This is a great time to buy a home, but let’s put a caveat on that statement… DO YOUR RESEARCH ON WHAT YOU ARE BUYING!!! I know this is tough, but DO NOT get emotional towards the purchase of a new home.
When I am working with buyers, and we have narrowed it down to 1-5 houses, I pull a bunch of stats on the house(s)..
1) Taxes – Are there any exemptions we do or do not qualify for that could affect our taxes?
2) CMA – in the CMA I look for average price for the neighborhood, based on numerous criteria(e.g.-Sq Ft, Bedrooms, bathrooms, yard size, etc). I pull stats for the past 3-12 months. Anything else is to old in this market. Ideally you want 3+ homes for comparison in each of your categories. If you are having trouble finding 3+ comparable properties then that means your SnD is going to be skewed.
3) SnD(Supply and Demand) Analysis – I look at how how many houses are selling a month in this neighborhood/area. What their average DOM(Days On Market) is. Is there a lot of foreclosures/bank-owned homes. What’s the competition to this house. Don’t buy the Specialty houses of the neighborhood unless you are fully aware that it’s going to be tough to sell on the back side.
4) Find out if any major changes to the area are going to affect property values, zoning, etc in the near future. You don’t want to move into a house and 3 months later the city is telling you they are going to take your back yard to widen a street, or extend the local airport….
You need to do your research on homes. I try to think worst case scenarios: If I need to sell this house in a week, am I going to be able to get my money back out of it with minimal loss?
Other things I encourage:
1) I try to convince people to not get emotional about a house.. If the facts are telling you the house is only worth 100k, dont pay 125k for it.. That being said, dont be afraid to pay a “little” more if it’s what you want! Just make sure you realize that “I am paying more for this home than I should, so I might have to eat that extra money at a later date!”.
2) Don’t go for a house that needs a ton of repairs, unless your price on the home is going to cover said repairs(and then some). Inspections do wonders for making you realize the problems a home may have. Banks don’t generally like homes that need repairs. Be aware that in some cases, they might require that the home be fixed before closing.
3) Realize that small things can be major.. One of my clients who completes flips bought a house on a highway. There is a 20′ sound wall, that can not be seen through the 30-40′ evergreens, and you can’t hear it when you’re inside the house, but he is having a heck of a time selling the house….
4) Ill say it again, consider the worst case scenario of having to sell the house in a week. Will you be able to sell the house with minimal loss in money, time, and hassle?
Hope some of this helps! Personally, I think it’s a great time to buy real estate. If you REALLY read the doom and gloom, you find holes in the articles. I read an article talking about how bad my market is, and then they said “Average sale prices have fallen 1-2%”.. Ummm, So if I had a 100k house a year ago, it’s only worth 98k this year?!? Oh the HUMANITY!!!! /sarcasm off. Now granted that doesn’t meet the 5% appreciation we are supposed to normally gain, but IMHO give it a year or so, and it’s going to turn around… No offense, but if you follow my rules above, you are still way ahead of the game…
Like some of the information I write(or shamelessly steal) and want to donate to the cause? Have a friend or family member looking to buy, sell, or invest in real estate? Then refer them to me. Even if you are in another state, I can find a good real estate agent to help them and I might get a referral fee! Free to them, and I might get to put food on the ole table and fatten my kid up!
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