Spending More Might Save You Money When Purchasing a Home
I want to first say, loud and clear that I am not advocating for spending beyond ones means. Rather, the thought comes by knowing that people will look at bargained price property without thinking long term at the costs of dollars and time that it will take to make the home "liveable" for them.
If at the end of the day, if the bargain costs you capital and time, and you could have bought a slightly higher priced home, at the current rates, it could save you cash in the long term. It could definitely save you headache.
This thought comes from the voice of experience, not just in selling homes, but a personal observation as well.
"Don't you just love a bargain!" As I write, I can hear that Christmas Tree Shop jingle in my head. I can so relate. I love to get a bargain. Obviously, others do too. That's what makes the jingle and it's store so it is widely popular.
Real Estate is NO different. Everyone dreams of the "deal".
I grew up in a family of do it yourself folks and contractors. It has always been easy for me to look beyond an imperfection, seeing the way it will be transformed with a little work. The other thing I do know is that, a "little" work most times means a lot money. At the very least it will cost time, and in many cases lots of it.
How Spending More Can Sometimes Save You Money.
Before getting out there to look at that home, you need to be prequalified. That's not news to anyone these days. The lender will look strictly at numbers and make an educated and strategic assumption based on those numbers. They will let you know what your purchasing power is. What you can spend up to. I am not a fan of spending the most you can, but staying with in your means and understanding your own personal lifestlye is always the best bet. When a buyer wants to focus on a price range under what the bank says they are good to go for, I am all over that.
But, there are some considerations.
When faced with a choice of two homes, one priced for less because it needs more work, should you go for the lower priced home and plan to put those upgrades in? We are talking about major updates here. Unless one has the capital saved already, it can cost more to save for those updates/repairs, especially considering current home loan rates.
How to weigh the decision?
- Be Serious. I watch a lot of those home improvement shows. You know them. The ones where they can transform a room with just a couple of thousands of dollars. What they don't give you in the transformation cost is the labor involved. If you must get someone else to complete the job, then factor those costs in!
- Do It Yourself vs. Contractor. My brother says this best. Yea, he can put a roof on. But he's not a roofer. It will take him longer than a professional in that field. In that time that he takes to figure it out, he can work at his own job and make more money doing what he does best, leaving the repair to the pro. There is something to be said for that.
From Experience. My First Home. Needed everything. Of course the family came through with all the essentials, getting those up to speed, but the cosmetic upgrades, kitchen etc.. well, that was on me. It took me a long time to save the cash for a remodel. I figured out over the years that it took me to save, if I had only spent a little more, right out of the gate, I would have had what I wanted sooner. I would have been happier sooner. Now I am wiser.
Again, Spend according to your lifestyle,
but, remember that a bargain is not always a bargain!