When you start looking for a home, there are so many tangible and intangible factors (emotions, competition, tight timelines, etc) that can distract the logical side of our brains and make us jump to decisions that might not be the best for us, our families, and our wallets. It's so easy to get caught up in the moment; knowing that there will be multiple offers and you may only get to see it once or twice before you have to decide if you are going to live in this house for five or the next fifty years. It is sad to say, but in our market you can probably spend more time deciding on whether to buy a pair of shoes than on whether to buy a house.
Determine your Budget
The first aspect of this process is to figure out how much you and your family are willing to pay for a house before you ever see one. Lenders are normally going to give you the maximum amount that you can qualify for. This is not the number you need to go with. I ask my lenders to break that into what the monthly payment would be. This is usually a lot easier for people to equate to their budgeting process.
If you can qualify for a $400,000 home, it doesn’t mean you should buy one. Look at your budget, set a monthly amount you are comfortable with and let’s go with that number. At the end of the day we want you to be comfortable with the purchase price. The last thing we want is for our clients to pay more than they are comfortable with. When in doubt, go below what you feel comfortable with and push higher if you find a truly amazing house.
Trust Your Gut
Once we have established your search criteria, lender, and how much you feel comfortable paying, then we go see homes. I want to front-load the buying experience with the financial aspects so that when we go see a house, you can focus on what matters: THE HOUSE!!!
There is definitely a unique feeling, or vibe, or some other hippy new-age buzz word to explain it. However, when you are in certain homes, they simply feel right. For me, specifically, if I can imagine myself drinking a cup of coffee on the back deck, or cooking dinner for my family in the kitchen, I take that as a good sign.
Go with it! Trust your gut, because at the end of the day your gut is the thing that will keep you up at night worrying that you made the wrong decision or that you paid too much. So trust it. After all it is you.
Once you have decided that this is the house for you and your family, I will research comparable properties in the area and give you my thoughts on the home's value. I try to use values similar to an appraiser's so that if we think there might be a problem on value, we will know ahead of time. On the other hand, if I think the listing agent priced it low to drive multiple offers, we will know this and form a strategy on how to beat the other offers.
At this point, we know what price the house should go for, where we feel comfortable, and how high we are willing to go to get it. This is the true key to not overpaying.
If someone is willing to push higher than your maximum, we are ok letting them go crazy. At the end of the day, it is only overpaying if you get pressured to win and go past your comfort level. There will always be other amazing houses out there. Sometimes it's for the best to let one go knowing you did all you could and the next one will be the right one for you.