How to Buy a House in an Expensive Market

May 5, 2011

Buying a house always seems to cost you more than you planned.  If you live in a city with expensive real estate you might even feel like those high home prices mean you’ll never be able to afford your own home. While some citites in California, New York, and other states across the country have dauntingly expensive homes, there are ways you can pay less to live in some of those areas.

Our Home Buying Story

My wife and I live in that beautiful semi-rural part of central New Jersey that nobody knows about. It feels as far away from “The Jersey Shore” as Boulder, Colorado. Because of our relatively close proximity to New York City, the houses here are always very expensive.

During our nearly one-year house search, we learned that it was nearly impossible to find a decent house for under $300,000 in the county where we live. Note that I’m talking about a whole county, not just a town or two. This is also true of many of the surrounding counties where we live.

Here were our only requirements for our first home:

  1. Home not be listed “as is”
  2. Have three or more bedrooms
  3. Be located in an area with a good school district
  4. Not be located on a busy street
  5. Not be a total “fixer-upper”

Our price range was $300,000 or less. We found it nearly impossible to find a home that met even three or four of our requirements in that price range. By utilizing the below tips, however, we did eventually find and purchase a great home.

We love our house and it met all of our qualifications with the exception that it is located on a busier road than we would have liked. It took nearly a year of planning to find a home we could afford in a pricey market. With the below tips you too might be able to buy a great home, even in an expensive real estate market. By implementing the tools it took us a year to learn, hopefully you’ll be able to afford a home in a much shorter period of time.

1. Find the Right Agent

I think this is important for any real estate purchase, but even more so if you are looking to purchase in an expensive real estate market. In the beginning of our house search my wife and I found an agent online. We were not very impressed with the results and still wonder whether that agent had our best interests in mind.

The second time around we got smart and asked a few real estate attorneys we know their opinions about who the most trustworthy local real estate agents are. You should be able to find a good real estate agent from within your social circle as well.

2. Do Your Own Homework 

Although you will be well-positioned if you have a committed and trustworthy agent, you should still learn about your local housing market. You should visit as many houses as you can. How else will you know what a fair price?

Websites such as,, or can show you globalized real estate listings. Make sure you study the listings sent to you by your agent as well–even the homes you have little or no interest in.

3. Consider Foreclosures and Short Sales

Buying a foreclosure or a short sale can be an effective method for buying into an expensive market that you may otherwise be price-precluded from entering. Recognize, however, just how difficult these types of transactions generally are.

Banks have made the short sale process more difficult than ever. You may wait months even after a seller accepts your bid waiting for the bank to reach a decision. Some people waste months waiting for a bank short sale acceptance that will never come.

Foreclosures have their own issues. Many foreclosed homes are in terrible shape. Foreclosures and short sales provide a means to purchase a home in an expensive market at a reduced price, but do realize you will likely be paying in other ways.

4. Expand Your Search 

If you’re not finding a value home in your price range, then consider expanding your search. This will provide you with more options and a better chance of finding a home you can afford.

5. Look For Homes New to the Market 

Most of the homes that have been sitting on the market for months remain unsold because they are either: a) extremely flawed; or b) not priced to sell. Also, be weary of sellers who list the home themselves or who are using a real estate company you have never before heard of. These may be signs the sellers cannot accept the true value of their home, and therefore have not been able to hire a legitimate real estate agent to assist in the sale.

6. Develop a Solid Negotiation Strategy 

One of my favorite negotiation tools is the “price history” on Many times I would find that the owner purchased their home in 2005–right at the height of the market. I knew this person would likely be difficult to negotiate with, because they would want me to subsidize their mistake.

If you know your market you can use the price history to establish a fair current market value. For example, if you know the person purchased their home in 2005 and your real estate market’s average home prices have decreased 20% since that time, this provides an idea of the home’s current market value.

The key to just about any negotiation is to make a low first offer that is still high enough to not be offensive. Good real estate agents should help you with your negotiating strategy as well.

7. Save for a Larger Down Payment 

It seems to mee that we’ll see further depreciation in most real estate markets. Although nobody can time the market, perhaps the best idea is to wait a year. During this time you can save for a larger down payment and hold out to see if prices will continue to drop. A year from now you might be able to afford that dream home, even in an expensive market.

What other strategies have you used to purchase a home in an expensive real estate market?


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Chris Thomas is a personal finance blogger at Debt and the owner/creator of FreelancePF. Chris has a B.A. in English and a J.D. in law. Chris lives in the northeast with his Wife and dog.

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One Response to How to Buy a House in an Expensive Market

  • Barb Friedberg

    Chris, As one who also just bought (we hope, as it’s a short sale) a home in one of this countries high priced markets you offered some excellent strategies. You did a great job getting under 300k in NJ with any proximity to NYC. That area is outrageous!