The Dream Home or Condo: Showing to Offer
Fear not, I have not discontinued my quest for a first home as a young professional leaving our series stranded in the planning phase. Earlier this summer, as part of The Dream Home series, we posted a number of questions for you to consider about buying a home along with some money saving tips to help with the down payment. Now, as summer comes to a close, I am stepping up my efforts to find a place and make an offer. Why? Let me count the reasons:
- Current mortgage rates are some of the lowest in a very long time due to the market, fed rates and the despicable bailouts of Fannie and Freddie.
- I am getting closer to my savings goals.
- Real Estate sales are cyclical, everyone tends to move and look at new places during the summer months, if I am buying when no one else is during early to mid winter, I hope to get a lower price.
Now that I have really started looking, going to showings and considering real estate values, I would like to share some of what I have learned. Keep in mind, real estate valuation is a fairly nebulous concept, it’s mostly subjective but, you need somewhere to start. Here are the questions I asked myself and how I answered them.
Where should I look?
When looking for a place, I just started simply at Realtor.com and some of the most popular realtor’s in my area. Their websites are usually good and the allow you to look by price, location and a million other variables. If your market is extremely large or complex, a realtor can definitely be of assistance as well, I asked my friends and ended up getting a great referral.
How much should I offer?
No one can really answer this. Especially because it depends on the market, how much you can afford and how badly the person wants to sell. There are many other factors to consider as well such as how long the house or condo has been on the market and how easily you believe you can resell it. You can judge these factors or trust a Realtor to judge them for you (although this is not advisable as Realtors are paid on commission and therefore motivated to have you pay more).
Some people also try to make this judgment based on a percentage below listing, ie you should offer 10% below what it listed for when you place your initial offer. It’s all a bit of art and science but, I have found one tool to be an extremely helpful starting point, Zillow. Zillow provides a good look at recent local sale prices and trends values. I find their “Zestimates” to be about 10-20% too high but, it’s a great way to at least get an idea of the values in the area you are looking at and see what a particular property has sold for in the past.
Once you decide on a place and how much you want to pay, you will need to work with a realtor to make the offer and possibly go through the counter offer/acceptance process. When I reach that step, I will share my experiences here but, in the mean time, if you have bought a house before or are in the process now, what are your tips and favorite tools? Please share them in the comments.
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September 17th, 2008 at 1:58 pm
Buying a first home can be a real stress ball. I’m waiting to find out if I’ll be relocating for a job. If I don’t get the position I plan on buying a condo or splitting a house with my cousin.
I work in Boston, but am from a city called Worcester. There is a program called Buy Worcester Now (http://www.buyworcesternow.com) where the local banks raised a bunch of money (around $90 million) in order to subsidize some of the costs of buying a home. This helps so much. Possibly there are more programs like this across the country? I’m not sure.
Equity is a beautiful thing if you can get it rolling. Best of luck!