Our Buyers’ Most Frequent Questions Answered
Buying a home, especially if it’s your first time, can be complex and confusing at times. But, you are not alone!
The questions swirling around in your mind are likely the same ones that every buyer wants to ask too. You want to make sure you don’t do something wrong, right? Or, you might worry that you don’t know what you don’t know?
We hear from our clients all the time about what their concerns and questions are in today’s market. That’s why we are here to provide answers to some of the most common questions we get so you can become better informed and more reassured.
We realize the decisions you make and the path your take when it comes to buying does have an impact on your finances. So the question/answer sections below from other of our buyer clients should give you some insight on what steps might be best for you. Plus, maybe you’ll learn something “you didn’t know you didn’t know” too!
Most Frequently Asked Questions from Buyers
Q: How do I know the property value will increase?
Although there are no guarantees, there are clues and historical data that are indicative of future performance. One thing that drives home values in the DC area more than anything else is the addition of “walkability” and commercial/retail space.
If you know the area is changing and is going to increase in density or desirability, you are likely to see an increase in value over time, perhaps more than other areas. We always tell our clients to not go on hearsay, but look at projects that have actually been through the planning, development, and funding stages.
Being near transit is also a good indicator that your value will increase over time. The good news about the DC market is that our population is increasing, our unemployment is low, and our economy is booming. That is a recipe for an increase in value overtime.
However, you still need to buy smart — each neighborhood, block and/or building are important to understand to make sure you don’t overpay. There is an old saying that says you make money in real estate when you buy, so focus on that and you’ll be fine when you sell.
Q: Should I put a deadline on an offer?
This is a tough question to answer and really depends on the specific situation of the home you are bidding on. In more competitive neighborhoods, most sellers want to give their home full market exposure to get the highest price possible. That means sellers tend to have their own deadline for any and all offers.
If a seller is not anticipating multiple offers or perhaps just wants less inconvenience or a need for a quick sale, moving quickly with an offer and having a deadline for a response can be a useful strategy. If you are going to put in a deadline, make sure to give one that allows for enough time for the seller to respond, but not long enough for another offer to swoop in.
Again, it depends on the particular situation, but 8-12 working hours (not sleeping hours) is often a good time period for a deadline. Often times, this could mean avoiding a bidding war. But you’ll have to make it worth the seller’s while to want to take their home off the market quickly—perhaps a higher price than asking and favorable terms such as no or short contingency periods.
In some situations, a deadline will not make the seller respond, so be prepared for that outcome as well!
Q: Is it worth it to find something faster because interest rates are so low?
No! Don’t let interest rates dictate your time to buy a home. We are still in a period of historically low interest rates and we don’t expect them to spike any time soon.
A slight increase in your interest rate is not going to make the home you want unaffordable. And, just like buying and selling other investments, such as stock, timing the market is never a good idea. Buy and sell when the time is right for you. Speak with an expert about perhaps which month is best, but always go based on your own timeline and schedule.
One thing we know for sure—there will always be houses to buy. And, when interest rates rise a lot, that often times leads to a slight cooling of prices.
Q: How do I get a good deal?
Good question and one we focus on for each and every one of our clients! We always say, you make money when you buy in real estate, so making sure you buy right is HUGE. The one and only way to make sure you are getting good deal is to look at what has recently sold in the specific neighborhood, building or block you are buying in and compare your home to what has sold over the last six months to a year. There will be a range in price depending on specific location (for example, a basement unit will sell for less) and condition (just renovated will sell for more). Compare the home you want to buy with what has sold recently to make sure you are not overpaying. Last, get information from your agent about whether it’s a sellers market or a buyers market and if buyers are going up or down and make an offer accordingly. Also, keep this in mind—-just because something is “cheap” doesn’t mean it’s a good deal! Be sure not to make this crucial mistake!
Q: The house I want is $20k over my price range, that means I can’t afford it, right?
Maybe, maybe not…
Focus on your monthly payments, not just on a purchase price that may or may not be what you want to pay for a home every month.
In other words, focus on the fact that you want to pay, say, $2,500 per month on your new home, not on a somewhat arbitrary price point because for every $10,000 change in price, your monthly payment only goes up about $45 per month. When you look at it that way, you might be able to afford the home of your dreams and not have to spend money on repairs after you buy something not as nice!