Let’s face it. This is one of the epic buyers’ markets in the history of real estate. The heady days of easy money are over and the market is stuffed with inventory. That doesn’t mean you should forgo the usual discipline when buying a home.
Buying a home is both an emotional and practical decision. On the emotional side, you want to find that perfect home of your dreams with the white picket fence and so on. We all have an image in our mind. From a practical side, you want to make a good investment. Get the balance of these two issues wrong and you could end up in a mess.
Temptation is all around you. Home values are bombing, which means those that have money on hand are in an absolutely great position. If you fall in this class, congratulations. Now don’t blow it! Stick to the basic rules of buying a home so you don’t go down the drain like so many.
The number one mistake buyers make in this type of market is buying beyond the neighborhood. What does this mean? Well, there is always one or two homes in a neighborhood that have been overimproved. The owner has put in more money then he or she will ever recover from the sale.
When confronted with this opportunity, it can be easy to jump in and buy. There isn’t anything wrong with this if you are getting a good deal so long as you remember one thing. The home will only recover its value to the range supported by the neighborhood. If the neighborhood has a home value range of $350,000 to $450,000, don’t assume you can sell the overimproved home for $600,000. You can’t!
Along this line, it can be incredibly tempting to buy the unique home in an area. Personally, I like unique homes because they have character and so on. You might feel the same way. All that being said, unique homes are harder to move than your run of the mill home. Why? Because they are unique! Almost by definition, a certain population of buyers is not going to like the design of the home. If this population is big, you are in a tough position when you try to resell it.
There is no doubt that we are one of the great buyers’ markets these days. Stick to the basics of buying and you should make out like a bandit when prices bounce back. Go wild, and you probably will regret it.
Raynor James writes on real estate issues. View or sell
homes for sale by owner at FSBOAmerica.org.
