what to consider before buying a home

Factors You Need To Consider Before Buying a Home (2020)

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Some real estate buyers have difficulty finding the “perfect” house. Perhaps it’s because the perfect house doesn’t exist, or, it’s because they can’t seem to make up their mind.

This leads to the question “What should I consider before buying a home?”

The answer to that is subjective to the buyer and the economics of your real estate market.

On average, buyers will spend about ten weeks previewing ten different homes before making an offer.

That’s a lot of properties to think about.

In this article, we’ll discuss what the average real estate buyer should consider before buying a home so that they can feel confident in making a decision.

The Emotional Side of Buying a Home: The “Wow”

The end-all in a real estate search is when the buyer says “wow”.

This usually signals to me “you better get an offer in”.

Keep in mind. If you walk into a home and your first reaction is one of pure joy and love, odds are that you found the right one.

Happiness is the goal.

The Logical Side of Buying a Home: Economics and Market Trends

Now that we’re past the emotional part of a decision, let’s talk about logical ways to make an intelligent purchase on a home you like.

Appreciation Value

Listing prices reflect the current market. But, the market changes constantly.

Appreciation is when the value of something increases.

As a buyer, it’s best to ask your real estate agent for statistics on the area you’re looking to buy in to see if you’ll make a return on your investment.

Good real estate agents will be able to pull up MLS data and other sources alike that can go back years in the record books to compile valuable data.

Then, they need to be capable of explaining the variables to you.

For instance, let’s say you’re buying with me as your agent in Asheville, NC. You’re looking at a neighborhood called Montford, one of Asheville’s most desirable neighborhoods.

Prices in Montford are generally at a premium due to proximity to Asheville.

montford closed sales
Montford Closed Units 2010-2019 (1-mile radius). Extracted from Canopy MLS.

I’d pull information from my MLS that shows the number of listings closed within a square mile. The data suggest that the number of closed units have nearly doubled in the last decade, but are beginning to slow down, potentially foreshadowing a downturn in the coming years for that market.

Montford median sales price 2010-2019
Montford Median Sales Price 2010-2019 (1-mile radius). Extracted from Canopy MLS.

Then I can pull median sales price data that shows Montford sales at a record high of $375,000 in 2019.

Does this also show signs of Montford slowing down soon?

If closed listings continue to slow down, then possibly. A higher volume of closed listings shows that there’s heavy demand in the area, making it a micro Seller’s market.

If it slows down, listing prices will have to fall in order to get homes off the market, which means if you’re buying for appreciation, I might recommend against Montford.

Of course, there are more factors at play than a couple stats, but preliminary numbers would deter me from suggesting an investment in Montford.

Value Within Neighborhood

Often, you’ll find homes that are priced incorrectly within the neighborhood.

To stick with our Montford example, properties are old there. Most of them built in the 1920’s, some before then.

Most often, as you would imagine, these homes need to be renovated. You’d be surprised by how many are not.

Yet, due to high demand, these properties can sell at the same price as other homes that have been updated, sometimes more.

As a home buyer, it’s important to understand that location isn’t everything (as it’s often believed to be).

Settling (keyword: settling) for an outdated home in Montford at a premium price simply because you’ll “own a house in Montford” isn’t necessarily the right choice.

If you absolutely loved the home and everything about it. Fine.

But if not, it’s probably best to move on because there’s a chance that if you plan on relisting the home in five years or so, you could have lost tremendous value, even if you renovated.

Renovation Costs?

All this talk about renovating leads me to my next point.

How much will it cost to renovate the home, if necessary?

This is a very open-ended question as there are thousands of ways you can require renovating.

However, the average full house remodel can cost anywhere between $40,000 – $60,000. You can check out this handy calculator here.

If you plan on purchasing an older home that needs a remodel, you’ll want to ask your real estate agent to help you find the best bargain with the most future resale value.

While your real estate agent should always help you do this, it’s especially important in these situations. No one wants to pay a premium price and then slap another $50,000 on it just to figure out that you’re negative -$100,000 in ROI within seven years.

How Long Do You Plan On Living in This Home?

The number of years buyers plan to spend in their homes has begun to decrease in recent years. Homeowners in Charlotte, NC are down to a median of 10.9 years spent in their homes as of 2018.

This means that when you go to make your decision on purchasing a home. If you aren’t completely sold on the one you’re about to buy, consider how long you’ll be there.

If it’s only five years, then you might find comfort in knowing that the market will be completely different in five years, where you might be able to find the “perfect” house.

It would be smart to purchase a home with good appreciation value and then using the extra cash you receive to get into a different price bracket that satisfies your homeownership dreams.

It’s an investment, but it can be extremely fruitful to be patient.

Final Thoughts

When buying a home, it’s extremely important to consider the factors I’ve listed.

While there is certainly more to think about and evaluate, such as how much you’ll include in your earnest money deposit and the closing costs you’ll face, that’s a discussion to have with your real estate agent who can support your immediate needs.

Of course, if you have any questions for me, I’m happy to answer. As always, if you’re in the Asheville/Charlotte regions of North Carolina, I’m available to serve as your real estate agent as well.

Matthew Myre

Matthew Myre

Matthew is a North Carolina real estate agent and the CEO of Berri Properties. Matthew brought his passion for writing to his career by creating the Berri Properties Blog, which now ranks as one of the Top 50 Best Real Estate Blogs in the world. His favorite things are basketball, history, politics, and popcorn. Feel free to contact him at matthew@berriluxuryproperties.com

Matthew Myre

Matthew is a North Carolina real estate agent and the CEO of Berri Properties. Matthew brought his passion for writing to his career by creating the Berri Properties Blog, which now ranks as one of the Top 50 Best Real Estate Blogs in the world. His favorite things are basketball, history, politics, and popcorn. Feel free to contact him at matthew@berriluxuryproperties.com
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