Figuring out how to buy a house is no small feat—particularly since the rules keep on changing. So even if you’ve bought a home in the past and feel like the process is old hat, watch out: What worked in 2017 might not fly in 2018. It’s a whole new real estate world out there!
In an effort to prepare you, here are some of the new rules on how to buy a house this year. You will face new tax codes, an onslaught of tough competition, and more that will require you to hone your home-buying skills more than ever. But knowing what awaits you is half the battle. Check out this refresher on how to buy a house in 2018.
1. Know how the new tax codes will affect you
New year, new tax code! Although the recent tax reforms have stirred up concerns that they’re putting homeownership further out of reach for many Americans, the reality is more nuanced than that—and shouldn’t deter home buyers from making the leap.
For instance: In 2018, homeowners can deduct mortgage interest on loans up to $750,0000. That’s down from $1 million, but keep in mind that, according to realtor.com data, the median list price for a home is only $270,000.
Bottom line: Don’t give into vague fears about the new tax code without doing your homework and understanding how it affects you.
2. Prepare for some cut throat competition
While housing inventory continues to be some what low, the days of multiple offers are still in play. But not in every situation.
In January of last year, only 23% of all home purchases were made with all cash with no mortgage, according to the National Association of Realtor®’s Confidence Index Survey Report. These buyers have the edge since they don’t have to secure financing, so they’re particularly appealing to home sellers. But that doesn’t mean it’s hopeless.
While cash is king, it’s not always the end all be all to writing a winning offer.
One way to get the edge over all-cash buyers is to write a letter to the seller about yourself and your family to make your situation more personal. This could steer sellers in your direction, especially if it means choosing you over a buyer who might tear down the home and turn it into a new development.
3. Get street-wise about what you read online
We’re not knocking “For Sale” signs planted in front lawns; however, these days perusing real estate listings online on sites such as realtor.com is par for the course. Yet while it’s a definite perk to be able to shop for homes on your laptop or phone, it would be naive to instantly believe everything you see.
In the same way you’d be skeptical of that online plea to raise funds for cute puppies, you should be suspicious of real estate “offers” that could be thinly veiled attempts to steal your identity or scam you out of money.
So how can you tell? Here are some classic red flags:
- Offers that sound too urgent (e.g., “available at this price for only today!”)
- Listings asking for personal information such as your Social Security number
- Home sellers or listing agents who are “out of the country” or otherwise unavailable
4. Don’t get suckered by home staging
During the past several years, more and more sellers have opted to incorporate at least some level of staging into their homes: Think bringing in furniture (or taking it out), storing clutter, hanging new wall art, and removing personal items. Nearly a third of buyers are more willing to overlook property faults in a staged home, according to a survey by the NAR.
A staged home can help you visualize yourself living there, but don’t let it deter you from checking on the basics. For example, that farmhouse sink might be lovely to look at, but a leaky faucet or slow drain could portend plumbing problems you should not ignore. Perfect rugs or a fresh coat of paint might be covering stains or water damage. Don’t be shy about lifting, moving, and testing whatever you need to in order to know a house is in good shape—and if something big isn’t up to snuff, ask the seller for repair credits or to lower the home’s price.
5. Consider a fixer-upper
Keep your eyes peeled for the ugly ducklings, aka fixer-uppers.
Don’t rule out houses that need work, even if you are not up for doing it yourself. The lower price plus the cost of renovations usually adds up to less than the price of a completely renovated home. Plus there are many loans available that can assist with the renovation costs.