What's your goal?

You've been searching for months now and you still haven't found a home you want to buy. You've spent every weekend with your Realtor visiting homes after homes in the past few months. The houses you like are too expensive, and the houses in your price range are not what you like. While you feel like it has taken too long but you don't want to make a mistake in the "biggest" investment of your life. And besides, the market is bad. I'm not going to pay full price. My friends and these blogs I read says I have to get 10% off the list price so I'm not going to settle.

Sound familiar? Yes. I've had some clients like this. My question to you is, what is your goal? Do you want to buy a home or not? Notice I said "home" and not "house." A home is a place you come home to, your base camp, your sanctuary, etc. It's a place you want to be, not a place you got a sweet deal on. I tell people that regardless of the market, I (a practicing Realtor) am willing to pay 10% above the asking price to get the home I want. That means, even in this market, I'm willing to pay $70K more to purchase a $700,000 home. Why? Because I want to come home everyday and love the place I call home. I don't want to think "I got a sweet deal." If you only care about a deal then you might as well said "while a trailer homes wasn't my choice, I got it at a sweet deal on it." So, I say again, you have to know what your goal is. If it's to buy to rent, then it's just a financial model. If not, you should buy a home you love.

While doing this, you want to do it efficiently while eliminating choices. First, pick a neighborhood you want. Next, visit various types of places - even those you may not think you want. Once you visited a particular type of place, the rest will be very similar so you can start eliminating them. Then, keep progressing until you can narrow things down.

If not, you may end up in the same place you started which isn't the best use of time. Think of it this way, if you spend 100 hours to save $10,000, then that's a saving(earning) of $10/hour. Conversely, a person making $60,000 per year make $28/hr while at work. You get a much better deal by leveraging your background to make more money.

And don't religiously follow the recommendations of saving 10% off the listing price. Why? If I listed my house for $7 million, then sold for $700,000 then you saved 90% off the listing price. Is that a good deal? No. you should only pay attention to what's sold in the area: the comps. Trust me, I have a very technical and statistical background and most of the blogs out there that does such analysis is so horrible that a high school student could have performed them. These are the same people who doesn't properly understand difference between the mean and median.

Lastly, if you believe that this is the "biggest" investment of your life, then you especially don't have to worry about short-term fluctuation. The real estate purchase is similar to the stock market. It's a long term view and everything will even itself out in the long run if you buy in the right neighborhood. Besides, we live in a transient world. The days of having one job and living in the same for for 30+ years are over. You're going to buy another home again.