Buy Your First House Before You Can Afford It

If you are saving up with the goal of getting your dream home within the next two to five years, the following ideas could help you buy your house sooner than you planned.

* Buy from a motivated seller. A motivated seller is someone who has a house he or she wants to get rid of quickly. It could be that the owner was unable to sell the house on his or her own or that, even though the house was listed through a real estate agent, it just didn’t sell. Because only about 5 percent to 10 percent of sellers are truly motivated, you may need to relax your must-have requirements in a house.

* Find a seller who doesn’t need cash upfront. Most sellers will need the money from the sale of their home to buy their next home. Instead, look for someone who has already bought his or her next house. Vacant properties or homes that have been rental properties also are good candidates. By looking for properties like these, you’ll be working with sellers who are more likely to wait to get their money.

* Structure your offer as a lease purchase. Instead of buying right away, offer to rent the home for four or five years at a set rate. This will help the seller cover the current costs of the property while giving you the ability to live in your home now, continue to save for the down payment and then buy the home when you’re ready. Make sure you’re offered the option to buy the home at or below today’s value. If the seller is not willing to go along with this, then look for someone who is more motivated to sell.

See if you can get the seller to give you a credit toward the purchase of the home for each month that you pay rent.

Using these ideas, you’ll be able to buy that special house this year rather than waiting another two years or more. If the home you get is worth €200,000 today, then at a 10 percent appreciation rate, you could make an extra €40,000 or more simply by getting into the real estate market years ahead of schedule.