The Top 5 Things You Need to Know about Buying a House on the Mid-peninsula
#1 There will be blood. (link to IMDB movie site) (Ed. Note: Many Americans will get that this was an academy-award winning movie, but if the reference is too obscure for Chinese, we can change it.)
Ok, not really, but it will be competitive to buy a good house in a good location at a good price.
Findings from the 2013 Housing Market Survey show 70 percent of properties sold in California that year had multiple offers. You need to be prepared to do battle. And you need to be prepared to lose and to go back into battle again until you get the house you want.
#2 You need to be extremely prepared.
Do whatever you can do to prepare you to quickly make an offer when you find a house you like. Get pre-approved for a loan (not just pre-qualified—link to real estate terms blog), have cash in the bank (at least a 20% down payment for most homes) and be ready to go to go the extra mile, like securing your own inspections before you make your offer, so that your offer has few or no contingencies.
#3 No matter how well-prepared and qualified you are, you will likely lose several houses that you would have liked to buy. And that’s ok.
There is so much competition for good homes now that most people who make offers lose. That’s just the numbers. Everything is a learning process. There will be homes that you lost and wished you would have bid more for, and homes that you are grateful that you did not get after all the dust settles. In the end, it will all be an education that will hopefully lead you to being confident in making an offer on a house that you really want, at a price that is reasonable for you, that will culminate in a purchase.
#4 Still, you must be careful and only make an offer that you feel comfortable with and that you will feel happy about if you win.
In this hyper-crazy market, it is tempting to want to win at any cost. This is a mistake. This NY Times article (Link: http://www.nytimes.com/2014/04/06/realestate/borrowing-the-maximum.html?ref=realestate&_r=0) advises against buying a home at the top of your budget.
I feel like I’m channeling Suze Orzman here, but here are some guidelines:
- You must be comfortable paying the mortgage with the income and expenses you have now—not the income you anticipate coming in the future.
- You should have savings so that you can pay the mortgage if you unexpectedly lose your job and have to be unemployed for a while—probably about 12 months in this economy.
- You have to be okay with the purchase, even if the real estate market drops and your house is worth less the year after you buy it. Real estate cycles. Any investment of this magnitude is risky. If you can’t stomach the risk, don’t purchase a home.
#5 Having an experienced real estate agent who knows the area you want to buy in is more important than ever.
The market is crazy and dynamic. An agent who knows the local market, knows the trends and who has a reputation among the other agents as someone who is a professional with integrity will be able to navigate the stormy waters and steer you toward the best deal for you.