The pandemic made many of us wake up and realize that we don’t have to be tied down to a single location.
Some of us decided it was time to move a bit further away from the city. Some of us decided to leave our city or state altogether because of increased flexiblility from our employer, a desire to be closer to family and friends, or a desire to find cheaper housing.
There are the obvious practical steps that need to be taken, but getting pre approved by a lender in the state you’re targeting is the most important one. But there are less obvious one.
We helped many people make these transitions and now that several years have passed since the start of the pandemic, here are some of the lessons we think are important and 3 common mistakes we have seen people make.
It comes down to the golden rules of real estate: Location, location, location.
(1) Location: Neighborhoods not Cities
It comes down to actual zip codes, maybe even streets. Think about a city you really know.
You know the basics like the best schools, restaurants, bars etc…but you also know the stuff that only locals know: what streets to steer clear of past a certain hour or an up and coming neighborhood that is flying below the radar.
This knowledge is only gained through first hand experience over several months, if not years.
Now, when relocating to a city you heard of on some “Top 10” list from an article, or because you spent a vacation there in the best part of town on a holiday weekend, do you really think you’re ready to buy there?
Maybe take a minute first. Go there on a weekday. Get an airbnb, a short term lease, rent there for awhile.
Get to really what part of town, or suburb you want to live in before spending your hard earned money.
But if you already know the area because you used to go to school there, work there, visit family and friends there often, or because you just can’t stomach the thought of not owning your own space for a little while, then by all means, go ahead and buy.
(2) Location: Relying on an agent
Realtors are good at helping determine property values, negotiating, putting together the right team around you etc…but we’re not the best people to lean on when it comes to deciding on where you should live.
As a matter of fact, many of us shy away from trying to influence people on where they should live because it’s literally illegal – it’s called steering. These laws were put in place to protect African Americans back in the ’60s.
No one wants to live in the real ‘hood – People getting robbed, beaten or killed on a consistent basis in your neighborhood. But no one wants to live in an area that is unwelcoming for our people either.
There is obviously a lot in between these two extreme ends, usually found in fairly diverse communities
The problem is that we, as agents, cannot speak to the demographics of a particular area. Again, it’s illegal due to Fair Housing Laws.
So while we may understand what you mean, no agent who cares about maintaining their license, is going to have a real conversation with you about the diversity of a neighborhood.
You’ll have to find that out for yourself by…wait for it…actually living there and spending some real time in the community. There is no substitute for first hand experience.
(3) Location vs Size of the Property
Some people relocate because they can get more bang for their buck moving away from a big city to a smaller less populous area.
But remember, if you have to choose between a desirable location or a desirable property, choose the location.
It’s better to have the worst house in the best neighborhood than the best house in the worst neighborhood. The definition of “good” and “bad/worse” neighborhood is a whole other topic for now.
There are exceptions of course. If you have 5 kids and need a ton of space, then obviously the size of the property will be more important, but for most people , it comes down to choosing between a good location or a bigger space.
Worst vs Best Case Scenario
Some of the people who bought homes with an agent in our network have recently been contacting us because they’re now looking to sell these homes. Usually, it’s been less than a couple of years. The reasons vary:
- Maybe they miss their old neighborhood and actually don’t really like the one they’re currently in after all now that they’ve been there for awhile.
- They want to move to another part of town or maybe leave the city altogether.
- Maybe they’re being forced to work in the office a few days a week now and the commute is terrible.
The problem is that you build very little equity in your home during the first 2-3 years of ownership. The real payoff happens a bit later.
If you sell your home too soon, by the time you pay commissions, closing costs and other fees, you may actually end up owing money – bringing money to the closing table.
They absolutely love their new space and their new neighbors. Even better, their home has appreciated significantly and they have even more equity in the property than they anticipated.
We breathe a sigh of relief every time we hear stories like this from agents and clients. But we often wonder whether they would be any less happy if they delayed this gratification by only a few months in order to be certain of their chosen location.
Agents are people with our own biases and preferences. You should make the decision on location – not us.
Once you’ve decided on the location, then and only then, does it make sense for an agent to help you you close on your ideal property.
As always, contact us should you need a great lender or agent.