How to save when buying a home

How to save when buying a home

Do not save what is left after spending; instead, spend what is left after saving.

Every home is an asset and all assets like being well-managed. As a potential homeowner, to make the best of your home buying and a homeownership lifecycle experience requires a sensible approach to a home as an asset. In business, both assets and expenses are applied as a “debit” balance on financial statements, because both require cash “credit” as an offset to balance any given transaction. Because of this, every asset can be viewed as an expense, and every expense can be viewed as an asset. What is then the difference between an asset and an expense?

1. The core difference between an asset and expense is long-term value.

An asset is a tangible item that has an ability to retain value or to be worth something after a year or longer. Some assets can grow in value over time, but some lose their value too. An expense is something that may be required to spend, but in the long-term, it has no value.

You can think of an expense as an asset with a very short lifespan. The distinction between an asset and an expense is very important when buying a home because this concept lays down the basis for the homeownership lifecycle savings. For example, a home cleaning service is typically assigned as an expense, to paint a home may be both an asset and an expense, and to build an addition to a home is most likely an asset. From another side, to stage a home is an expense that may increase the value of the home as an asset before the sale. Such distinctions sometimes make it incredibly difficult to separate an asset from an expense. What makes it even more difficult is hidden fees plaguing residential real estate. All hidden fees are an expense that typically results in a higher mortgage, higher cost of maintenance, or both.

2. Focus your energy and time to buy, build, and maintain good assets.

In business, an asset is expected to make a positive ROI (Return on Investment.) ROI is a simple and effective metric that helps to evaluate the efficiency of an investment and compare it to another (similar in value) investment. This metric is also important to a homeowner. Unless a home is bought purely for rental income purposes, the difference between the present value of an investment and the overall cost of investment is difficult to establish because some home expenses in a home may be considered personal, unrelated to the life-cycle of the asset itself.

HomeOpenly helps consumers, as an Open Marketplace, to manage costs and expenses that directly affect homeownership lifecycle in order to help you to make the opportunity of homeownership transparent, affordable and open experience.

3. Services and deliverables must provide you with economic utility.

As a homeowner, your goal is not only to improve an ROI on your asset but to improve the overall utility associated with a home purchase. The economic utility is a term used to describe the measurement of usefulness associated with an asset, or an expense. For example, in your home, electricity, water, and heat all have an economic utility value. The interesting thing about these services is that they possess different economic utility value to each individual, but regardless of utility, these are, more or less, mandatory expenses.

An ability to reduce the cost of expenses, without sacrificing the bulk of economic utility is the definition of savings. For example, as a homeowner, changing out lightbulbs for energy-efficient lighting is a form of savings because this action reduces energy costs, but does not reduce the economic utility of being able to turn on the lights.

4. Fees for services and improvements are negotiable, but not always competitive.

A home is one of the most expensive assets in people’s lives. Buying a home is not easy and it is considered one of the riskiest personal investments. Unfortunately, the combination of a high price tag and high risk make for an incredibly risk-averse economic environment for consumers. Service providers in the residential real estate industry have a very powerful motivation to steer consumers in self-interest, often to collect exigent fees. $31 Trillion in 2019 is the total approximate value of all homes in the United States; there are over 2,000,000 real estate professionals in the country.

In this massive market, mega-industries are built to finance, develop, maintain and transact real estate. However, due to risk-aversion and infrequency of real estate transactions, consumers are often misled into buying and using services that do not honestly serve their needs. Consumers are now very often steered toward exigent and hidden fees that eventually reduce ROI and utility associated with owning a home in an effort to earn referral fees as a reward for such steering. HomeOpenly aims to change this dynamic by compelling the real estate industry into transparency, as an Open Real Estate Marketplace™ with the power of Network Effects.

5. Focus on the costs you can actionably control.

When it comes to the issue of affordable housing, there is no room for gimmicks. The truth is, some costs in the homeownership lifecycle can be managed, while others are out of your hands. It is also true that some costs in the lifecycle are very important, while others are not. Mortgage interest, for example, is one of the largest expenses of owning a home. While this fact cannot be actionably changed by you, it is still possible to shop for the best interest rate and save tens of thousands in fees. HomeOpenly is working on a solution called LendOpenly that helps consumers do exactly this.

Real estate agent commissions in the United States are some of the highest in the World and are often associated with paying high referral fees. Despite the cost, most buyers choose to work with a real estate agent. It is possible for a buyer to negotiate a buyer’s rebate with an agent – this is something that may yield tens of thousands in a tax-free refund back to you in 40 States that allow consumers to receive refunds. An ability to take advantage of such savings is only possible in an unbiased and impartial open marketplace environment.

6. Use services that look out for your interests.

When it comes to savings, HomeOpenly is here to help you save not just on a real estate transaction fees, we aim to build an end-to-end savings marketplace that identifies your ability to reduce homeownership lifecycle expenses while adding value to your economic utility.

We work to bring you a comprehensive marketplace with a focus on home buyer's and seller's representation services, mortgage, refinance, home insurance, renovation, design, staging, home inspections, home security, moving, home maintenance, title, escrow, cash offer stand-in programs, home warranty and other real estate verticals. Our goal is to identify and advertise for services that systematically provide positive-sum value-added benefits to consumers.

Related to: home buying, home savings, home cost management, homeownership lifecycle

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Feel free to contact us if you need further assistance. At HomeOpenly we aim to make the opportunity of homeownership transparent, affordable and an open experience.

First published: July 12, 2019
Last updated: November 03, 2019