How to Not Overpay for Your Home
How can you avoid overpaying for your home? This is every Silicon Valley home buyer’s fear! Here are a few quick things to keep in mind, and links to articles that I’ve written on other sites of mine which address each topic.
- Get pre-approved upfront. Not just pre-qualified, but pre-approved. You must do your part upfront in order to know your own true budget and not find yourself at an emotional disadvantage, which can happen if you’re not well prepared! 99% of the time, getting a pre-approval will cost you nothing and will provide you the boundaries that you want and need for yourself. This puts you on solid footing going into your house hunting.
- Set your priorities first, then go house-hunting. If you do it in reverse order, you again won’t be on solid footing and will be more likely to make an emotional or impulsive decision that could cost you in the long run.
- Try to find the balance between seeing too few homes (being overly impulsive) and too many (indecisive or unrealistic). If at all possible, try to put yourself in the reasonable middle between the two extremes of impulsivity and extreme caution in home buying. For most people, that means shopping for at least a couple of weeks but not more than 3 months. At either extreme, you risk overpaying either because you are rushing too much or because you have let it drag on so long that in your exhausted state, you risk overpaying.
- Don’t just view the comps online and assume that you now understand the market value of the home you like – the “auto” programs are often wrong and may be missing crucial information. For example, the county records may include transfers between parents and a grown child, between spouses at a divorce, or a refinance – all of these can be artificially low. Instead, go over the comps with your Realtor and get more information. Find out what the private agent comments say, if the commission offered to the buyer’s agent was low or high (it impacts showings), if the home was hard to see, if there were any incentives, etc.
- Part of not overpaying for your home is not overpaying for your loan! Get educated on lender terms so that you can avoid “junk fees”.
- This may be obvious, but hire a great Realtor who’s truly looking out for your best interests and who wants to help you to not overpay. It may not always be possible to get a bargain – but a good agent will try to save you money along the way by assisting you with information on contracts, inspections, contingencies, and many other important facets of buying a home in Silicon Valley. It is a sophisticated process, so hire well!