What is buyer motivation and why is it important? As professional realtors, we have been trained to ask many important questions to best serve our clients. The first important question is why are you buying home? It may seem like a silly question but everyone is different and often times have different reasons why they are deciding to purchase a home. Our clients usually have more than one reason, and usually there is more than one buyer, so you can see how quickly reasons to purchase can add up.
We take all of our clients reasons to purchase a home very seriously. We ask our clients to think about what their main motivations are so we can all be on the same page. Buyers perform their best when they are confident in the decision they are making. Confidence comes focus, knowledge, and trust. Trusting your agent with all the reasons why you want to purchase a home is the first step toward achieving the confidence you should have in making this giant decision.
This is especially important for first time buyers since the whole process can be complicated and intimidating. When things get a little hard or if doubts and stress start creeping in, reminding ourselves why we are undertaking this great task is such a great practice. It will keep you grounded, motivated and energize your confidence. That’s good practice in making any major decisions in our lives. We got this!
We did some research on why buyers are motivated to buy a home and we listed the top 6 reasons why. There are many more reasons why and obviously you have your own personal reasons, but adding more reasons is a good thing right? Ok so here we go:
1- Prices are going up!
We can all agree that the price of homes are going up around the country and especially here in San Diego County. So it makes perfect sense that buyers do not wait until the price of homes increase even more since we know historically they have and will continue to rise. Sometimes buyers want to wait until the prices go down. Nobody has a crystal ball to see the future, but we know the economy is strong, there are no more bad interest only loans that caused the housing market to crash previously and the demand has increased and the supply has not. This is strong evidence that the housing market will continue to push housing prices up on a steady pace.
2- Tax Incentives for homeowners
There are several tax incentives when owning a home. As a homeowner you are able to deduct the interest off you home mortgage if your mortgage is not greater than $750,000. The next is your are able to write off your property taxes which is about 1% of your home purchase up to $10,000. You can write of mortgage insurance in many cases if your loan was taken out prior to 2007.If you sell your home in the future, as long as you owned and lived in the home for 2 years, you don’t have to pay capital gain taxes on the profit of your sale, $250,000 for a single person and $500,000 for a married couple. There are even more benefits, however we are not tax experts but have a general knowledge of taxes when it comes to real estate. You should consult with your CPA or tax expert to confirm these facts, learn the details that are involved and learn about even more benefits.
3- Stop paying rent
and someone else’s mortgage and start investing in yourself. We found that many buyers after a while get frustrated that they are making someone else wealthy and not themselves by paying rent. They realize rents will keep increasing as and a mortgage payment is steady. When is the last time you can remember rents decreasing? Never right? Why are you investing in someone else by paying off their mortgage and not into yours and your families future? We all have to pay one way or another to have a home, so why don’t you want to pay for something that is yours and not someone else’s?
4- Interest rates are historically low right now
As you know interest is the profit banks make on their loan to you the buyer. So it’s like you are buying money. The cost of money is low right now compares to years past. Over time, the amount you pay on interest is huge if rates go up just slightly. Here is an example that you can do using any online mortgage calculator. Current interest rates are around 4%. So lets say your mortgage, or money you are borrowing for a home, is $450,000 and your loan is at the current rate of 4%, for a regular 30 years and fully amortized (equal payment), The total amount of interest you will pay is approximately $323,000 at the end of 30 years. Now let’s take that same loan with interest rates at 6% (They were this high in 2003-2007), the amount of interest you would pay over 30 year is $521,000! That’s $198,000 more than what you will pay now. What else can you do with nearly $200,000 instead of paying interest? I am sure you can think of many things.
5- Nobody can tell you what to do in your house
Your home is your sanctuary and you can do with it as your please. No need to ask your landlord for permission or fight with them to maintain your property, you can do as you see fit. Home improvements in most lease’s stay with the home then you leave or you have to leave the home like ti when you took possession of it. All the time, effort and money to improve your home should be one that your own and that you will benefit from when it raises the value.
Buyers want a sense of stability and security and buying a home gives that to them. No longer can a landlord give them 60 or 30 day notice to vacate in the landlord decides to sell. A landlord need only give a 30 day notice if renters have lived in the unit less than a year and a 60 day notice if longer than a year. Living without that fear is a strong motivating factor to buy. Also buyers want to settle into a community and establish roots for their family. No longer wondering where they will eventually end up, buyers want living stability for their family.
These are amongst the most popular reasons why buyers are buying homes today. There are many more reasons like commuting to work and school, living close to relatives, living in a certain school district are just a few more. What is important is that before you buy a home, really understand why you specifically want to buy a home so that you go through this process with conviction and start building confidence in your purchase. When we as relators understand our clients needs it gives us not only motivation but negotiating power because it demonstrates how closely we are working together for the same goal, the purchase of your new home.