The allure of downtown living is obvious: being in close proximity to work, shops, eateries, entertainment, and just about every other handy amenity is the height of convenience.
But along with the advantages of downtown living comes the tight living spaces, the sky-high prices, and even bidding wars.
Buying in urban centers definitely poses both benefits and obstacles, but if you’re well prepared, you can land the perfect abode without becoming house poor and losing your patience.
Have Your Financials in Order
Before you even start pounding the pavement in search for a home, it’s critical that you make sure that you’ve got a good handle on your finances. Make a visit to your lender first to find out exactly how much you can comfortably afford, and how much of a loan you would likely get approved for.
Having a pre-approval letter in your hand when making an offer will help you get a leg up on the other buyers vying for the same property. In fact, most sellers in a hot market probably won’t even consider your offer without one. Once you’ve figured out your financials, the house hunt can begin.
Get Ready to Move Quickly
If you’re looking to buy in a busy urban city, be prepared to move fast. Homes are usually snatched up just as quickly as they’re listed. In larger centers that are a little short on inventory, the competition can be fierce. In situations like these, multiple offers and bidding wars are the norm.
That’s why it’s crucial that you come into the game prepared and armed for what lies ahead. You basically need to be ready to jump in full throttle without hesitation, which is why getting your finances in order beforehand is such an important step.
The buying process can be extremely fast in many urban centers across the country, such as San Francisco, Seattle, New York City, and so on. While some smaller cities might have markets that are more moderately paced, the larger housing markets tend to move incredibly quickly.
Adapting yourself to handle such a speedy, competitive housing market can help ensure that you don’t get caught up in an emotional whirlwind of putting in reckless offers that will cause buyer’s remorse the day after. Before you dive head-first into a hyper-swift real estate market, understand the mistakes you might be vulnerable to making, and what red flags to watch out for.
Find Out the Exact Market Value of Homes in the Neighborhood
Knowing the fair market value for specific homes in the neighborhood you’re looking in is critical before you get caught up in a bidding war. Many buyers fall head over heels in love with a home, and lose touch with the logic behind the prices they’re willing to offer the seller just to come out the winning bidder.
Before getting involved in such a situation, it’s important to find out what the true value of the home is, and set a limit as to how much you are willing to offer. Without this number in front of you, it can become easy to go well past your cap.
Not only do you not want to pay too much for the home, you also don’t want to risk being denied a mortgage because the home is not appraised at the amount you agreed to pay for it. Lenders will send in a professional appraiser to value the home according to current market conditions.
If an under-appraisal comes in, your lender will likely not approve you for the loan amount requested. For instance, if the appraisal comes in $50,000 lower than the price you agreed to pay, you will have to come up with the difference if the bank declines to provide you with more than the appraisal amount.
Be Open Minded About Various Neighborhoods in the Area
It’s easy to fall in love with a certain pocket in the city, but keep an open mind about other areas in the neighborhood. If there aren’t many homes to choose from or the listings are way out of your price range in the area you’ve set your sights on, you will be setting yourself up for disappointment when you can’t find anything.
Instead, keep an open mind about other neighborhoods in the city that are similar, and offer the same types of features and amenities, such as close proximity to shops and public transportation. Scope out each neighborhood to get a feel for each, and see how they would fit in with your lifestyle. By keeping a few neighborhoods on the list of potentials, you’ll be opening up yourself to greater opportunities and choices.
Factor in the Cost of Transportation
Living downtown is ideal for those who don’t have a vehicle and depend solely on public transportation to get around. In fact, one of the biggest appeals of living in urban centers is the ability to walk, bike, or bus it to work.
However, if public transportation is on the agenda, you should factor in the cost for such convenience. Homes in city centers tend to be priced at a premium for being so close to public transportation. You can offset this price somewhat by living along a bus route rather than being directly on top of a metro station, for instance.
And if you’ve got a car, you’ll need to park it somewhere, and that typically comes with a steep price tag. Parking in downtown cores tends to be very expensive, so it’s important to factor in these prices in the particular neighborhood you’re looking at before you decide to buy a home.
If the property you buy doesn’t come with a driveway, you’ll likely have to either rent or buy a parking spot. Depending on where you’re buying, you could be spending anywhere between a few thousand dollars in smaller centers to up to $100,000 in hotter markets like New York or San Fransisco.
Living downtown certainly has its perks, but just like any other buying situation, it’s important to go into the game fully prepared before you sign on the dotted line.