While the pandemic-induced recession was short-lived, you never know when a recession is likely to return. That’s why it’s important to understand what to expect when buying property during a recession.
In truth, you need to give more thought to buying your house. Whether it’s your first home or your second, it’s best to anticipate the potential challenges beforehand for your purchase to go smoothly, especially in a recession.
Vancouver real estate expert Lisa Chandler shares some of the best steps you can take.
Know what you can afford.
Buying only what you can afford is a straightforward concept. However, it’s something that many home-buyers forget for various reasons. You may find yourself throwing all caution to the wind when you find a house that ticks all the right boxes. Or, because properties are generally priced low in a recession, you may be tempted to splurge on what seems like a good bargain, even when it’s beyond your budget.
Needless to say, it’s still wise to stick to what you can afford. Ideally, your potential mortgage payments should not go beyond 30 percent of your monthly income. You also have to take your debt-to-income ratio into account. And it’s definitely good practice to get pre-approved for a mortgage as it keeps your budget in line while allowing you to snap up a great deal on a moment’s notice.
Identify your priorities.
It’s smart to know what you’re really looking for when buying property to avoid getting sidetracked by all the possibilities. For instance, the right location is a must for many. Those buying family homes need proximity to schools, offices, and other conveniences, while commercial property investors want to be well-positioned to attract renters. Knowing your location of choice, therefore, allows your search to be a more targeted one.
Readynest suggests narrowing down your priorities to three to five factors. Doing so guarantees that you don’t waste your time looking at too many options and end up settling for less than what you want or need.
Learn the finer points of your purchase.
In a recession or slow housing market, there are more motivated sellers. This means that, as a buyer, you usually have the upper hand, so you have better chances of negotiating lower prices or special contract terms.
You may also encounter a lot of properties that are being sold “as is.” These may seem like bargains on the surface, but you do need to be very careful about buying property as-is. Essentially, this means that sellers wash their hands of potential defects that the property might have, so you may have to deal with problems like a pest infestation, mold or mildew, a leaky roof, etc. on your own. It’s a must, therefore, to have the property thoroughly inspected before any commitments, as well as to consult with an attorney. Ultimately, a good as-is sale depends on how the benefits outweigh the pitfalls.
Set aside funds for other expenses.
When you’re buying property, it’s safe to say that you probably have your down payment covered. However, know that your out-of-pocket fees do not end there, so it’s important to also have ready funds to cover other incidentals. Generally, you can expect to pay closing costs, home inspection fees, mortgage and/or homeowners insurance, property taxes, and more.
Remember that buying a new house (and moving into it) should be a positive experience. When you know your priorities and your limits, as well as do your due diligence, you can be sure that the property you purchase is the right one.
Interested in buying a home in the Vancouver area? Then it’s time to connect with real estate pro Lisa Chandler of Macdonald Realty. Call 604-868-8006 to get in touch today!