Equity - Every Home Buyer and Seller Needs It! | Buying Right Begins the Process!

By
Real Estate Agent with Crye-Leike REALTORS® 165062

Equity is the most important thing a home buyer or seller can have. Equity is basically your interests in a property after your obligations are deducted.  If you purchased a $100,000 home with 20% down that means your equity is $20,000 dollars.  It is a sad commentary in this current real estate market that most agents and home owners do not heed this!  

A home is something that is a long term plan, not a fix for the short term.  Over the past few years all the fundamentals of home ownership have been thrown out he window and trampled underfoot.  From what I see, buyers overpaid for junk, did not ask any questions, and got themselves into really hot water!  Equity begins by buying right!  When a builder offers you closing costs, upgrades, bonuses for your agent and other major incentives up front...the home is overpriced!  The incentives are meant to hold their price so you will feel guilty to ask for more!  It is a game that most new agents do not understand, because they have never lived through a real esate downturn before!   The best advice that I could give anyone that is considering buying a home in the near future is:

  • Make sure the agent that represents you has extensive experience selling many homes.
  • Ask your agent for testimonials and references. 
  • Do not become emotional on any home you are considering buying - you'll lose your objectivity. 
  • Make sure you are purchasing a home that has value.
  • Never pay full price!  Never!  Not even new!
  • Ask the seller to pay uyour closing costs - If you do not ask, you will not get!
  • Be prepared to walk away if you do not get what you want!
  • Remember everything is negotiable!
  • Make your agent demostrate with a CMA why this purchase is a great deal!
  • View your purchase as a long term hold. 
  • Never buy a home without an inspection - needed work eats away at your equity position.
  • Negotiate teh seller doing the repairs on their home.  Otherwise move on to the next property!
  • Aggressively negotiate the purchase of the home with a seasoned and experienced agent!  Buy it right!
  • Save up 20% down payment and closing costs.
  • Get fixed rate financing 15 or 30 year term with a fixed mortgage rate
  • Pre-pay your mortgage principle - increase your equity, and shorten the term owed.
  • Do not use your home as an ATM!  Do not borrow against the equity!
  • Avoid getting a second mortgage.
  • Do not borrow against your home value to purchase a car or to fund a vacation
  • Maintain the goal to pay off your mortgage totally.  This will fund your retirement!

Jim Crawford

 

 

 

 

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James Crawford ABR, Broker Associate

 

 

 

 

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Rainmaker
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Ann Heitland
Retired from RE/MAX Peak Properties - Flagstaff, AZ
Retired from Flagstaff Real Estate Sales
Yes, equity is good, but I'm not sure I agree that you should pay your mortgage off entirely. A combination of investments, and realizing the benefit of low rates on home loans to make those investments, may be a better path to retirement. But again, borrow wisely and make sure the investments pay a margin above what you are paying on the mortgage loan so that it makes sense. Buy wisely, but also borrow wisely.
Feb 11, 2008 05:04 AM #1
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Jim Crawford
Crye-Leike REALTORS® - Atlanta, GA
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Ann Heitland, Associate Broker, CRS, GRI , ABR ~ Flagstaff Real Estate/Community   The path to wealth begins when you are not so much leveraged and you are secure in finances.  I would pay off the mortgage as a goal.  Think of it this way, it is a 30 year goal!  The most common term I heard when I first came into real estate in the 1970's was the term "Free and Clear!"  Most persons in real estate do not even know what the term means today!

Feb 11, 2008 05:59 AM #2
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Jesse & Kathy Clifton
Jesse Clifton & Associates, REALTORS® - Fairbanks, AK
Retired
Great post, Jim.  This should be required reading for every buyer looking to buy today... and most of it applies no matter what the market is doing. 
Feb 12, 2008 07:48 PM #3
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Jim Crawford
Crye-Leike REALTORS® - Atlanta, GA
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Fairbanks, Alaska Realtors ~ Jesse & Kathy Clifton ~  I am surprised many agents do not get it.  They need to educate home buyers that a home is a long term strategy.
Feb 13, 2008 12:08 AM #4
Rainmaker
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Lorinda Ward
Keffer Realty - Norfolk, VA
Serving, Hampton Roads Virginia. Norfolk, Chesapeake, Va Beach
What a great informative blog I really enjoyed reading it.  Have a great day.
Mar 19, 2008 08:48 AM #5
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Jim Crawford
Crye-Leike REALTORS® - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR
Lorinda Ward  Thanks I am glad you enjoyed it!
Mar 19, 2008 01:04 PM #6
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