Existing homeowners represent a growing majority percentage of home sales in 2021, according to Zillow. Current real estate market conditions lead to more first-time buyers having difficulty leaping homeownership. These trends are some of the results of the heated real estate market in 2021 that we’re observing from our decades of providing NJ Coastal Home Insurance to buyers in the local real estate market.
In markets like these, where low resale inventory ratchets up demand, it’s easy to get carried away. Buying real estate is emotional and competitive when most buyers today find they need to put in two offers before they succeed with a purchase. That’s new development compared to recent past years.
We’re providing these tips to make you a more informed buyer aware of situations and conditions that can wreck an otherwise tempting deal. Use this advice to maintain an objective perspective before submitting your offer.
Know Your Numbers and Dates
If your transaction is contingent on selling your existing home, it’s even more critical to know all the financial details on your side before you offer. If you are moving up in size and price, will you have the cash to add the equity you’re swinging into the new loan?
Getting prequalified with your mortgage lender will tell you how much money you can put down on your next home. Your lender will need essential debt, income, and asset information to prequalify you. Not only will you know how much you can afford, it tells your seller you are serious, ready, and able to close the deal.
If you are coordinating closings, the closing agent will arrange the transfer of funds from the sale of your current home to the purchase of your new home to occur on the same day.
If your closings are not in line, your loan officer will need to structure your new loan with you temporarily carrying both two mortgages if you qualify.
Organize Your Priorities
Watching home improvement channels offer helpful ideas, but the shiny, bright objects can skew your real priorities. Will you love the open design with new appliances in a new home so much you don’t mind an extra 30-minute commute each way? Is a two-story in the right neighborhood and price point a good compromise to the rambling ranch you fancy?
In real estate, the function is more practical than form usually. You can spiff up and even add to a property in many ways, but you can’t move your location 15 miles closer to your daily destination. Current design trends add fleeting value now, but functional aspects are more likely to add greater strength to your long-term resale value.
Good Bones versus New Paint
It’s crucial to step away from your emotions and desires for buying your next home. It’s critical to evaluate the property through the eyes of both an appraiser and home inspector to buy the right home that won’t bite back. The age of the house, appliance, roof, HVAC, and mechanicals such as pool and spa equipment is critical to your decision-making process.
If the home is relatively new, it’s less problematic than it is for older homes. You want to avoid buying a bunch of deferred or soon-to-be-needed expensive repairs. Zillow also reports that buyers in 2021 are more likely to renovate than make minor upgrades and repairs. One can surmise the blizzard of home improvement programs fuels this trend.
Trends don’t matter at the personal level. You should know what you want and what you want to do. If a turnkey home makes the most sense for you, ignore the trend and buy a house already fixed up.
Look for Hidden Dangers
It’s hard to deny the excitement of buying a new home. But once again, you must let cooler heads prevail and look for trouble spots that lurk out of plain view. With an older home, you have more exposure to repairing failing sewer lines. That’s because the roots of mature trees have had decades to push against and invade the sewer line from your home. Look for signs of root growth that may cause problems now or soon after that.
How old is the roof, siding, exterior paint, flooring, appliances, and HVAC system? The price tag for replacing any of those items starts in the thousands. Is the basement prone to flooding? Is there any history of water seeping into the foundation? Make sure you know what your homeowner’s policy covers to avoid shocking news at precisely the wrong time. Seepage is an example of potential damage to a home that is not covered in most standard homeowners’ insurance policies.
Buyer Beware
We advise giving yourself adequate time to purchase a new home. Understand you may not get your choice or close on your first offer. Don’t let the implied urgency throw you off making intelligent, informed, and dispassionate buying decisions. You may love the home and location, but step back and look at it like a seasoned real estate pro when evaluating the deal.
The numbers and the lifestyle need to match up as much as possible. Don’t overpay for pretty and new, and don’t underpay for a money pit fixer upper. Go for the Goldilocks “Just Right” sweet spot whenever you can.
Keep in mind, at the Dickstein Agency, we are eager to provide our NJ Coastal Home Insurance clients with the benefit of decades of experience in evaluating needs using our five decades of experience, expertise, and market access. Because of our longevity, we can secure coverage for coastal residents, which is more challenging now than ever. We understand your needs and how to address them best. Whether you own a home on the Jersey Shore, in South Hampton, or Miami, we’ve got markets to provide you with Property and Liability insurance. We design policies to cover losses affecting the dwelling, its contents, loss of use, loss of rental income, and loss of personal possessions (for those renting out their homes), and personal liability.
About Dickstein Associates Agency
Dickstein Associates Agency has distinguished itself as a leading provider of personal and business insurance in the tri-state area since 1965. We pride ourselves on being advocates for our clients and providing them with quality and affordable coverages. As Trusted Choice™ independent insurance agency, we partner with various national and regional carriers, allowing for flexible coverage for each client’s unique circumstances. For more information on how you can leverage all your insurance to work best for you, and how we can secure the best insurance in the marketplace suited to your specific needs and business objectives, contact us today at (800) 862-6662 or www.dicksteininsurance.com.
