To many, owning a luxury home is just an elusive dream, given the extraordinarily high prices that this type of property often goes for. With smart planning, however, your dream luxury home can be within your reach even with a relatively tight budget. Here are some tips to help you make this happen.
- Do your research to make sure you can afford the mortgage.
Your dream home can easily become a nightmare if you have to pay a bigger mortgage than you can afford. Before going any further, crunch the numbers to see how much down payment and monthly mortgage amortizations you can afford with enough left over for your other wants and needs.
- Shop for homes during the off season.
Off season in real estate is generally in the winter, when the weather is too cold and gloomy to look for new homes. Additionally, most buyers pause searching for homes during the holidays and turn their attention to family activities. With fewer competitors, you get a better chance of getting the home you want at a good price. Additionally, luxury home owners may be looking to sell their property before the new year starts for tax purposes.
- Be on the lookout for sellers who may be motivated to sell as quickly as possible.
In a seller’s market, homes are sold in as fast as two weeks. One that has been listed for three months or more without price adjustments could be overpriced. Keep tabs on homes like this and check for price changes. Ask your real estate agent for help in finding out if the seller is open to accepting a lower price in order to sell more quickly.
- Include perks in your offer.
Many sellers look beyond the price in accepting an offer. By including perks and making fewer restrictions, you enhance your chances of convincing the seller to accept your offer. Perks can include more earnest money, fewer contingencies, and other benefits that could shorten the closing process.
- Fund the purchase with your retirement savings.
This should be done with care as the wrong move can mean you’ll have to pay taxes on your withdrawal or will have significantly depleted funds when you retire. If you have a 401(k) plan, you can borrow as much as 50% of your vested balance (with a maximum of $50,000), tax free, which you should repay within a specified period.
If you have a traditional IRA account, you may withdraw up to $10,000 without a penalty, but you have to pay taxes for the withdrawal. It you have a Roth IRA, you may withdraw up to $10,000, tax free, if you meet certain conditions.
- Consider foreclosure properties.
A foreclosed property may be priced as low as 15% less of its actual value. It’s commonly believed that these properties can only be purchased in cash, but according to Wells Fargo, around 60% of foreclosed homes are bought with financing. In buying a foreclosure, it’s important to keep in mind that you’re buying the home as is. It’s highly likely that it has fallen into disrepair and is not in the best of shape. Have the home inspected by a professional to assess the amount of repair it would need. Include the repair costs in your estimate
before placing a bid.
If you’re considering buying a luxury home in Bloomington, Edina, Golden Valley and other top communities in Minneapolis, you should get the best professional help. Call Scott Haubrich at (612) 298-5400 or send an email to scott(at)buyrentsell(dotted)com.