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TIP
1- Buying A home Is One Of The Best
Investments You Can Make! Home equity remains the largest single savings
vehicle for most Americans. In addition to the tax incentives of home
ownership, and the ability to tap into your home equity if the need
arises, buying a home is a wise and prudent investment for most people.
TIP 2-
It Is Very Important To Buy A Home That Will Go Up In Value.
Slow,
steady home appreciation has been the rule over most of the nation’s
history, and many real estate investors became quite wealthy in that
environment. They did so by very carefully analyzing the appreciation
potential of their investment, and they invested for the long term. You
should too. Even if you plan on living in your home just a few years, you
will want it to have gone up in value when you put it back on the market.
TIP 3-
Use A Buyers Agent. If you’re going to work with a real estate agent,
contract with a buyers agent rather than with a subagent. A buyers agent
is paid by you and has a duty to represent your interests, while the
subagent is paid by the seller and represents the seller’s interests.
The subagent, which has been the traditional relationship between a buyer
and an agent, is ethically required to disclose all relevant information
(such as the fact that you’ll be willing to raise your offer if
necessary) to the seller. Try as you might, it’s difficult to avoid
saying things you shouldn’t to a subagent. While you are responsible for
paying the buyers agent, the net cost can be zero if you put in your offer
that the seller is to pay buyer agent’s commission (which the seller
would have had to pay anyway if the offer had come from a subagent). An
exception is if you’re buying from a self-seller. They often did not
plan on allowing for a real estate commission. In those circumstances you
face a subjective decision as to whether a buyers agent’s negotiating
skills are sufficiently better than yours to justify the commission you
will owe them.
TIP 4-
Choose Your Agent Wisely. If you are using a real estate agent look for
one with experience in working with buyers, with knowledge of the
neighborhood(s) you are considering, and who does not have a reputation
for being ‘pushy’. The purchase of a home is a serious long term
commitment on your part and a good agent will recognize that buyers need
time and patience so they can satisfactorily sort out the myriad's of
factors involved in a purchase decision.
TIP 5-
Current Home Prices Are A Less Important Consideration Than Interest
Rates. Try to buy and/or sell when interest rates are low. The amount of
mortgage you can afford (and thus the price of the home you will consider)
will change as the interest rates rise or fall. A certain asking price may
sound expensive to you, but at a lower interest rate you might be able to
afford it. You may own several homes over your lifetime, and the factors
that will limit or increase the value of the home you will be selling will
similarly affect the price of its replacement. Since those factors largely
wash each other out, interest rates remain the most important factor.
TIP 6-
Always Have A Home Inspection Contingency In Your Offer and always hire a
professional home inspector to provide you a written report, along with
"ball park" estimates or ranges of repair costs. If the
inspection turns up problems that weren’t readily noticeable, you can
use it and the ball park estimates for negotiating leverage to get the
seller to make the repairs or provide you a commensurate price reduction.
TIP 7-
Learn As Much As Possible About The Seller’s Circumstances. There may be
mutually beneficial opportunities. For example if you might face
difficulty qualifying for a big enough mortgage, and the seller is worried
about college costs for his or her sixth grader, then maybe the seller
might be interested in accepting a second trust for part of the purchase
price if the interest rate is above what they could otherwise earn and the
loan is paid off the summer before the child's freshman college year. From
your perspective the rate will likely be less than you could get from a
traditional lender.
TIP 8-
Research Your Mortgage Options Well Before You Make An Offer. You won’t
have enough time in the five days sellers normally allow to get all of
your paperwork together, determine the best kind of mortgage, who is
offering the best rates etc. Consider getting a contingent letter of
approval for a loan, or an actual loan commitment prior to making an
offer. The former is not actually a loan commitment, but rather a
contingent approval for a loan up to a certain amount. While it has
relatively little enforceable value, it nevertheless can impress a seller,
who might be more willing to accept a lower offer because of the perceived
financial capabilities of the seller. Its also possible to get approved by
a lender with a longer term "lock" on the interest rate in order
to protect you from subsequent rate increases. While this should
substantially increase your negotiating leverage, keep in mind that you
pay more directly or indirectly for the longer commitment, either in terms
of the rate and/or points.
TIP 9-
Learn How To Negotiate Like A Pro. There’s more money involved in this
negotiation than just about any other area you’ll encounter. Even if
you’re using a buyer’s agent, you’re part of the team, and you’ll
have to make the ultimate decisions about how much to offer and how much
to compromise on a counter offer.
TIP
10- STUDY! The tips in this brochure are
only the beginning. You’ll need to learn a lot more if you want to get
the best possible deal. Read as much as you can on home buying, on
negotiating, on neighborhoods in your area that might fit your needs, and
on factors that impact long term appreciation like schools,
infrastructure, major new business expansions or closing etc.
Keep copies of everything you send the lender and everything
the lender sends you. |
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