Below Budget Buying - Oro Valley Real Estate
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Buyers who have been preapproved for a mortgage may be tempted to shop for homes at that lender allowance amount. But real estate pros and financial experts advise setting a limit somewhat lower than that figure.
House hunters should look at homes with list prices that fall below the top of their price range because they likely will need to leave room in their budget to bid up in the competitive housing market.
If you look at properties that are under your budget, you’ll have room to submit a competitive offer that goes above the asking price.
For example, buyers who have a preapproval letter for $375,000 may fall into the trap of wanting to shop for homes that list for $375,000. But homes often sell for much higher than the list price these days. That could spell disappointment for buyers who continually get outbid. A real estate professional can help them set a more realistic price level to shop at based on their preapproval allowance.
The advice to shop below the top of their budget may seem obvious to real estate professionals, but buyers may still be surprised by how much they’ll have to stretch their budgets to afford a home they want. The temptation to shop at the top of a budget may be even more pressing. The housing market remains competitive and bidding wars are typical.
Financial and real estate experts advise clients to factor in the additional costs of homeownership when bidding on homes, including maintenance costs, utilities, association and insurance fees, and more. Home buyers who get in a bidding war may lose sight of additional housing costs. Even when they are able to stretch their budgets, they need to ask whether they really can afford to do so.