5 Pitfalls to avoid in 2009: Buyer Advice

By
Real Estate Agent with Silvercreek Realty

 

Banana 6If you haven’t heard, the government is handing out $8000 dollars to first time home buyers this year in the form of a tax credit.  In the past, this type of stimulus had a pretty immediate impact on the first time buyer market and I expect that this spring we are going to seem some long awaited activity in the market.  The timing couldn’t be better, spring usually offers a nice kick start to the market as buyers crawl out of winter hibernation and start shopping for homes.  With good incentives for buyers and a strong buyers market, don’t get caught up in the frenzy that could easily ensue.

Pitfalls to avoid this coming year

Everyone has heard the three most important rules of buying real estate;  “Location, location, location”.  Which begs the question, “What’s a good location?” Everyone everywhere has different needs and wants and what may be an attractive location to you just may not be an attractive location to buyers when it’s your turn to sell.  Keep in mind the big picture and that unique real estate (riverfront, city views, etc.) is limited and will typically hold it’s value over time.  As a first time home buyer, don’t trouble yourself by looking for waterfront property, but employ the same thought and analysis within your price range.  And remember, buy today what someone will want to buy or rent from you tomorrow!

As an example, buying a home in a large subdivision with many vacant, buildable lots that is surrounded by more large subdivisions is a purchase that could take many more years to recoup and make a profit (which by the way, you aren’t guaranteed).  Which brings me to my next point.

Don’t assume that you are entitled to a profit.  Over the long haul, real estate has proved to be a great investment, but if you expect that your home is going to be a cash building machine, think again.  Good consultation that includes an analysis of you goals can help you determine if buying is even a good idea for you personally.

Don’t get caught up in Granite, Tile, Fixtures and Appliances. Far too many homes bought and sold boast all of these nice glamourous touches, but fail to deliver where it counts — Location.  Instead, get caught up in the important details like, lot size and orientation, proximity to major thoroughfares (noise), schools and natural amenities.  Before you know it, a Stainless Steel Refrigerator will have the same appeal as an Avocado Oven/Range (which happens to be coming back in style I hear).  You can replace amenities, but you cannot replace a floor-plan or otherwise poorly located piece of real estate.

Don’t wait for lower interest rates. Interest rates are still at historical lows and waiting for them to go lower could be the kiss of death for you and your family.  If you are looking in the 200k price range, a 1% increase in interest rates can drive your monthly payment UP nearly $150 bucks a month OR, it could drive your affordability down into the $180,000 price range — nearly $20,000 less!  Low interest rates are nice to have so lock in now, if a lower rate is what you need, have your agent negotiate for you and have the seller buy your rate down.

Don’t low ball an already good deal. This is probably the #1 rookie mistake.  Believe it or not, there are homes listed on the market at a good asking price.  Just because a home is listed for $180,000 doesn’t mean it will sell for $160,000.  If you’ve done your homework as some sellers have, you’ll notice a good value when you see one.  Low balling a seller just to low ball a seller is a waste of your time and you’re more likely to lose out on a good deal.  Don’t get me wrong, I am all about negotiating , but if it’s done without strategy to help you achieve your goals, then you are only hurting yourself.

Don’t buy a home without a buyers agent. OK, this is the number two #1 mistake.  As the real estate industry becomes more transparent, buyers of today can educate themselves using very powerful tools and can find listings just about everywhere on the web.  But don’t be fooled, just because you can surf the search engines and look up tax assessed values doesn’t mean that you can negotiate face to face with a seasoned home builder (who by the way is in the business of building homes to make money for his family not yours) or negotiate face to face with the owner of a home whos children took their first steps there and said their first words.  Negotiating is difficult and I have done it hundreds of times for my clients.  You agent should be looking out for you and your interests, period!

There are many reasons to get out this spring and summer to buy a home and I hope you see the benefits.  With some good consultation and thoughtful calculated decision making you are sure to wind up happy as ever with a good deal at a great interest rate.  If you’ve already made the decision to buy, start talking to your loan originator and get the ball rolling.  On average the process takes about 60-90 days from start to finish — from that standpoint, summer will be long gone and so will many already good deals.

If you don’t have a trusted lender/loan originator that you can call, give me a shout and I will send you some referrals.  I work with only the best that the industry has to offer, and have used them personally to buy my own real estate.  I can be reached anytime at 208-724-7602.

 

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