Everyone loves to talk about real estate. Even before I got into real estate, I was obsessed with looking at homes and keeping track of the cost of homes in my city. To be honest, I have been obsessed with real estate since I rented my first home in college. The American pop culture is obsessed with homes and real estate. Just turn on your television and you will see shows that are all about buying, decorating and investing in real estate. With the internet, it is fairly easy to determine the ballpark cost of homes thanks to realtor and housing websites. While these shows are great for inspiration, they don’t do a lot to help set cost expectations for buying a home. What are the true costs of buying a house, you ask? That answer is not as glamorous as “what color should I paint my living room”, but just as important. (The answer is gray by the way).
With all this information at our fingertips, you would think buyers and sellers would have a realistic idea about the cost of buying (or selling) a home. In many cases, if they have been looking in the right places and have been talking to the right people (real estate professionals, lenders, etc), consumers do have a realistic idea of the cost of buying a home. However, thanks in part to well meaning parents who “know the market”, home flipping shows, and websites such as Zillow, many potential home buyers do not.
Many people (sorry parents) have the misguided idea that there is a “deal” to be had on every corner in the hottest areas of town. Chattanooga was not hit very hard by the housing market crash in 2008, so we did not have as many foreclosures as the rest of the country. And 2008 was ten years ago. Our market has been strong for the past 6-8 years, to the point that homes are selling, in most areas at or just below asking price (96.4%) . Asking prices are not skyrocketing as they did during the years leading up to the crash, and banks are not lending on above appraisal values, so home list prices are close to home values.
What does this mean for a buyer? When setting the expectation for buying a home, being pre-qualified at or above the home price you are looking at puts you in the best position for success with an offer. The median home price in Chattanooga is currently $189,450 and being prepared for a full price offer (or above in some cases) is a must. The additional costs of purchasing a home include down payment, home insurance, inspection, appraisal and closing costs.
Closing costs can be negotiated to be paid in full or partly by the seller, but the remaining costs must be paid by the buyer. Home insurance is based on the value of the home and should be well researched. The down payment is determined by the type of loan, the cost of the loan, the credit history of the buyer and the mortgage company. Down payments can range between 0 and 25% of the sale price, with FHA requiring 3.5%.
Buying a home is like anything else, you don’t want any surprises. Working with an experienced and knowledgeable real estate agent who will sit down with you before you begin to tour homes and set your expectations in order to insure success in your real estate endeavor is an absolute must. Our team of dedicated buyer specialist will meet with you face to face for a buyer consultation. Contact us today. info@chattanoogapropertyshop.com
