————————————————————————————————————————
Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
————————————————————————————————————————
The following is a post by MPFJ staff writer, SK. SK writes about the reasons we get into debt, changing the patterns that get us into debt, and examines small business ownership and real estate investing at her blog, American Debt Project.
Well folks, it’s back. Not the economic recovery. Just the part where California home prices start going crazy again. In Los Angeles and Orange County alone, prices increased 12% in January and marked seven straight months of housing price increases (and we just finished the eighth month of that trend). Although some incredibly biased news sources claim this is no bubble (but they’re heading Realtor.com and Trulia, no conflict of interest there, amirite?), I beg to differ. I don’t want to get hosed in this crazy housing market, especially considering this is my first real estate purchase, so here are some tips on keeping your sanity in an insane housing market.
Do Your Due Diligence
Realtors are pushy. So pushy! I’ve been a few times now to check out homes, and thanks to the market conditions, realtors are back to their old ways. They want you to make an offer after 5 minutes of looking at a home. They’ll push you to waive inspections, and make offers that are either over asking price, or, if they come in above the appraised value, that you will maintain your offer.
These are bad ideas, my friends. You should take your time to look at the home. Check the cabinets. Run the water. Measure the rooms. Consider the exterior condition. If someone else offers $30,000 over appraised value, let them have it. Do you have $30,000 in cash that has no better use? I don’t see the value in getting a home for the sake of just getting a home. Check out Khan Academy’s Renting vs. Buying videos to understand when it makes sense to rent versus buy.
Don’t Get Into a Bidding War
You can certainly make an offer even if other people are bidding, but don’t allow your emotions to take over and bid way over your original budget. If there are 10 other bidders, there may be cash buyers who have an advantage. But just make the offer and get the experience. Remember, you won’t buy the first house you put an offer on (hopefully!).
Consider Other Neighborhoods
I know that I have my heart set on 3 neighborhoods in Orange County. But to be realistic, there are 3 neighboring ‘hoods’ that would work out just fine. If you can expand your search and increase the inventory available to you (I know, inventory is at an “all-time low”), you can increase the odds of finding a home you like and can afford.
Ugly Homes Need Love Too
Many buyers are wising up to the standard staging tricks in real estate. Granite countertops and new carpet and paint do not make a good home. It’s the structure, layout, and location that matter most. So, if there is an OK home on a great lot in a nice neighborhood, consider it just as seriously as the fully-renovated home in an almost-as-nice neighborhood. You’ll get a better value with greater long-term appreciation potential.
So, if you’re looking to buy a home right now, I want to know: Are the market conditions affecting your decision? And how are you adapting? Is the housing market only “hot” again in California?
Share your experiences by commenting below!
***Photo courtesy of http://www.sxc.hu/photo/1394960
