Let’s talk about house hunting. We recently bought a house (photo shown below) and I thought it would be perfect to share some tips on determining whether a house is a good investment or not. I recently shared that we sold our Pittsburgh home and also gave you tips about selling your house. I also talked about purchasing a home in this post: on whether you should buy or sell first. If you’re all caught up, let’s get to the house hunting part! These things really helped us narrow down our choices and ultimately pick our new home.
First off, don’t mind the end of winter gloomy look. The trees haven’t sprouted leaves and the front yard needs some love. We are also replacing the garage door. The previous owners were going to replace it and have ordered the garage doors. However, we asked for a credit instead – so we can pick the garage door ourselves! Also replacing the front door stoop railing eventually. And I cannot wait to paint that faded red door a black color to make it modern!
Now let’s get back to our house hunting thoughts. If you’re wondering about a house whether it’s really worth the price… or if it is indeed a good investment, read on.
Here are some things you can look at to help you decide:
- Ask your realtor for a market analysis. It’s part of their job and they have the access to systems that show comparable houses, recently sold properties in the area, all the way to how much they sold. So don’t hesitate to ask your real estate agent!
- If you check Realtor.com, you can see three home value estimates from three reputable automated valuation model (AVM) providers.
- There’s one trusted by major mortgage lenders and financial institutions – perfect for making sure the house will pass the appraisal. Because of the high demand/boom in the real estate, many sellers now are overpricing their properties. If the appraised value is less, then that’s not a good thing! First off, lenders will only lend you the appraised value of the house and NOT the asking price. That means you’ll have to pay the difference in cash. The other thing is, when the real estate market normalizes, the value of the house will most likely go back to normal. And if you want to sell the house, that could potentially be a loss or you’ll have to wait until the market goes back up.
- The other AVM I like uses collateral and mortgage risk technology. This is great if you are planning on reselling in the future. It helps you assess if the property value is steadily increasing or if it’s a high risk.
- I also like viewing properties on Zillow.com because right next to the listing price, you can see the Zestimate – an estimated value Zillow provides based on a variety of data models that they use!
- When you’re looking at a house listing, make sure to check the price history of the house AND the neighboring houses too. They can also be telling in terms of price and risk factors! How many times has the property gone down in price? How long did it sit in the market?
- Lastly, check the property on Google Maps and make sure to check the satellite view too. Sometimes, it can show you information you may have overlooked that can help you decide even before viewing the house. For example, before we even looked at a house in person, we saw on Google maps that it was next to a cemetery. While some people are fine with it, majority don’t want to live next to one. So in our case, if we plan to sell in the future, then we are narrowing our potential buyers.
These tips are just some of the factors you might want to consider when it comes to the VALUE of the houses you’re looking at. Look into this guideline once you’ve narrowed down your choices based on your “musts”, condition of the house, repairs needed, etc. And I’m gonna have to say this, emotion ALWAYS plays a big part in our house-hunting decisions. And while that’s fine to some extent, make sure to keep your emotions in check and be smart when ultimately deciding on the house, just to make sure you’re not losing $$$ in the house you choose.
Better to go with a house that needs some love in a better location/higher property value, than a fully remodeled home in a bad location. There are some exceptions that may involve some risk. But remember, you can always change the house, but you can never change the location! Unless of course if it’s a mobile home, hah! You know what I mean!
Hope these tips help you in your house hunt or bookmark it for the future!
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