Most people who know me well know that I LOVE the process of purchasing a car. I love the research involved, and I really love going in there as an educated consumer to negotiate a great deal. I understand why other people dislike that process, but I truly get a kick out of doing it.
There is a process of negotiation involved in purchasing a house, too, but it is radically different. Another great piece of advice my dad gave me as he taught me the art of negotiation at a car dealership: "Do not fall in love with a car, and never let the salesman know you even like the car." I could go into detail about my strategy for negotiating a car, but that's not relevant here. Just know that I enter the dealership with a manila folder filled to the brim with info, and I know exactly what kind of car I want to buy with what options, etc. This way I cannot be swayed, I cannot be lied to, and I cannot be talked into anything like "the Florida package" or upgrades that "only add $5 per month to the monthly payment." (On a side note: Do you know what that $5 a month adds to the overall cost of that car over the lifetime of that loan with interest? Scary!)
The purchase of a house is the same...but different in a big way. Undoubtedly, you will find a house that is perfect, and it will be very easy to fall in love with it. And, it will be very hard to walk away knowing there's probably not another one like it...especially if there are other people submitting offers on that house. (Easy to think "it's MINE!" and keep bidding) With cars you can easily walk away knowing they produce thousands identical to the one you like each day. You can go back and try to negotiate again in a few weeks...even at at a different dealership the same day! That's not so with houses. It can be hard to walk away from something you like knowing you may not find it again if you do walk.
Similarly to buying a car when they tell you something just adds a few bucks to the monthly payment...it's also easy to talk yourself into a house that's above your budget if you do the math because: "What's another $2,000 -or even $10,000- when you're talking about something that costs hundreds of thousands of dollars anyway?" Interest is a big deal...and it adds up quickly. Don't forget that, and don't let anyone tell you any differently.
The short sale and bank-owned houses are even harder to walk away from because they're usually a great deal. Don't allow yourself to be bullied - regardless of what you're purchasing! I'll say this again: You're talking about mortgaging hundreds of thousands of dollars! (Check out where the term "mortgage" comes from...it's French.)
Although I have tried to keep my dad's advice about not falling in love with it, it has been hard not to envision living in this house we're trying to get. But still, we will go see another house today to keep our options (and our minds) open. Sooner or later, one way or another, this home-buying process will end for us. Who knows where we'll end up.
One of the biggest pieces of advice that I would give to homebuyers in this market is to keep your emotions in check. Do everything you can to avoid falling in love with a house, and don't be afraid to walk away. And don't threaten to do so unless you're serious. Do not move into that house (figuratively) until you've signed the closing papers...or received the all important approval letter in the case of a short sale like ours. (Even then, inspections can change everything.) I'm the pot calling the kettle black, but I'm telling you this because this is another one of those things that's easier said than done.
The difference between buying a car and buying a home is a significant one, and it's easy to get wrapped up in emotions. Stay strong. Here's to speedy closings!
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