Here’s how to avoid overpaying when buying your home.

Unlike big corporations, individual people don’t have billions of dollars to throw at their marketing campaigns. So what can people do to avoid overpaying when it comes to buying their homes?

Here’s the thing: In real estate, time fixes most mistakes. We spoke to hundreds of homeowners during the housing crash, and when we did the math, the answer became clear—don’t sell, stay in the house. Everyone needs somewhere to live, after all, and living under an overpass is no plan B. Their homes might have gone down in value, but they don’t have to take the loss if they can just stay put. Over time, home values can go up, and indeed, since the housing crash, that’s all everything has done. The highs today have exceeded even the highs back then.

Now, if you’re in a situation where you have to move, such as for a job relocation, that’s a bit trickier. However, we have helped a lot of people turn their homes into investment properties and rent them out, which allowed them to move.

“If you didn’t have the money to buy it, you probably won’t have the money to sell it. ”

Something else to consider is that you’re paying down the loan balance every month; if the market shifts and the value drops, you’ll eventually be able to pay it down to zero, and then you can sell it. Additionally, rates for 15-year loans are amazing, and if you already own a home, you could refinance to one.

Having a 15-year loan will help you build your equity quickly compared to a 30-year loan. Back during the housing crash, most of the people who went into short sales had 30-year loans with really low or no down payments, meaning they started with no equity at all. Then the market shifted, and those people suddenly found themselves $30,000 underwater. 

It’s not rocket science: If you didn’t have the money to buy it, you probably won’t have the money to sell it. Many of those people either had to go into short sales or rent out their homes until the market came back. This second option wasn’t actually a bad thing for many people; I know some who ended up converting their primary residence into a rental and went on to buy two or three other properties that were either in short sale or foreclosure, which they could then turn into rental properties as well.

If you have any questions about the market or buying or selling homes, don’t hesitate to reach out to us. We’d love to help you.