Last year, in the middle of an apartment hunt, my husband and I realized it was smarter to buy a house. We live in New Jersey, well within commuting distance from New York City. The price of living is high for owners and renters, but, turns out, lessees tend to get the raw(er) deal.
Rentals with the features we wanted — a second bedroom, in-unit washers and dryers and parking, OMG parking — were priced at or over $2,900 a month … plus move-in, maintenance, parking, pet fees and more. Homes, on the other hand, were available for a lower-to-comparable monthly mortgage payments — around $1,500 to $3,100, depending on our final price point and how much of a down payment we put together. Plus, we’d build equity. And not pay thousands of dollars to own our cats.
So my husband and I pivoted, unexpectedly, into a house hunt. And the experience was different than I imagined it would be. Here are some secrets I stumbled on as a first-time homebuyer in 2017.
1. Seller’s markets are a thing now
Never offer over list price, we thought. Boy, were we off-base. Turns out, 2008 is long gone and, contrary to what you may have heard, Americans are buying houses again. Our area was full of millennials fleeing the city to have 2.5 kids and a dog. Plus, there were countless investors gobbling up starter homes to rent at exorbitant prices.
We initially passed over a few nice properties because my husband, in particular, couldn’t fathom offering more than the seller was asking. But then we fell in love with a four-bedroom, turn-key house in my husband’s old neighborhood and agreed to bid $15,000 over list price.
Some markets are less competitive, I’m sure — though with mortgage rates and housing prices on the rise in 2018, buyer’s markets are exceedingly rare. Still, don’t balk at your real estate agent if they suggest sweetening your offers. It might have nothing to do with scoring a bigger commission.
2. Open houses are the best way to figure out your market
Of course, you don’t want to overpay for a house either. Online research is great, but real estate listings tell many lies. We didn’t get a true sense of what fair market price in our area was until we started hitting up multiple open houses each Sunday. It made for an exhausting few months, but we needed to see enough three-bedrooms with similar price points, but totally different features, to know how much to offer on the ones that struck our fancy. On that note …
3. You’re going to see some real doozies
During our search, we saw a house with a room full of dirt, an old colonial with an outside shower and chicken coop (not exactly common in Jersey), a Victorian that was quite possibly modeled off the Haunted Mansion in Disneyland and a single-family home with a labyrinthine and seemingly endless basement a la “House of Leaves.” We also visited one house that smelt so bad, we walked in and walked right back out. I mention these experiences because they were very, very discouraging — and had us rethinking our decision to buy. Mostly, because we thought the exercise was futile. Spoiler: It wasn’t.
5. They tell you not to get emotional, but you’re going to get emotional
Don’t get attached, they say. But, really, your Realtor, broker, lawyer, etc. should just tell you to prepare for disappointment. For starters, you’re human. It’s hard not to get caught up in the thrill of the chase. Moreover, no one spends that much money on “meh.” If you don’t walk into the house and immediately start mentally decorating its walls, it’s probably not the one for you. Having said that …
6. There’s no such thing as the perfect home
Unless you’re on an unlimited budget or building from the ground up, prepare to compromise on a want or two. Our wish list included three-bedrooms, a driveway, garage, central air, fenced-in yard and a decent-sized, though not necessarily finished, basement. We ended up with three-bedrooms, a driveway, central air, fenced-in yard and a decent-sized, but not finished basement. If we held out for a home in our price range with all that stuff, plus the garage, we’d probably still be looking.
7. When you get the one, it’ll feel like the one
Here’s another cliche your agent or broker will throw at you about 800 times during your house hunt, especially if you lose out on a house or two. But they’re not lying. Sure, hindsight is 20/20, but I’m happy we lost out on the first house we bid on because, beautiful as it was, the property was way too big for us. And, while it was in our budget, the cost of heating, cooling and furnishing that house would have been stressful. It was telling, too, that my husband and I were half-disappointed/half-relieved when we found out that property had gone to another bidder.
The decision to rent or buy is personal and contingent on your financial health, local market and penchant for cleaning gutters. But when we learned our offer was accepted on our now-home — a ranch house that’s small, but in mint condition — we were (and still are) ecstatic. So are our cats. And our new puppy. And that’s how it should be.
Currently on a house hunt? We've got a full guide on how to buy a home here.
Image: Courtesy of Jeanine Skowronski
Get essential money news & money moves with the Easy Money newsletter.
Free in your inbox each Friday.