Caveat Emptor

A smart man makes a mistake, learns from it, and never makes that mistake again. But a wise man finds a smart man and learns from him how to avoid the mistake altogether. – Roy H. Williams

A few years ago, a home buyer could almost buy the first home they looked at and be assured that it would be worth more when it came time to sell. In today’s real estate market, you have to be a more savvy buyer, you need to be more selective about what you buy, and where. In short, you need to know more now before you jump into a purchase.

Here are five things you need to know, and do, before you purchase your first, or next, home.

1) Know your Options for Financing

Bad financing has burned many a buyer in the last couple of years. A Realtor can refer you to a number of reputable home loan professionals in the area, home loan companies that have been around for a long time and will be here for years to come. This should be your first step in buying a home.
If you have a loan representative help you determine how much you can afford, it will save you a lot of frustration and wasted time. There are dozens of loan programs available. Discuss your needs and objectives with your loan professional. Review the loans and rates available in your area, and based on your income and existing debt, determine how much you can afford.

You need to make an informed decision about which loan is right for you today, and in the long term. Things to consider include: First Time Buyers programs, Government backed loan programs, Down Payment options, Locking in the Interest Rate, length of escrow, and direct payment options.

2) Understand What A Buyers Agent Does

The buyers agent works for you, and represents your best interests. In our area, Realtors usually help you find a home without a written agreement called a Buyer Broker Agreement. When you work with an agent without a written agreement, it is called being a transaction broker. In most cases the representation of the buyers agent will not require payment from you, as the buyer’s agent is paid out of the commission charged to the seller of the house that you buy.

3) Know What Affects the Value of Homes

Real Estate is a major investment. Things change, neighborhoods change. People move more frequently today than they have in the past. You have surely heard it before, but the most important thing affecting the value of a home is LOCATION! Some other things to consider include:

Is the neighborhood being kept up or is it slipping?
How is the home in relation to others in the area? Is the home the smallest home in a neighborhood of big homes, or the most expensive home in a neighborhood of cheaper homes?

  • How might things change in the future? Those open lots behind your home, are they zoned to become a park, a school, a convenience store, or more homes?
  • How has the area appreciated? What is the future potential?
  • Are there any environmental issues with the ground water?
  • Any history of flooding?

These are the kind of questions you need answered before signing on the dotted line. Which leads us to…

4) Have a Professional Home Inspection

Sometimes called a “Whole House Inspection”, it can be written into your offer on the home that the offer price is based on the successful results of the home inspection. If the inspector finds a defect, the owner will have to fix it, or you can negotiate a modification to the price. If you can’t work it out with the seller, you do not have to proceed with the transaction. By having a professional Home Inspection, you might save yourself thousands of dollars and many hours of frustration from future problems with the house. There are also available home warranties that a buyer can purchase. T hese cover the appliances in the home and other items for the first year after you buy the home. This allows you to relax knowing that if anything goes wrong with the house after you move in, it is covered by the warranty with nothing more than a small deductible. Ask your Realtor for details.

5) Know How the Purchase Will Affect Your Taxes and your Household Budget

There are many tax benefits to owning a home including deduction of mortgage interest and loan points in certain instances. Check with your tax adviser or accountant to make sure you understand them. You need to know the effects on your taxes and budget before you buy the home to prevent surprises later on. The tax laws change frequently, so get the latest updates. And how will your new monthly mortgage payment impact your overall household budget. You may have to adjust your spending habits in order to adapt.

Don’t go into the home purchase without being armed with the facts. It may end up costing you thousands of dollars and years of frustration.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s