When it comes to real estate, there are some rules of thumb that have been passed down through the ages. Even a layman could spout off a list of real estate truisms (location, location, location, for instance) without having ever been involved with any kind of transaction. However, do all of these old standbys still stand up in today’s market? Which tips should you take and which should have been thrown out with your acid-wash jeans? It’s time to brush up on what you thought you knew about real estate.
Location, location, location. This has got to be the most-quoted pearl of wisdom in all of real estate, and it still rings true. The first item potential buyers search for when looking for a home is the location. They’ve got an idea of where they want to live and rarely will change their minds depending on the kind of homes they find elsewhere.
Spend 40% of your annual income on your mortgage. Especially in times like these, this rule of thumb is outdated. Everyone’s got their own financial situation, and each person’s unique spending habits should be taken into consideration when it comes to mortgage payment. A better way to go is to get pre-approved by a lender, find out how much mortgage you qualify for and then spend less than that amount.
You never get a second chance to make a first impression. On average an impression, good or bad, is made in seven seconds…yes, seven seconds. Not only is “curb appeal” important, each room inside gives the buyer insight into the seller and the manner in which the property has been cared for (and how the house will hold up throughout the years). Each room makes an impression. Impressions determine desire and value. Desire and value determine the price.
Don’t buy the most expensive home on the block. This still rings true. Homes in most neighborhoods are relatively similar in terms of price. One home may have an addition or more yard space, but neighborhoods tend to have similarly-built homes. If a home is priced well above any other area homes on the market, chances are the sellers have it overpriced. It’s best to have a home value in the middle of the neighborhood.
Don’t Overrehab. If you add an entire second story or install a magnificent home theater, you may have just turned your perfectly-nice home into the most expensive house on the block… and we’ve just covered how you shouldn’t shoot for that. Many people put so many upgrades into their home they don’t realize how the entire thing will turn out. One person’s upgrade may be another’s eyesore. Sure, finish the basement, install new countertops or make over the bathroom, but if you overdo it you may not always see the dramatic increase in home value you desired.
In any case, don’t try to judge the market on your own. Buying or selling a home is a process, though rewarding in the end. Find a knowledgeable, professional Realtor to guide you along the way.