Photo by Mostafa Safadel on Unsplash

The penthouse is the pinnacle of real estate in many markets -- and places like New York and Miami -- have plenty of options to choose from. It's easy to get caught up in great decor or fall in love with a view, but there are other considerations as well. Here's what to think about when you shop for a luxury penthouse unit. 

Expect to Pay  a Premium: Most penthouses are priced above similar sized units in the same building, so be prepared to spend a little more for that amazing view and those amenities. A single penthouse spanning the top floor will command more of a premium rate than one that shares the floor with one or more other units. 

You Can Still Negotiate: While a penthouse will command a higher price than any other unit in a specific building or location, you can and should negotiate the best deal. In cities with a glut of inventory in this price range, you may be able to secure a better price, simply by presenting the right offer. Your real estate agent can help you determine how flexible a price is and what fair market value is for a home you are considering. 

Inventory Impacts Price: In high-rise dense cities like New York, there are always penthouse properties available. Outside of cities, though, you may have fewer options  In vacation and resort areas with coveted views, there are only a small number of penthouse properties to begin with, and they are not all on the market at the same time. Act swiftly if a property you truly want becomes available to avoid missing out. 

Visit at All Hours: If you will live in the penthouse property, you should visit it during the day, at night and on weekends. Because this property is near the roof, it may also be near HVAC and elevator equipment -- these can get noisy when in heavy use. Newer penthouses have insulation and soundproofing, but older ones may not, so the home could be noisier than you expect when everyone else in the building is home. 

Is the view guaranteed? A building that faces the ocean and is directly on the beach will have a view that is not interrupted by future construction, but not all penthouses fit this description. You should be aware of zoning and building possibilities -- could a taller building be placed in front of yours -- disrupting your view? Your agent can help you discover if this nightmare scenario is a risk factor in any home you are considering. 

Buying a penthouse is different from other luxury property purchases, because the view and position of the home offer so much and contribute to the price. Be aware of the setup of the building and its location -- and be ready to move if a penthouse becomes available in a market with scant inventory. Your real estate agent can watch for new listings and help you be first in line to view new luxury properties as they arrive in the marketplace and ensure you don't miss out on the home of your dreams. 

Tweet

If you intend to list your house, it helps to determine a competitive initial home asking price. That way, you can stir up plenty of interest in your residence as soon as it becomes available.

Ultimately, there are many reasons to establish a competitive price for your home, and these include:

1. You can boost the likelihood of a quick, profitable home sale.

A competitive home price is sure to garner homebuyers' attention. Thus, it may help your house stand out to potential buyers, increasing the likelihood of a quick, profitable home sale.

Oftentimes, it helps to review the prices of comparable houses in your city or town before you list your residence. If you understand the prices of similar homes in your area, you can set a competitive price from day one. With this price in place, you can generate interest in your home and move one step closer to selling your house.

2. You can minimize the risk of alienating potential buyers.

A home's price is one of the key factors that a buyer will consider as he or she evaluates the real estate market. If your home is overpriced based on its age and condition, you risk alienating potential buyers. And if no buyers show interest in your home, you may be forced to lower your home's price down the line.

Setting a competitive home price requires you to take a close look at your residence and examine its pros and cons. If you can identify your house's strengths and weaknesses, you'll be better equipped than ever before to understand the buyer's perspective. Then, you can establish a price in line with buyers' expectations.

Furthermore, it may be beneficial to conduct a home inspection before you list your residence. This inspection enables you to gain comprehensive insights into any underlying home problems. As a result, you can use the inspection to identify any home issues and ensure these problems won't prevent you from maximizing the profits from your home sale.

3. You won't have to worry about selling yourself short.

A competitive home price likely is based on a wide range of housing market data and a house's age and condition. Therefore, it helps minimize the risk that you'll sell yourself short.

By establishing a competitive home price, you can feel confident that your residence is priced fairly. And if you deploy a data-driven approach to selling your house, you should have no trouble establishing a competitive home price.

Lastly, if you need help determining how to price your house, you may want to hire a real estate agent. This housing market professional can offer expert insights into the home selling journey and ensure you can list your house at a competitive price. In addition, a real estate agent will do everything possible to help you optimize the value of your home.

Ready to list your residence? Set a competitive price for your house, and you can bolster your chances of enjoying a successful home selling experience.

Tweet

Preparing to buy a home is a long and stressful process for many. You’ve spent months, or even years, saving for a down payment, planning your future, and building your credit to ensure you get the best possible interest rate on your loan.

Then you find out, when getting preapproved for a mortgage, that your credit score dropped by a few points. So, what gives?

There’s a lot to understand about how credit scores affect mortgages and vice versa. In today’s post, I’m going to attempt to cover everything you need to know about how applying for a mortgage can affect your credit score so you’ll be prepared when it comes time to buy a home.

Prequalification, preapproval, and credit checks

There are a lot of misconceptions about what it means to be preapproved or prequalified for a loan. Some of it is due to the jargon that is used in real estate transactions, and some of it is just a marketing technique on the part of lenders.

So, what does it mean to be prequalified and preapproved?

The short version is that getting prequalified is a quick and easy process to determine whether you’re eligible to lend to and how much you’re likely to receive. It involves a quick review of your finances, and often includes either a self-reported or soft credit inquiry.

A “soft inquiry” is the type of credit check that employers typically use for a background check. It doesn’t affect your credit score, as you are not applying to open a new line of credit. In fact, many lenders’ process for prequalification is a simple online form that doesn’t even require a credit check. We’ll talk more about the difference between soft inquiries and hard inquiries later.

The simplicity of prequalification makes it a simple and easy way to get started. But, it isn’t always accurate in how well it predicts the type of mortgage and loan amount you can receive. That’s where preapproval comes in.

When you get preapproved for a loan you fill out an official application (you often have to pay for these). This will request documentation for your finances and assets, and will ask your approval to run a detailed credit report.

These credit reports are considered “hard inquiries” and are a vital step in getting approved or preapproved for a mortgage. However, they also, at least temporarily, lower your credit score.

Why hard inquiries lower your credit score

When any creditor, be it a bank or credit card company, is determining whether to lend to you, they want to know that you are a safe investment. To determine this, they want to know how frequently you pay your bills on time, how much you owe to other creditors, and how financially stable you are right now.

When you make multiple inquiries in a short period of time, it’s a red flag to lenders that you might be in trouble financially. Thus, hard inquiries will lower your credit score for 1 to 2 months.

Applying to multiple lenders: the silver lining

When borrowers apply for a mortgage, they often shop around and apply to multiple lenders. While it may seem that all of these hard inquiries will add up and drastically lower their credit score, this isn’t the case.

Credit bureaus take into account the source of the inquiries. If they realize that you are applying for mortgages, they will typically recognize this as rate shopping and group these applications together on your credit report, counting them only as a single inquiry. This means your score shouldn’t drop multiple times for multiple mortgage preapprovals that were made within a small time frame.

Now that you know more about how mortgage applications affect your credit score, you can confidently shop around for the best mortgage for you and your family.

Tweet