Even a whisper that you’re maybepossibly thinking about shopping for a home, and the floodgates of opinion open.
But what’s sage counsel and what’s bunk advice? To assuage your confusion, we’ve gone MythBusters on six of the most common refrains surrounding the home-shopping process.
1. Never splurge for the most expensive house in the neighborhood
Your mother always said: Don’t buy a home that costs 50% more than the surrounding properties. (OK, maybe your mom wasn’t always saying this; we’re paraphrasing here.)
The logic goes that said home won’t appreciate in value given the lack of comparable properties in the area, and will also be harder to resell later on.
But you don’t buy just for investment; you buy for personal fulfillment as well. Maybe you need a home office, or an extra bedroom for that rotating cast of couch surfers; a splurge on a bigger home in your preferred neighborhood might well be worth it.
The key here is not to overpay. Instead, work with your agent to research comparable properties in the general area so you can determine fair prices.
2. Spring is the best time to house-hunt
It’s a real estate adage as old as time: When the buds start blooming, so does the market.
But with the flood of “For Sale” signs comes the buyer deluge, which means bidding wars and a quick turnover of inventory.
The reality? People need to move property 365 days a year, and in fact may be more motivated to do so during the slower months; job relocation or a soon-to-start school year can also light a fire.
If it makes sense, eschew the warmer-weather mobs and take your time looking. (I can speak from personal experience on this front, having bought a house of my dreams in November after looking for, oh, about two years.)
3. Follow the five-year rule
“The only way to recoup your investment is to stay in a home for at least five years.”
This one pretty much hearkens back to the Eisenhower era. But times have changed, our lives have become more transient, and besides, no one ever said Ike was such a great president anyway.
Here’s just one work-around: if you buy less home than you can afford and make an extra payment a year, you’ll build equity more quickly.
And nothing says you have to sell a home when you leave it; rent it out for another few years and you’ll take a deeper swipe at that principal. Just be sure you can swing two mortgages if a lease suddenly falls through.
4. Never offer the asking price
There are two worries here. First, that the seller will psych herself out of the deal, figuring she priced the home too low for the market.
Conversely, the buyer might avoid offering full price out of a fear of overpaying. (If it isn’t clear to you by now, real estate is rife with psychological warfare.)
But the question really comes down to the home’s worth. If the property is priced correctly, then by all means offer asking. There are many other ways to make both buyer and seller feel as if they got a good deal out of the exchange.
5. A 30-year fixed mortgage is always the best deal
Remember that five-year rule, just debunked? Let’s apply it to mortgage shopping too.
It’s true that a 30-year fixed loan makes the most financial sense over the terms of that loan, given market fluctuations. But the longer you fix a rate, the higher that rate will be; if you plan to be in the home only for a few years, investigate 5/1 and 7/1 ARM loans, which mean lower monthly payments over the duration of your planned ownership.
6. Don’t buy the first house you look at
The marriage metaphor is inevitable here. You wouldn’t marry the first person you kissed, and so you certainly shouldn’t put in a bid on your first condo crush.
But why play the field if you’ve found The One? No doubt you’ve been browsing online for months anyway, and rare is the home that meets all of your criteria at any point in the search.
Seize the closing day.