Stressed-out seems to be the condition we’re all living with. It may not be an actual medical term, but if you have it, you know it. One of the fastest ways to catch “stressed-out” is to try and buy a house right now, and one of the biggest mistakes you can make when shopping for a home is to fall in love with it.
Valentine’s Day just passed, and I hope you had a lovely day with the one you love, remembering the warm glow and comfortable feelings you had when you first fell in love. Falling in love with a house may give you the same emotional rush as the flesh and blood love, however, you would be making a mistake to give in to it.
Now more than ever, with the shortage of properties available for sale, getting emotionally involved with a house will cloud your thinking and your ability to make good decisions. It’s exhausting trying to buy a home in this market. Whether you’re living in Florida or Montana, inventory is scarce all over the country. Because of the extraordinarily low mortgage interest rates, more buyers than ever are qualified to purchase a home, whether it’s their primary home or a second home, making the shortage of inventory even worse.
Know what you want and know what you can afford to pay for it. If you’re planning on financing, get pre-approved, meaning a full-blown credit application. Lenders will want you to produce bank statements, tax returns, income verifications, credit score and permission to run a credit check, stopping just short of your blood type. The final approval is pending on an appraisal of the property you finally choose, but your ability to get financing will be secure. In addition, there will be an expiration date on this approval, so work fast.
This process is substantially different from a pre-qualification which merely gives you a guideline on what you can afford based on the information you give the lender. In the competitive market we’re in where a high percentage of buyers are all cash, a pre-qualification doesn’t mean much to a seller.
Make a list of your “must-haves” and then tear it up. In the best of real estate markets, there are no perfect homes and you always have to compromise. In this market, compromise is on steroids; I can practically guarantee you what you buy will not look like the image you had in your mind.
If you are lucky enough to find something you love, please don’t “fall in love.” Full-price offers and offers above full price are common so try not to let love get in the way of good financial choices. It’s easy to get in a bidding war – know your limit and be prepared to accept it. Just like when your high school love broke up with you, you may think “I can’t go on,” but you will. Sometimes you just have to walk away before your emotions take over.
There will be more Valentine’s Days in your future and someday there will be more homes available to make up for the one that got away. Keep the stress level down by keeping the expectation level also down. Just like falling in love, the journey is the fun part. Stay safe.
