In many real estate markets across the United States, home affordability is a major obstacle to home ownership. There's a short supply of entry-level starter homes, and often times, homebuyers are in a crunch looking for a "deal"- a home priced below market value or one that doesn't involve a bidding war to buy. However, not every home that appears to be a deal is one.
Here's how to know when a deal isn't a deal.
It Needs a Lot of Work
A home that needs a lot of work can be a deal, but only if its expenses are already built into the sales price. For example, a home priced $50,000 below market value because it needs $50,000 of work is fair. But a home priced $20,000 below market value needing $50,000 of work is a bad deal. The seller is asking the buyer to pay over market value, with the costs of repairs considered. Think carefully about buying a house that needs major renovations-the costs often outweigh the savings.
Everywhere Becomes a Drive
Some homebuyers are willing to sacrifice location for a home they can afford. Living near or far away from a city can sometimes be the difference between being a homeowner and not. But if you've added an hour each way to your work commute those extra two hours a day spent in your car or on public transportation could get old in a hurry. You might wind up regretting buying a home so far away from your job, your family and friends, your favorite restaurant, or your family doctor. You'll have to decide between dollar savings and the inconvenience of traveling long-distance everywhere.
Too Many Compromises
Every homebuyer begins a search with a list of expectations and must-haves. Depending on the price, you might be willing to compromise some of the things on your wish list. But compromising on things that are most important to you - the number of bedrooms, a good school district, a crime-free area - could end up being a daily drain on you. Giving up too many of your priorities might not be worth the savings.
Affordability is an issue in real estate markets, so finding deals on homes sounds great. But a low price doesn't necessarily equal a deal, and it's helpful to recognize those situations. As skilled real estate professionals, we can help you find the home that best fits your lifestyle.