Tuesday, July 10, 2012

Buyer's Comfort Zone May Be a Danger Zone

The greatest obstacles to success with any goal can be our advantages. These comfort zones can be dangerous distractions when advancing toward a goal to buy a home or cottage, or to achieve any significant change in life. Your advantages can represent limitations since they offer only familiar possibilities and obvious opportunities. These aren’t necessarily the best options, most creative solutions, or ideal choices for the future.

Advantages of friendship, experience, financing, or family proximity can lure buyers to markets, locations, or price ranges which can detract from long-term goals, restrict lifestyle options, or limit return on real estate investment:

  • Friendship can undermine analysis and decision makingLook no further than friends for market research and real estate knowledge, and success is limited before you start. At the same time, a buyer who considers the real estate or mortgage salesperson a friend may leave more of the analysis for fit and practicality of the real estate or mortgage to the professional than is to the buyer’s advantage. Clearly-defined goals, not insecurity, short-sightedness, or plain laziness, should form the foundation for investing in real estate. Buyers who don’t take the initiative to think and act in their own best interest are vulnerable to the agendas—hidden and otherwise—of salespeople, and to sellers’ marketing campaigns and staging. If you don’t take charge of your future, others will.

  • In times of change, experience can be a buyer’s worst enemy>/b>Let the fear of acquiring new skills, perspectives, or knowledge paralyse you, and you’ll be trapped in your comfort zone. For first-time buyers of a house, condominium, or cottage that can be problematic as they have no ownership experience to fall back on—just hearsay based on the questionable experience of non-professionals (that’s friends and family). Buyers who have owned at least one property, may not realize how dated their experience is. A lot has happened in the last year or so, thanks to the internet and the economy. If a buyer’s real estate experience and knowledge are a decade or two old, it may put decision-making at risk or at least cause a buyer to miss out on the best the current market has to offer. Cellphones and the net don’t automatically answer your wishes like Aladdin’s Lamp. Look beyond what is easily available and beyond Google™ and Wikipedia™, to learn from the broad range of experience and wisdom of real people and creative professionals.

  • What can be afforded may not be all that can be bought.Even at the max pre-approved financing limit, buyers may not be able to purchase the location or type of housing they prefer. Add a rent-paying boarder or two, or a income-generating second unit to the real estate mix, and borrowing power is extended. Lenders will usually include at least half the rental income in mortgage calculations which can mean a mortgage large enough to buy that “dream home” or preferred neighbourhood. After a few years, the rental may no longer be necessary, or it could have evolved into a financial powerhouse in paying off the mortgage. Include a home-based business, and tax advantages will lower income tax while increasing cashflow. Using a mortgage broker to shop for the best mortgage package available can increase returns and expand affordability even further.

  • Families can mean the best of times and the worst of timesWhat the family thinks a buyer should do, may be dramatically different from what the buyer would like to achieve, or it may be more than the buyer is ready to commit to. Add to this, the pressure to move near family, and you have buyers who are paying the mortgage on a house or condominium that may not really be their first choice. Purchase a property for family convenience or under pressure from others, and the independence that comes with real estate ownership is compromised from the beginning. If you don’t reach beyond what family thinks you can do because they know you so well, how will you discover that brilliant future that can lie ahead?

    The major limiting factor in buying real estate is not what the market is doing, but how creatively buyers can achieve the goals that matter to them. Play follow the leader and do what your friends are doing, and you’ll end up with what they’ve all settled for. Expand your thinking by learning more about where personal value lies and how to be a savvy buyer, and you’ll end up with more home, a more affordable mortgage, and less wasted money.

    Advantages become strengths when they are consciously used as bridges to overcome disadvantages. If you don’t move out of comfort zones, you’re in danger of never discovering what you’re missed.
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