Megamansion “The One” was listed for $295 million in Los Angeles recently, making it the most expensive property of all time in the US. The property has everything from a 400m running track, panoramic views of Los Angeles, 25 foot ceilings, and even a club and a full service hair salon. This house is just one of the many luxury properties that have gone on sale. 2021 was a record-breaking year, with sales increasing by a whopping 35% compared to 2020 for such properties.
The increase in sales reflects the increasing value and potential profitability that the uber-wealthy see in these properties. But just because you don’t have $300 million to drop on a mansion doesn’t mean you can’t play it smart and maximize the value of your money when buying your first property. Here are some useful tips to take note of to make sure that you’re spending your money wisely.
Understand Your Mortgage
Chances are, you’re going to have to take out a mortgage to buy your house. However, many people forget one crucial factor when it comes to mortgages—the interest rate. Because of this rate, you will end up paying your bank more than what your house was sold for. Make sure to calculate a mortgage payoff to make sure you don’t get any nasty surprises when looking at your loan repayments. While you can’t eliminate interest entirely, you can lessen it. Always keep an eye out so you know when interest rates are low. That’s when you can refinance your mortgage to reduce your financial burden.
Pick The Right Real Estate Agent
Your real estate agent is going to be the key person in this monumental transaction. Make sure you pick someone who is knowledgeable, trustworthy, and reliable. Get referrals from other new home buyers and check online for reviews. Take care to meet at least two or three agents so that you can compare their skills. Guiding a first-time buyer through the process often requires a particular set of skills, so make sure your chosen agent has experience in that area. Remember, a bad agent could lead to you losing a lot of money.
Know Your Deal Breakers
There can be so much to think about when choosing a new home—the location, the size, the type, and much more. While you’re probably not going to find your perfect home on your first try, unless you’re really lucky, you can get pretty close to perfection if you know what you want. Make a list of things that you absolutely must have—proximity to the city, an extra bathroom—and absolutely cannot have—a noisy neighborhood or a small kitchen. Don’t budge from this list, no matter how tempting the realtor or seller makes it sound. You will regret it in the long run. Remember, you’re going to live in this home for at least 5 years. Don’t skip on the essentials in exchange for a minor feature you aren’t going to care about in 3 months.
Hire a Professional Inspector
Never take your seller’s word for the condition of the house you’re looking to buy. In fact, you shouldn’t trust anyone else except for the person you’re paying for their opinion. Test for things such as build quality, materials, pests, mold, and other issues that will become a nightmare if ignored. Your inspector might even uncover serious problems such as structural weaknesses that could make you reconsider your decision to buy the house. Don’t forget to attend the inspection as well so that you can learn how to keep an eye out for problems in the future.
Think About Other Costs
The actual cost of the house is far from your only expenditure. Things such as renovation, your agent’s commission, taxes and duties, HOA fees, and other maintenance costs can add up quickly. Make sure to take all these into account when planning your budget so that you know exactly what you can afford.
Don’t Rush
Buying your first home is an exciting time for anyone. However, buying a house is a major expense and isn’t something that should be rushed into. Carefully consider all the pros and cons of your decision before making it. It’s a significant commitment that is going to tie you down for the foreseeable future, so it shouldn’t be something you’re going to regret. And don’t worry if you find you aren’t able to buy a house right away. There’s no set time for this decision. Taking a few more years and doing it right is infinitely better than rushing into it and having to live with the consequences for potentially the rest of your life.