Looking to buy a home? Part I
Now isn’t such a bad time to be in the market to buy a house. How come? Not only are interest rates at record lows, but home prices have dropped in the last couple of years. So now you have a combination of low rates, and lower prices. Typically, the lower the rate, the more the prices go up and vice versa. Demand is also is a factor in this as well for obvious reasons.
So if you are house shopping, how should you go about it? First and foremost, decide what your goal is. Are you looking for a home that you are going to live in for the next 10 to 30 years or even longer? Or are you just looking for that home to live in for the next 3-5 years until you can afford something more? Both situations require different approaches. If you are going to be buying a home that you are going to settle in for good, paying more for certain things that you want is fine. If you aren’t going to be living in a house very long, then you are definitely going to have to shop for a huge bargain. Otherwise, when it comes time to sell, you won’t make any profit at all. Home prices have topped out so much that it probably isn’t feasible to expect any kind of profit at all if you buy a home that you want to sell in a few years. You might be lucky to break even after commission cost if you use a realtor to sell it.
With my knowledge and experience on home shopping, the absolute most important advice that I can give is to not buy someone else’s “crap”. Meaning, there are way too many people out there selling homes that have just “lived” in them over the past so many years they’ve been there. A lot of people typically just live in homes and perform very little if no maintenance whatsoever. Years ago it was ok to pick up a home that needed lots of updating and repair. The house could be flipped and sold for a profit. Unless you buy a home that has been foreclosed on at a bargain price, it is not a good idea to buy a house that needs work. My experience is that offering a lower price for a house due to repairs and updating still isn’t the greatest thing to do. More than likely, when you get into the house you will find even more problems that you or the inspector didn’t see before. Also, figure out how long it would take you to update the house and then multiply that by a factor of about 4. If you think it will take about 3 months to make the upgrades or repairs you wish to do, it will actually take you probably about a year or more. All too often when it comes to housework, the amount of time it takes to do something is always underestimated. For example, I was going to do some repair work and painting in a small kitchen bathroom that I have. I expected it to take maybe 2 weekends to complete. But after all the trouble I ran into with the difficulty in repairing the damage to the walls, and replacing the custom fitted sink, and sanding joint compound, etc., it ended up taking me weeks to complete. Housework always looks much simpler until you actually tackle the job. There are just too many people out there that don’t take care of anything. They are even completely unwilling to even touch a paint brush. If the house they are selling looks a little dated and “trashed up”, don’t buy it. Stay the heck away from it. Buyer beware.
If you aren’t shopping for a new home and most of the homes available in the area you are quite a few years old, or in other words, you are buying a home someone has already lived in, always approach every house with one question in mind: What’s wrong with it and why are they selling the house? Yes, some people sell their home because maybe they have lived there for 30 years and are downsizing, or maybe their job was transferred, or maybe they came into quite a bit of money and are moving up. But typically, and all too often, people put their homes up for sale because they do not want to be there. Over a period of 3 or 4 months, I walked through probably about 35-40 homes that were for sale. Almost half of those homes backed up to a busy noisy street. Most of the homes had small unfinished basements. Most were not updated. In every single case there was always something about the house that would be a nuisance. So always go into every house with that question in mind. People are always trying to get out of a mess they are in. They want someone to buy their problems so they can get out. Don’t give these people a break.
This is what leads us to what is called a “hot house”. What is a “hot house”? A “hot house” is that home that is up for sale that is priced right, has great qualities, is in a good area, and has been maintained very well. These are the types of homes that a realtor knows will sell in one weekend, even in a down market. Bad news is, don’t plan on buying that “hot house” unless the buyer’s agent you are using is the listing agent of the house. The agent that is listing the house knows it is going to sell quickly. They do not want to split commission with another agent. So they will usually find their own client to buy a house. So with that being said, depending on the area and situation, you probably do not want to use a buyer’s agent. If you see a listing on a house that you are interested in, just simply call the listing agent and ask for a showing. That’s all. Don’t mess with getting a buyer’s agent. They might be helpful in opening homes up and showing them to you, but you will end up missing out on that dream house you were looking for.
Stay tuned for Part II of home buying…
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