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Why are you still not evaluating your finances before making a purchase?

The Path to the Dream Home / Mortgage or Home Loans / Newcomer in the real estate market / Cheat sheet for shoppers
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Why are you still not evaluating your finances before making a purchase?

Real Estate Questions

In my daily practice, I often encounter inquiries about buying and selling property. This can be a client's attempt to make a deal on their own or contemplation of possible courses of action. There are five main topics.

Market Conditions

Based on observations over the past few months, the housing sector in Estonia, particularly apartments, has shown resilience. Sales have not experienced sharp fluctuations and, despite temporary fluctuations mainly related to new construction, have remained consistent since the end of last year.

Real Estate Market in the New Year

A continuation of the lull period is expected until the spring season, when changes are unlikely. A detailed analysis shows that the price of secondary housing has fallen over the past 12 months, unlike new properties, where prices have been rising. The reduction in planned and pre-reserved apartments leads to a decrease in the volume of ready-to-occupy housing, which also affects the overall market statistics.

Housing Market in the New Year

It is expected that the cost of residential real estate in the secondary market will decrease, as forecasted by the Statistical Office. This will be a key factor in price adjustments.

Real Estate Transactions

Now is a suitable time to engage in real estate transactions, especially when it is related to satisfying basic life needs. It is not recommended to postpone buying or selling and wait for ideal conditions.

Financial Strategy for Acquiring Real Estate

Before considering a purchase, it is important to evaluate your finances. The main steps are:

  1. Calculating available capital and income.
  2. Researching housing market prices.
  3. Creating a financial plan.

The four-year income rule: the price of housing should not exceed four times your annual income. For example, with a monthly salary of 2000 euros, the maximum cost of housing is 96,000 euros. This applies to both buying with a loan and without.

Financing Housing through a Bank

Banks play a key role in financing purchases, determining the cost of the property based on your contribution and the potential loan amount. If you have 70,000 euros in reserve and the bank provides a similar amount, don't forget the basic rule: with a monthly income of 2000 euros, it is advisable not to exceed a purchase of 96,000 euros to avoid financial difficulties.

Recommendations for Working with Real Estate

Sales Principles

It is worth selling assets only with a clear understanding of where the freed-up funds will be invested.

Retention Strategy

If you own a property that guarantees a constant rental income, consider keeping it. Alternatively, exchange it for a property with higher profitability and guaranteed occupancy.

Individual Approach

Take into account the uniqueness of each situation. Answers to similar questions may vary depending on specific circumstances.

Property Valuation

Want to know how much your house or apartment is worth? Simply send us the address of the property or an excerpt from the registration documents, as well as photos taken with a smartphone. Our qualified real estate specialist will quickly analyze the information. For standard housing, the appraisal will be ready instantly, and for more complex cases, within a day after a detailed study of the market situation.

Apartment Sale

Key factors: To successfully sell an apartment, use the services of a real estate agent.

The valuation depends on various parameters:

  • Location: A key role that influences the price.
  • Appearance: The external appearance of the building and the interior significantly impact the buyer's perception.
  • Technical condition: Includes the area of the premises, number of floors, and current condition of the housing.
  • Documents: An immediate check of all legal documents will be carried out, which may affect the final price.

Consult with a professional to determine the optimal value of your property.

Housing Options: Buying vs. Renting

Determining whether it is better to buy an apartment or rent one depends on your personal circumstances. If you need housing for a short period, such as during studies, renting is the more preferable option. The costs associated with purchasing, such as notary fees, government charges, and bank services for mortgage processing, can be excessive for short-term property ownership.

Analysis of Financial Aspects of Buying Property

Additional expenses associated with moving and furnishing the housing cannot be ignored. These costs can significantly reduce the attractiveness of acquiring a temporary home in terms of savings. Before making a decision to buy, it is necessary to carefully weigh the financial factors. - Evaluate the value of your existing real estate asset. - Explore financing options and the bank's conditions, including the possible loan amount and monthly payments. Sometimes renting out your own property while simultaneously renting another can be a more profitable solution.

Deciding on renovations before selling

You can sell a property in any condition, but the price is what matters. If your walls are recently renovated masterpieces, the price can skyrocket. But consider this: designer services and interior updates come with expenses.

Overview of the housing market value

Information from November indicates an increase in the cost of residential property compared to the previous month, but an analysis of the annual figures shows a decrease in prices. During November, 1695 apartments were sold, which is less than the October figure (1790). The average price per square meter was 2055 euros, which is 7.2% higher than the October level, but 5.8% lower than the previous year.

Changes in the housing market in Estonia

In the capital of Estonia, Tallinn, there was a change in ownership of 680 apartments (1 more than the previous month). The cost of residential property increased by 0.6% per month, reaching 2948 euros per square meter, which is 5.8% higher than last year's figures.

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