I work with a couple that have been looking for an apartment for-ev-er. Like, if she were pregnant when we started, that child could name all the state capitals by now. And they’re still looking.
They get close to moving forward on a home, and then they get cold feet. They’ve missed out on a bunch of homes that would have suited their needs and wants, because they were afraid to pull the trigger and as a result they were outbid.
We’ve canvassed Manhattan and there are dozens of homes that meet their needs, but for some unbeknownst reason, they can’t make up their minds.
Meanwhile, over the last decade, the median sale of a house in New York has jumped from $380,000 to $675,000, according to Curbed. Big picture, when looking at the market, they’ve lost out on the rising tides.
How to Know If Now is the Right Time for You to Buy
People are usually worried that it’s not the right time or it’s not the right place.
With time, their fear says: This isn’t the right time to buy, period. I’ll buy and then I won’t be able to get out of it for 10 years because the market is too high.
With space, they think, “This space won’t be the right space for me for the long term. It won’t suit my needs down the road..”
But how can you tell if your fears are founded or not, and if they will cost you? How can you tell if you’re in the sweet spot of the real estate cycle? How can you tell if it’s the right time to buy?
The Most Common Unfounded Fear: You’re Overpaying
The first step towards making sure you’re not overpaying is for you to do your research, find a trusted real estate advisor, a broker, who can extract the market trends, facts and data and then share that with you in a meaningful way. The majority of people who purchase do not overpay. It may feel that way, it’s your money.
There are times when, no matter what you buy, it’s hard to actually overpay because the prices are down or depressed. And then there are times where it’s really hard to find something that’s a good deal because you bought it at the height of the market and the home prices are inflated.
When prices are down, people are worried that they’re not getting a good deal, we dissect the trends in that micro market, whichever particular neighborhood is the client’s focus, we synthesize the data, and we discuss. They’re buying at a depressed moment, prices are down, and they’ll be fine.
Some clients have urgent needs, and can’t wait and need to buy even if it is at the height of the market. When the market is in a frenzy and it feels like properties are going to go up and it’s going to keep going up, it can feel like they’re overpaying. They might have to wait longer to get out. It doesn’t mean they’re never going to get out. There’s no crystal ball about real estate, but in general, markets go up and down and with inflation over time, values rise.
What’s crazy is that in the end, the people who are most afraid of overpaying are the ones that overpay. Because they get to the point where they have so much fatigue from waiting that they buy when they need that place yesterday instead of in six months.
How to Face Your Fear of Buying
There are five points you want to make sure you’ve gone over to see if your fear — whether overpaying, committing, or putting down the funds at all — is justified.
- Make sure you’re committed to living in the place you want to buy for at least 5 years. If you plan on leaving in 18 months, it’s probably not the time.
- Make sure your family’s not going to outgrow it. If your kids can share a room now but not in two years, it’s not going to work.
- Do the math to ensure you’re comfortable with the finances. Will you be ok taking on the responsibility of whatever financing or financial burden is associated with your purchase?
- Make sure you don’t have to clean out the bank to make the sale. Do you feel comfortable parting with the liquidity in order to make the purchase? Feeling house-poor is not fun.
- You’ve seen enough places to know what you want. At some point, choosing to not make a decision is the decision, and with the historical path of real estate value, that decision costs you money. So once you know what you want, and you know you have no other reason not to buy, it’s about making the decision.
If you have these five points down, then ask yourself, what are you afraid of, when you know you have the funds but you’ve been renting longer that you care to admit? Then find out what’s really getting in your way.
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