Young adults were hit hard by the recession. They postponed their decisions to purchase a home while the economy was in the doldrums. This has finally changed. Millennials have finally begun to recover from the aftermath of the worst financial crisis since the Great Depression. As a result, they are finally beginning to purchase homes.
Last year, Housing Wire published a report showing that millennials were finally purchasing more homes than all other generations. However, young adults are not as independent as previous generations were. They are leaning more on their parents and other baby boomer friends and family members to guide them through the process.
Older adults can often give some very useful feedback. Unfortunately, sometimes, their perspective isn’t going to be helpful. They might give biased advice that doesn’t consider your personal situation. You need to take their advice with a grain of salt.
Here are some factors that you need to keep in mind while deciding whether or not to take their advice wholeheartedly.
Listen when they point out that the property might be overpriced
There are going to be imperfections with every property. Some properties are going to be in areas with a relatively high level of crime. Others are going to have limited insulation, so they won’t be very energy-efficient during the winter. Others might be in an area with a poor school district.
You might feel that all of these concessions are worth the trade-off. However, that does not mean that you should have to pay a higher price than you should after accounting for them. You might not care about the quality of the schools if you don’t intend to have children of your own, but you should still use that as a factor to negotiate a better price.
Your parents might have more experience with buying and selling properties. They can help you consider the problems with the property you’re looking at and use it as a bargaining chip to get a better price.
Consider where they have lived most of their lives
The homebuying decision-making process is going to be very different, depending on where you live. If you are trying to buy a home in the San Francisco Bay area, you are probably going to prioritize finding a low-cost home above almost anything else. The average value of a home in that market is $845,000. On the other hand, if you live in New England, home prices might not be such a big deal. Instead, you will still need to look for a home that is going to be warm in the winter. If you are buying a home in Florida, you need to think about the likelihood of a hurricane.
You need to think about where your family grew up. They might not be familiar with the buying decisions that homeowners need to consider in a different area.
This means that you need to find a broker that knows what they are talking about and build a good relationship with them. Your family probably won’t be much help if they don’t know the area.
Be skeptical about their perception of quality-of-life issues
Last year, one young couple purchased a home in one of the most expensive cities in their state. The wife is a social worker and her husband is an elementary school principal. Although they make a middle-class income, they do not earn a tremendous amount of money. This meant that they had to choose one of the more affordable homes on the market.
They didn’t get the best advice from the husband’s parents. They insisted that the couple shouldn’t buy the purple home in their community, because purple was a tacky color. The couple had to go against this advice because they would’ve needed to pay another $30,000 to buy a similarly sized home with a different color.
Keep in mind that your parents, Uncle Edward or your parents’ lifelong friends are probably in a pretty stable financial situation at this point in their lives. They likely don’t remember the financial insecurity that they experienced when purchasing their first property.
When they give you advice, it will probably be tainted by their own expectations. They have the resources to afford a much more comfortable lifestyle than a young professional purchasing their first home.
You need to remember that you are probably going to need to make some trade-offs when buying a home. You might not care as much about the aesthetics of the exterior, as long as the house is going to be durable for years to come.
(Featured image by Stock-Asso via Shutterstock)
DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation for writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.
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