Do you look at houses over your price range?

marissa422

While house hunting, do you look at houses that are listed for higher than your price range with hopes you could possibly negotiate down to your range?

I feel like it would depend on each individual situation, the buyer, their situation and how willing they are to fluctuate their listing price...how much over your range is 'ok' to consider??

atlcatlover

Initially we did not.  Why put yourself in a position to fall in love with a house that is outside your range of affordability?

We were looking within a very small radius, and we exhausted all the inventory in our range.  DH and I decided it might be worth it to look a bit higher to see if we found something we liked since we were having so much trouble.  For us, we could still easily afford the higher payment, we just had a particular range in mind to keep our loan under a certain amount.

The first house we looked at that was over our initial price point was the one we ultimately bought. We knew it was for us the minute we saw it.  As a general rule I wouldn't recommend looking higher unless it was something you were comfortable spending.

MommyLiberty5013

We had the same issue as PP when we bought our second, current home. All the homes in our price range that we liked were going to be in need of mechanical repairs or updates (roof, furnace, etc.). But we found that homes in a slighlty high price point, already had many of those updates taken care of.

That said, we only looked at homes that were $10-15k over our budget, which didn't increase the monthly payment all that much, but it did mean a higher DP (we put down 20%).

As long as it's within your budget and it won't make you house poor, and there is truly nothing in your price range in the area in which you need to live, then I think this approach can be fine. As long as you actually stick to the new price range you have laid out.

And be mindful of your REA. Our first one we used when we bought a home the second time around, wanted to keep showing us homes $100k above where we wanted to be. We let her go. Don't let your REA talk you into something.

marissa422

Gotcha'! Thanks! This is where we are pretty much at too..first time home buyers & we just backed out of the one we were initially going to buy after inspections and found that the house was SHOT! And basically needed everything from the foundation up..no thanks! So we're back to square one and let me tell you finding a 4 bedroom in a low price range is half the battle!!! Not to mention lots of flood zones in the area to watch for and of course the dreaded taxes...so I was thinking if looking only around $5,000 above. & Exactly as you said, the work that needs to be put into some of the lower priced homes equals out to pay a little extra in mortgage for a higher priced home...

mikepugliese

I think that looking 5-10K over your budget cant hurt too much, but lets face it....the more expensive the home, the nicer it most likely is and you dont want to fall in love and then find out you can't negotiate it down.

 

I am a Realtor and always try to give my clients options, but looking above what they can afford is one I try to steer away from for this reason. 

GeorgiaRiah

My original budget was 100,000.  I knew I could easily afford more but was trying to find something very inexpensive.  Everything in my range needed a lot of work.  I decided to look at houses up to $125k but really wanted to stay under 115k.  I found my house the first weekend I up-ed my budget.  It was listed for 125k and we negotiated down to 115k with 7k in closing costs included.  This house was an estate sale so it was a lot easier to negotiate down a lot on.  Good luck on your hunt!

mikepugliese

Great Advice April, the monthly payment is really the most important unless you are talking about the amount you are totally approved for

gymbugmj2k

It depends on where you initially set the budget.  Hubby and I had been able to afford XX, but we dropped that number to X due to the fact that we knew we'd have to buy furniture, he'd need a new car in a couple years, and if one of us lost a job (which hey! he did...), we'd want to be able to keep the house running on one salary without trouble.

 That being said, we were finding lots of small, old, crumbling houses in our initial price range.  After awhile, we looked at a few about 10-15k above our initial range...and we learned that our budget was on the edge of a "step up" so to speak. those higher houses were either the same size as the ones we were looking at but in better condition, or they were larger, and in the same crumbling condition.  bottom line - we learned a LOT about the market, and learned to spot a good deal when we saw one.  Most times the price will not be negotiated down -- unless you target higher priced homes that have sat on the market for a good number of months with no offers.

 

We eventually bought a house that was at the top of our initial price range (though the quality of house was actually in that 10-15k higher range...so we knew it was well-priced!).  Staying within our initial budget let us do immediate improvements to the house, which has made it even nicer!  

 Looking above your price range can get a bit dangerous.  I definitely fell in love with 2-3 houses that were too high for us to afford (especially when I found out about repairs to be done).  The house we bought was smaller than I thought I wanted, but it turns out --- it's perfect for us

smallfry5909

We looked at homes 10-15k over our "preferred" max budget, because taxes vary so much in our city. We ended up buying a house that was 13k over our range, but our monthly payment is exactly the same as what we had budgeted.

However, not all houses are created equal, so you really have to factor in how important location, condition of the house, proximity, etc are to you.

Shutterman

From my view, I feels that People often miss that great house that have been beyond their set parameters. So, I always recommend to also include properties that are a little higher of your limit because shopping for a home is comparison shopping and we as a home buyer can?t see a great value without a little education.

marissa422

AprilH81:

Ask your realtor to find out the carrying cost of each $10,000 of loan.  $10,000 sounds like a lot of money as a lump sum, but depending on the interest rate it may only increase your mortgage payment by $15-20.  

I've bought two homes and I had a monthly mortgage amount in my head versus a total purchase price.  I downloaded an app for my iPhone for the second, it let me calculate the monthly mortgage amount (including taxes and HOA) by typing in the purchase price, down payment, interest rate, property taxes and HOA fees.  That helped me consider the monthly costs instead of a big huge scary number.

Good luck! 

This is very informative! Thank you. I am very interested in this now ESPECIALLY being able to up our price range by $10k, we would hands down find a home no problem....

MrsS728

We started looking at houses over our limit, but then found that the market is SOOO heated that there wasn't room to negotiate. The house we actually put an offer in had 6 other offers. We asked listing price and were the lowest offer, but ours was accepted because we did not have any concessions.