It’s commonly said that buying a home can be one of the most stressful things that you will do in your lifetime.
When you’re looking to buy a home, it’s easy to get a little confused. After all, most of us don’t have the resources or the time to turn buying a house into a regular activity.
As such, we may only get a couple of tries to learn some of the best tips and tricks when it comes to real estate. Thankfully, while you may not have much in the way of personal experience, there are plenty of tried and tested, helpful hints that are worth knowing.
Here are five general rules of thumb that you should consider before you sign any papers or pay any settlement costs.
1. It’s All About Location
A home’s value is dependent on many factors, and perhaps none are as important and far reaching as location.
No house is an island. When you purchase a home, you’re not only buying four walls, a roof, and maybe a bit of backyard; you’re actually purchasing a small portion of a much larger area. So, take a look around. What does the neighbourhood look like? How well maintained are the other houses on the street? Does the home have easy access to nearby schools, hospitals, or other amenities?
A home’s value is dependent on many factors, and perhaps none are as important and far reaching as location. So, when you begin hunting for a prospective property, be sure to take the area into account. Otherwise, you might end up stuck with a house you can’t sell.
2. Closing Will Cost You Up To 5% Of Your Home’s Purchase Price
Make sure that you get all of the details
Although this isn’t something that can really be nailed down, it’s pretty safe to say that once you’re ready to pay the settlement costs, you’ll need to have about 5% of your total purchase price to get everything taken care of. Of course, the cost could be less, but it’s best to plan for 5%, just to be safe.
Just make sure that you get all of the details, and are familiar with what the various costs and fees will be covering before you commit to anything.
3. Consider Carefully Before Increasing The Value Of Your Home More Than 10% Above The Average Property Value For Your Area
Once you pass the greater than 10% mark of the average property in your area, then it is more difficult to make a profit on your investment
A few remodeling jobs are a great way to increase the value of your property, but you need to be realistic about your expected return on investment. Every house in a neighbourhood effects the price of every other house.
So, if you plan on increasing the value of a home in an effort to make more money from resale, then you might be surprised to learn that once you pass the greater than 10% mark of the average property in your area, then it is more difficult to make a profit on your investment. Sure, the improvements will make the house itself nicer, but the overall value will begin to plateau.
4. Buy The Worst House On The Best Street
Each and every home-buying experience is going to have its own unique issues, and a rule of thumb is only good as long as it works.
As mentioned above, the value of your house is partly dependent upon the other houses in the area. So, why pay more to be the one to raise the average? It may not sound like very nice advice, but if you can buy the worst house on an otherwise great street, your neighbours will be raising your property value along with their own, through very little effort on your part.
Of course, none of these rules should be considered unbreakable. Each and every home-buying experience is going to have its own unique issues, and a rule of thumb is only good as long as it works.
So contact a real estate agent, speak with friends and acquaintances that have recently bought homes, and do your research before you start picking out a place to live.
For extra advice on buying a house read our article called, 4 Red Flags When Looking To Buy A Home. It will give you some further insights into what not to buy.