The Do’s And Don’ts Of Home Buying In Depressed Markets
If you are in the market to buy a new home, the one catch-cry you are likely to hear is that it’s a ‘buyers market‘ and there are bargains to be had everywhere. It’s true too, there are bargains to be had in a lot of areas, but every home on the market is not necessarily a bargain so the ever caution “let the buyer beware‘ still holds very true. Here are a few do’s and don’ts of buying in depressed housing market.
Do research the market, and in particular the neighborhoods you are thinking of buying into. Individual property types, neighborhoods, and even counties are performing differently to each other – ignore ‘national’ trends.
Do negotiate on a sales price, but use your research to justify your negotiations. Remember, if a home has already seen several significant price drops, then the seller may not be in a position to accept too much lower.
Do look for future added value. One of the better ways of benefiting from a falling market is to look for slightly run-down properties that can be purchased at a decent discount. Make good the repairs and you could see a considerable increase in equity.
Do contribute the largest down payment you can afford. The larger your equity, the more security you have. Put down 20% and you can avoid mortgage insurance, lowering your monthly payments.
Don’t buy just because it’s a buyers market, especially if you need to sell to buy. You won’t necessarily get the best value on the sale of your current home.
Don’t spend beyond your means. If your limit is $300,000, then stick to it. A bargain at $350,000 is no bargain if you run into financial difficulties and lose the home through foreclosure. Buy below your means now and build equity quickly.
Don’t buy before you’ve sold. You may find your dream home only to lose it because your current home takes months to sell. Check on how long homes similar to yours take to sell and use that act a guide to when you should start looking. It’s a frustrating wait, but it’s worth it once you have the financial security of knowing how much you can invest in your next home.
Those simple do’s and don’ts will help to ensure you are buying with a clear head. You will also be buying in the knowledge that, should home prices fall a little over the next 12 months, you are still protected and not finding yourself in financial difficulties and at risk of losing your new home.
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