Buying a house can be difficult, especially when the rules keep changing. When it comes to purchasing a home, the methods that worked in the past now no longer apply. Today, there are new tax codes, tougher competition and more that will require you to be on top of your game. To help you prepare, Realtor.com offers five tips to buying a house in 2018.
1. Know the new tax codes
Recent tax reforms shouldn’t keep you from purchasing your dream home, you just need to be aware of all of the nuances and how it will affect you. In 2018, homeowners can deduct mortgage interest on loans up to $750,0000, down from $1 million. However, keep in mind that Realtor.com data shows that the median list price for a home is only $270,000. So, this change is expected to affect just 1.3 percent of new mortgages.
2. Prepare for competition
With housing stock at record lows nationwide and multiple offers also returning in many areas, one trend that is emerging is all-cash buyers who are offering full price or more and waiving appraisals and contingencies. In January 2017, 23 percent of all home purchases were made with all cash with no mortgage, according to the National Association of Realtor’s Confidence Index Survey Report, and some experts say that number will increase this year. These buyers are particularly appealing to home sellers because they don’t have to secure financing. But don’t fear. One way to get the edge over all-cash buyers is to write a personal letter to the seller about yourself and your family. This could steer sellers in your direction, especially if it means choosing you over a buyer who might tear down the home and turn it into a new development. Another strategy is to ask sellers about their own goals in the sale, and then help meet those goals. For example, if you offer to close in a few months, you could stand out by being flexible.
3. Get street-wise about what you read online
Although it’s normal to peruse real estate listings online, never believe everything you see. Always be suspicious of real estate “offers” that could be attempts to steal your identity or scam you out of money. Some classic red flags? Offers that sound too urgent; listings asking for personal information such as your Social Security number; and home sellers or listing agents who are “out of the country” or otherwise unavailable. Also be cautious of incoming emails. According to data from the FBI, criminals attempted to divert nearly $1 billion into their pockets in 2017, up from $19 million in 2016. This crime usually begins when hackers send you an e-mail that appears to be from your real estate agent or a title company. So, if you receive a message requesting information you hadn’t previously agreed upon, or asking for a quick change in plans, call the person or company involved to be sure.
4. Be cautious of home staging
During the past several years, more sellers have chosen to incorporate some level of staging into their homes by bringing in or taking out furniture, storing clutter, hanging new wall art and removing personal items. Almost one-third of buyers are more willing to overlook property faults in a staged home, according to a survey by the NAR. A staged home can help you visualize yourself living there, but don’t let it deter you from checking on the basics. For example, that farmhouse sink might be lovely to look at, but a leaky faucet or slow drain could portend plumbing problems you should not ignore. Perfect rugs or a fresh coat of paint might be covering stains or water damage. Don’t be shy about lifting, moving, and testing whatever you need to in order to know a house is in good shape—and if something big isn’t up to par, ask the seller for repair credits or to lower the home’s price.
5. Consider a fixer-upper
There is more competition and demand for already renovated or move-in ready homes. Yet there is a way to turn this to your advantage: Keep your eyes open for fixer-uppers. After all, the lower price plus the cost of renovations usually adds up to less than the price of a completely renovated home. Keep in mind that the best fixer-uppers require renovations that are merely cosmetic, meaning they don’t involve major components of the house such as the foundation or structure. Cosmetic work might consist of a kitchen or bathroom remodel, new floors or siding repair. Hire a contractor to come through and give an estimate on the cost of the work so you can crunch the numbers.