Nowadays, potential home buyers seem to fall into two groups. One is excited at the idea of making a first home purchase in the current housing market and sees bargains everywhere. The other is also anxious to buy but is much more fearful of overpaying.
“Whether you’re more attracted by this soft market or repulsed by it has a lot to do with your personality type,” says Eric Tyson, a personal finance expert and author of “Let’s Get Real About Money!”
Renters who are eager to buy are typically optimists, Tyson says, while those waiting on the sidelines are usually pessimists about the U.S. economy and the potential for a near-term rebound in the housing sector. Past experience with large financial decisions also colors a person’s view of the present market.
After they’ve analyzed the overall situation, however, Tyson says even pessimists usually see the positives in buying a well-chosen property now rather than continuing to rent indefinitely.
“Renting year after year has its own risks. Obviously, rental costs could rise substantially in the years ahead. And in the future, those who keep renting will be precluded from the kind of home value appreciation homeowners have enjoyed through the decades,” says Tyson, who believes the current housing market is packed with opportunities.
There’s no such thing as a risk-free home purchase. However, you can improve your odds of a successful outcome if you think strategically and act cautiously. Here are several pointers:
* Do a little economic research of your own. Locate the parts of your metropolitan area that have the best prospects for future home appreciation, Tyson suggests you start with a regional map and pinpoint major employers — such as corporate headquarters and military bases — where jobs are expanding. By using the Internet, you can locate communities with top public schools and identify areas served by popular mass transit lines, including new light-rail systems.
* Consider your “personal economy.” Before committing to any purchase — even to a small home bought at a bargain price — it’s always wise to review your budget and assess your level of employment security.
* Scope out neighborhood property values before you bid. Researching relative property values before you put an offer on a home is critically important in the current market environment, says Leo Berard, charter president of the National Association of Exclusive Buyer Agents.
* Use the time a buyer’s market gives you. Just a few years ago, buyers were locked in fierce competition over available homes in desirable neighborhoods. Yes, there are still neighborhoods where buyers must compete. But in most places, buyers now reign supreme — given the glut of available homes relative to demand. And that spells opportunity.
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