If you’re a retail home buyer—not a real estate investor—building a relationship with an experienced real estate broker in El Paso can be incredibly beneficial. A seasoned broker can provide valuable tips for buying a house in today’s competitive market. They can guide you to desirable neighborhoods, recommend areas with better schools, and help you find homes as soon as they hit the market. Plus, the real estate commission is typically paid by the seller, meaning buyers aren’t responsible for this fee.
Appraisal
An appraisal determines the maximum loan amount a lender is willing to offer. In El Paso’s fast-paced market, appraisals often lag behind rising home prices. For instance, a home may appraise at $200,000, but the seller is asking $220,000. This is common because many buyers are willing to pay above the appraised value, and sellers are aware of this demand. If the lender offers 80% of the appraised value ($200,000 x 80%), the buyer would need to cover the remaining $60,000 to meet the seller’s asking price. Alternatively, buyers might explore owner financing as an option.
Owner Financing
The final selling price often depends on the financing terms. If a seller is asking for a price above the appraised value, the buyer could request that the seller finance part of the purchase. Sellers may agree to this arrangement, as it allows them to achieve a higher selling price and potentially earn interest on the financed portion. For example, if the buyer has a $40,000 down payment, the seller might finance $20,000 for a specified period. Both parties benefit from this agreement. It never hurts to ask!
Pre-Approval for Financing
If you’re not a cash buyer, obtaining a mortgage will require a down payment of 10% to 20% of the home’s appraised value. Being pre-approved by a lender can strengthen your negotiating position and reassure the seller that financing won’t jeopardize the transaction. Traditional lenders, such as banks, credit unions, and mortgage brokers, offer a range of options for financing your home purchase.
Monthly Payment Calculation
It’s essential to calculate your monthly housing costs carefully. Lenders in the El Paso area typically won’t approve loans if the total housing costs exceed 40% of your income. Be sure to include all expenses in your calculation, such as mortgage payments, property taxes, homeowner’s insurance, and any owner-financing payments.
Good Neighborhood
Buying in a good neighborhood is crucial. El Paso offers a wide range of neighborhoods to suit various income levels, but the old adage of “location, location, location” still holds true. Real estate experts often advise purchasing the least expensive home in a high-quality neighborhood rather than the most expensive home in a less desirable area.
By following these tips for buying a house in El Paso’s competitive market, you can increase your chances of finding the perfect home while navigating today’s challenges successfully.
