the winter is that you can often take advantage of lender specials on mortgage loan products. To secure new clients, lenders almost always offer lower interest rates during the winter. In addition, you may be able to negotiate more favorable loan terms from your lender during the winter.
One final advantage of buying in the off season is that your real estate agent will probably have more time to devote to your home search. In the winter, realtors have more time to research homes and work closely with you every step of the way.
Consider Your Borrowing Options Carefully
As we pointed out earlier, buying a home is an investment. Since you would never consider investing your hard-earned money in an uncertain investment, you need to carefully weigh the options of where you will place your cash when you buy a home.
Unless your income is unlimited, you will want to save and invest as much money as possible. Being frugal is the best strategy when purchasing a home and selecting a lender and mortgage program.
If you intend to live in your home for a short period of time, generally between five and ten years, and you are willing to invest significantly in renovations or upgrades to increase the home’s value, consider a balloon or interest-only mortgage program that allows you to pay only the accrued interest on your loan. Then, at the end of the loan period, you will be able to sell your home, pay off your loan, and collect the profit.
If you do not know how long you will live in your home, then seek a traditional mortgage with the shortest possible repayment period. It will mean a higher payment, but the equity will increase more quickly and you will pay less over the entire loan period.
Home improvements alone will probably increase the value of your home, but wise choices throughout the buying process will enable you to save even more money in the long run while raising the value of your home in the eyes of future buyers.
Contact your realtor today to discuss your expectations for, so that he or she can more quickly find the home that is right for you. For instance, if you are willing to buy a less-expensive home in need of significant repair in an affluent area, let your realtor know. Sometimes agents working with buyers in affluent areas assume that the buyer will not be interested in lower-quality homes in need of repair.
A realtor should be your greatest asset when you are purchasing a home, because he or she has years of experience and vast knowledge about the housing industry and home-buying trends.