We made our way back to my office to draw up some papers, but by the time we got there, cold feet had started to settle in. It wasn’t the kind of cold feet about whether they liked it enough to buy or not. Rather, it was the sort of hesitation comes when one gets realistic about price, the process of change, and a heavy dose of other assorted thoughts, fears, and realities. Life is limited sometimes. Decisions need to be made that work best for our own best.
I could feel their heartbreak. They wanted what they wanted, but they also wanted what they had. Torn, we put the process on hold. As a result, they lost the opportunity for the property they were looking at.
Their purchase of a new home would have been subject to first selling their current home. In case you are unaware of the terminology, “subject to” means that any offer made on something is only complete if and only if a certain condition is met. In order for my clients to buy a new place, they had to sell their place. Make sense?
When they started to consider selling their place, the flurry of thoughts and realities came smashing through into their consciousness. I wish I could have helped them think through these things before sailing out to see new and interesting waters. Had they had the information I’m about to share, they may have saved themselves the heartache of falling in love with a place only to have it dissolve in the face of present reality.
What could I have done to help them think through things before setting out? Well, I would have had them consider their answers to a list of questions. What are the questions? Well, sit back and check this out...
What’s your current equity in your current home like?
My clients, upon thinking through things between tour and office, had realized that they may not have enough money in their current home to warrant the shift to a bigger and dreamier home. Before journeying out to see new homes, they should have called their lender to determine how much they’ve built up in their property. Had they lived in their house for over 5 years, they may have built up enough equity to made an offer that included payments affordable enough for them. Unfortunately, at 3 and a half years, their situation was not what they needed.
What’s your current financial situation (income)?
Some people want what they want before they can afford it. That’s the kind of thinking that leads to impulse buys and a burden of debt that kills. In the case of my client, they had improved in terms of annual income, but not enough to justify the much higher payment. The lesson: in addition to equity, make sure your income justifies your move.
Is it really “time” for you to move?
Where you live now might be exactly where you want to live forever. In the case of my clients, they also really did like their current home. They’d done work on it to improve it’s comfort for them, and they were scared of changing to something new. In short, the “time” wasn’t right. For you, answer this question for yourself honestly.
What’s the market like? Is it a good time to move in general?
A hot market makes people want to get in on the action. Before you buy, ask yourself whether you are paying top dollar for a home that might not be worth top dollar? The emotionalism involved in a hot market makes for poor decision-making sometimes. It also makes for lost opportunities. Some people like to procrastinate the sale of their home; when they could be selling today making great gains, they way until tomorrow and end up selling for mediocrity. This wasn’t the case for my clients; their home would have sold fast. But, asking yourself if it’s good for business to sell is a good question before journeying out for a new home. Be sure to ask your Realtor what the current conditions are before even getting into the car.
What are the current interest rates like?
Even though interest rates can be a boring and confusing process, just remember that low rates help you buy more, and they help you sell your home quicker too. Who doesn’t like cheap money when buying something exciting and new? If the rates are not the best, then that’s a really good thing to know before falling in love with a place that is beyond your ability to achieve.
Questions have power. They have the power to help determine our best course in life. Before going out and looking to buy a new house, before falling in love with the impossible “right now”, make sure you have answered some of these with as much honesty and due diligence as you can. Doing so may just save you a ton of heartbreak.