Pam DeGemmis' Blog
For those who embrace a sense of nostalgic charm, older homes have an undeniable allure. The yesteryear designs and attention to detail are often absent in new construction. As attractive as the idea of living in a glorious Victorian or period home may be, it’s also imperative that you take an extra-long look at older homes. While it’s true that many homes age like fine wine, some can turn to vinegar as well. Consider answering these three things before putting down 20 percent, securing a mortgage, and signing off at the closing.
1: Older Homes Enjoy Better Quality Construction, But . . .
There’s a funny thing about the word “but,” that should prompt potential homeowners to sharpen their focus. It’s generally true that many older homes were routinely constructed with sturdier materials that are now considered “high-end.” In fact, structures built from the 1860s to 1920 employed lumber that is both thicker, and stronger by the square inch. The reason is that older homes utilized “slow-growth” timbers. Today’s wood generally comes from “fast-growth” trees. The wood density is vastly stronger in slow-growth, which is one reason many have stood the test of time. Now here’s the “but.”
Your ability to find slow-growth lumber would take a Herculean effort. That’s why it’s essential to understand that you may not be able to restore an older home to its original glory, only emulate it.
2: Homeowners Insurance Can Be Tricky With Older Homes
Take a moment and think about how you plan to approach your homeowners insurance to satisfy the lending requirements. Most people want to secure the least expensive policy, as long as it covers total replacement costs in the event of a natural disaster or fire. Therein lies the rub, “total replacement costs.”
A substantial difference exists between current building costs, and the revenue required to build a new version of your period home. The lumber already mentioned may not exist, and its modern-equivalent is generally considered a high-end material. Now add in unique architectural attributes, and you likely have a structure with a replacement value that far exceeds the average new construction costs.
In terms of your homeowners policy, it’s up to you to secure a quote from a construction outfit that specializes in older homes. Using that measure, your premium is likely to uptick. But unless you get full coverage, the coverage is likely to fall far short.
3: Older Homes Are Less Usually Expensive
Whether you have a passion for older houses or just want to purchase the maximum affordable living space, there’s plenty of good news. It may seem almost counterintuitive to old-home lovers, but the market tends to devalue them, much like automobiles. That depreciation can be a substantial perk as long as the house remains structurally sound and relatively unblemished.
Most people come to the real estate market with a set spending budget. The older home can deliver increased living space as well as a robust ambiance for less than its new-home counterpart. For those who simply adore older homes, it’s a lot like buying a fine wine or rare painting at a discount. What’s of primary importance when purchasing an older home is to follow through with a determined inspection that identifies any potential issues and conduct thorough due diligence before closing.
A seller's market poses a challenge for any buyer - when there are more buyers competing for homes than there are homes in market, you have to be ready to move swiftly when you find a home you like. Since the inventory of luxury homes is usually small when compared with more conventional homes on the market, a seller's market could make it more difficult to get the home you want, even if your financial details are in order and you're ready to buy.
What is a Seller's Market?
A seller's market simply means that there are more people who want to buy a home than there are homes for sale. When this happens, homes can move very swiftly -- some will sell within days of listing -- and buyers need to be able to offer appealing contracts to secure a home. While the luxury market often contains a smaller inventory, there are also fewer buyers competing for homes, but the market can still favor sellers.
Tips for Buying a Luxury Home in a Seller's Market
Visit in Person: Your real estate agent can help narrow down the possibilities and you can even send someone ahead to take a first look for you -- but you should view the home sooner rather than later if you want to see it in person before you buy. Luxury homes in high end vacation destinations can go very quickly in a sellers market, so you may not have the amount of time you are used to for viewing the property.
Streamline the Process: Work with your luxury real estate agent to prepare a compelling offer that is free of contingencies, or as free as it can be. The fewer conditions you have and the easier you are to deal with, the more likely it is the seller will accept your offer. Offer a swift and easy closing, request no contingencies and be ready to go swiftly when you find the home you want.
Have Financing in Place: If you need a mortgage, you should have your details worked out and ready to go. A seller with an advantage will be reviewing multiple offers and yours should indicate there will be no delays in closing. If you are a cash buyer, the funds should be available in time for closing; make preparations early and assume you will need to close within a month.
Be Prepared to Pay Full Price: The most common impact of a seller's market is that homes sell for the asking price -- or even more than the list price. Your agent can help you determine if a full price offer is right, or if you should even consider offering above the selling price. This is most likely in a hot market where homes are selling as soon as they list. If the home is still available after a week on the market, a full price offer may not be needed, if everything else is in order.
Make the most of the process by working with a skilled agent who is familiar with the complexities and demands of the luxury market. They will be more adept at helping you find and secure the property you want than a conventional agent. When you do find a home you like, be ready to act quickly so it does not get away; these steps will help ensure you don't miss out on a property you love.
A diligent homebuyer understands what it takes to shop for a residence. As such, this individual may be better equipped than others to discover a house that matches or exceeds his or her expectations.
Ultimately, there are many reasons to become a diligent homebuyer, including:
1. You can boost your chances of acquiring a top-notch residence.
Buying a home can be a long, complex process, particularly for those who lack housing market insights. Fortunately, it is easy for any homebuyer to become a diligent homebuyer, thanks in large part to the wealth of housing market data that is available.
A diligent homebuyer can analyze the prices of recently sold houses, along with the prices of homes that are currently for sale. By doing so, a diligent homebuyer can understand whether he or she is shopping in a buyer's or seller's market. This homebuyer also may be able to narrow his or her home search.
For those who want to acquire a first-rate residence, diligence is paramount. And as a diligent homebuyer, you may be able to identify many opportunities to purchase a deluxe residence.
2. You could save money on a home purchase.
When it comes to shopping for a home, there is no need to overspend, regardless of whether you're searching for a residence in a buyer's or seller's market.
Meanwhile, a diligent homebuyer is a thrifty home shopper who understands how to save money on a house.
A diligent homebuyer, for example, may be more likely than others to get pre-approved for a mortgage. This homebuyer will meet with a variety of lenders and learn about all of his or her mortgage options. That way, a diligent homebuyer can enter the housing market with a budget in hand and avoid the temptation to overspend.
Furthermore, a diligent homebuyer knows how to stay calm, cool and collected in stressful price negotiations with a property seller. This homebuyer will possess the housing market insights to make an informed purchase decision. In addition, he or she will have the confidence to walk away from a potential home sale if price negotiations get out of hand.
3. You can accelerate the homebuying process.
Although a diligent homebuyer analyzes real estate market patterns and trends closely, he or she usually realizes that navigating the housing sector alone can be tough. Thus, a diligent homebuyer may reach out to a real estate agent for extra help.
A real estate agent can provide even a diligent homebuyer with the necessary assistance to speed up the homebuying cycle. This housing market professional can help a homebuyer understand and overcome assorted property buying hurdles. Plus, he or she can offer expert insights into the housing market that a homebuyer may struggle to obtain elsewhere.
If you plan to purchase a house in the near future, it definitely pays to become a diligent homebuyer. This property buyer will be able to browse a broad array of high-quality houses, assess these residences effectively and seamlessly move through the process of acquiring the perfect home at the lowest price.
Whether you’re buying a house or selling a home, the smartest move you can make is to hire a real estate agent to represent your interests. But before you do, take these important steps so you can be best prepared for the next stages.
Have An Idea Of What Kind Of House You Want To Buy
If planning to purchase a new house, prepare for your real estate agent interview by figuring out what kind of house you’re interested in. For this, you’ll want to familiarize yourself with the various house style terms, like ranch, colonial, craftsman, Tudor, etc. Knowing these terms and knowing what you want will enable you and your agent to communicate easier, and your agent will be able to more quickly find the kind of homes you’d be interested in.
Get Your Financing In Order
Nothing’s worse than finding the house of your dreams, only to find out you can’t get approved for a mortgage. Before you do anything else, get your financing in order. Speak to a lender about getting pre-approved for a mortgage. This will let you know how much you’re approved for and how much house you can afford. Your pre-approval status is also a powerful bargaining chip if for some reason you need to compete with other bidders.
Be Ready to Move
If you hire a good real estate agent to sell your house, you could be looking at a closing date just 30 days away. A good agent can have potential buyers ready to close fast. Are you ready for that? Before hiring your real estate agent, make sure you’re ready to move. Have a contingency plan in place if you need to move out quickly, including:
Know Where You Stand With Your Existing Mortgage
You should have a very clear understanding of where you currently stand with your existing mortgage if you’re thinking of selling. You need to know the minimum of what you need to sell your house for so you can make the profit that you hope to gain. Also, go through your mortgage paperwork to ensure there will be no surprises regarding special clauses or contingencies when it comes to selling the house. Depending on the restrictions of your mortgage, there may be caveats as far as transferring title or changing terms.
Ask About the Real Estate Agent’s Track Record
During your interview with a prospective real estate agent, it’s fair to ask them what their track record is. Real estate agents keep tabs on how many houses they’ve bought and sold in any year, so the agent will be able to rattle off their “statistics” for you. Be sure to ask how long their houses stayed on the market, too, since that will reflect on the agent’s salesmanship skills.
These steps will ensure that your real estate experience will be a positive one. Once you’ve gone through these steps, you’ll be ready to hire a real estate agent to buy or sell your home!
If you've been pre-approved for a mortgage, you can enter the housing market with a budget in hand. In fact, this mortgage will enable you to spend up to a certain amount on a house. But in many instances, it pays to buy less house than what you can actually afford.
Ultimately, there are many reasons to consider purchasing a house below your means, such as:
1. You might not have to worry about significant home maintenance.
A small house likely means less home maintenance than would be required in a large house. Therefore, you may be able to spend less time worrying about keeping your residence looking great if you acquire less home that what you can afford.
Of course, let's not forget about the money that you might save by purchasing an affordable residence. If you buy an inexpensive home, you may be able to use the money that you save to hire professional home cleaners, landscapers and others to help you enhance your residence's appearance.
2. You'll be better prepared than ever before for unexpected expenses.
There is no telling when a family emergency, natural disaster or other dangerous situations may arise. Fortunately, if you spend less on a house now, you may be better equipped than ever before to handle the expenses commonly associated with these unforeseen events.
Purchasing a cheap house may prove to be valuable if you encounter costly, time-intensive home repairs down the line too.
For example, your home's roof won't last forever, and you likely will need to fix or replace it at some point. But if you purchase a budget-friendly home, you may be able to save extra money that you can use to cover the costs associated with various home repairs.
3. You'll have more money that you can use to personalize your house.
The money that you save on a house today may be used to upgrade your home both now and in the future.
For instance, if you want to install a deluxe swimming pool or fire pit in your backyard, spending less on a house now may provide you with the financial resources that you need to fund these projects. And if you complete a broad range of home renovations, you may be able to increase your house's value as well.
Deciding how much to spend on a house can be a tough decision for any homebuyer, at any time. If you collaborate with a real estate agent, you can explore a vast array of residences that fall within your price range.
A real estate agent will learn about your homebuying goals and tailor your home search accordingly. He or she also will set up home showings, keep you informed about new residences that become available and ensure that you can discover a home that matches or exceeds your expectations.
Consider your budget closely as you prepare to kick off a home search. By doing so, you should have no trouble finding a terrific house at an affordable price.