I bought a house in a scorching-hot market. Here are the 4 things I learned.
When my husband and I purchased our first home, it was all about price. We needed something we could afford. The house we bought wasn't in a great neighborhood and it was small enough to clean by spinning around a couple of times, but I loved it because it was ours.
By the time we purchased the house we are currently moving out of, we were in a different position. We had enough money to be choosy. It isn't huge, but the house we ended up buying is custom-built and has loads of neat architectural details.
When my husband accepted a job out of state a couple of months ago, I wasn't worried about selling our current house, but knew that buying a home was going to be tricky. And boy was it. A property would barely hit the market before someone else snatched it up.
Here are four things I learned about buying a house in a scorching-hot market.
1. It's about head over heart
I purchased our last home using my heart. There were so many houses on the market that I could reject a home because I didn't like the slope of the backyard. That was not the situation this time around. We're moving to a popular college town where there are far more buyers than sellers.
remained in our home state while my husband shopped for a house in the new state. The closest I came was a series of photos and one FaceTime call. Still, the fact that there's so little for sale hammered home the reality that we had to be smart and view this home purchase as a business transaction.
The house we purchased was on the market for nearly three weeks. It's a perfectly nice home (from what I can tell) but the landscaping is non-existent. Until we can do something about giving the house curb appeal, I'm committed to referring to the yard as Death Valley.
Buying a home? The housing market may finally be turning in your favor
My ever-practical husband appreciated the house because it's only seven years old, everything is still relatively new, the neighborhood looks nice enough, and the interior has been cared for. What sold me is that we could buy it for under market value, making it a good financial decision.
The first thing I learned about buying a house in a frenzied market is that it's possible to make a smart financial move if you're willing to let go of your fantasy dream house.
2. The right team can make all the difference
We've bought and sold enough homes over the course of our marriage to teach me the value of working with great professionals. Everyone – from your real estate agent to the person who inspects the property – needs to be someone you can trust.
>It was shortly after the Federal Reserve raised the interest rate for the second time this year that we buckled down and got serious about buying a house. Once the rate went up, the price we were willing to pay for a home went down. I did not want to get caught up in a bidding war, overpay for a house, and regret it later.
I told our lender how much we were willing to spend, and even though we qualified for more, she supported the plan. In fact, she even reminded me of it at one point. Our real estate agent knew our budget and never once urged us to raise it or even tour a property that was over budget. That's how I knew we had the right team. They made it easy for us to be financially responsible.
If a loan officer or real estate agent tries to talk a buyer into spending more than is good for them, that buyer is working with the wrong people.
3. Buyers have to be ready to walk away
This was the first time we've ever searched for a home with a backup plan to rent if we couldn't find anything. Otherwise, we would have been desperate to buy a house. And desperation leads to poor financial decisions. I realize that rents are also high right now, but I'd rather be locked into paying too much in rent for a year or two than paying too much on a mortgage for 15 to 30 years.
e had to imagine the worst possible case scenario, which was getting priced out of the market. If that was the outcome, we were ready to walk away from house hunting for a while. We'd take the money we made selling our current home and hole up somewhere until the market cooled.
I learned that sometimes, walking away from an overheated market is the smart move.
The Daily Money: Get our latest personal finance and consumer news in your inbox
4. Imagination can come in handy
I had a weird reaction about five minutes after the offer on the new house was accepted. It felt like buyer's remorse. I knew we didn't overspend, so it wasn't financial. I think it just hit me that this house was not nearly as nice as the home we just sold. It almost felt as though we were going back to square one.
My husband started talking about all the things we could do to the new house, including turning Death Valley into a lush yard. After a few minutes of listening, I found myself getting excited about what the house can become and the role we can play in its transformation.
A day or two later, I sat down and listed what I thought would make both the interior and exterior of the house fit my ideal. Creatively speaking, it's been fun. If we stayed in our current home, there are no improvements left for us to make. Moving to a house in need of TLC leaves room for us to personalize it.
In a tight housing market, it's easier to buy a home if you can look past flaws to see potential.
We may not have been able to purchase a home that makes my heart sing in this topsy-turvy housing market, but we were fortunate enough to buy one that we're going to have a lot of fun making our own.
The Ascent's Best Mortgage Lender of 2022
Mortgage rates are on the rise — and fast. But they’re still relatively low by historical standards. So, if you want to take advantage of rates before they climb too high, you’ll want to find a lender who can help you secure the best rate possible.
That is where Better Mortgage comes in.
You can get pre-approved in as little as 3 minutes, with no hard credit check, and lock your rate at any time. Another plus? They don’t charge origination or lender fees (which can be as high as 2% of the loan amount for some lenders).
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.
The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.