I NEED A HOUSE! HELP!
This is one of those markets that will go down in the history books as being one of the most robust, yet unpredictable. Of course, I am NOT an economist, statistician or any other self-proclaimed expert on housing stability. But I DO have 20+ years experience of watching the ebb and flow of the market. Clients ask me continuously if this is a good time to buy a home. My answer is YES, most certainly due to the consistently LOW interest rates……but”…So what are the “buts”? We’ll explore those and then you can finish that sentence yourself!
GET PRE-APPROVED!: I can’t stress this enough! I personally am reluctant to work with a buying client that is NOT pre-qualified or pre-approved. Why? I may show you numerous homes that are not within your price range! Then, when we finally find out what your price range is, you’re going to hate everything else you see! It’s that’s simple! You’re not wasting my time, you’re wasting yours! Even IF we find the perfect home right off the bat, I cannot write up an offer for you until I find out what kind of loan you will have, what your lender needs from you or me, or even the time-frame involved to close the transaction. On top of that, no seller is going to wait for you to get pre-qualified if another offer is on the table! A pre-qualification is slightly less effective than a pre-approval. When you are pre-qualified, the lender has run your credit and has based their decision upon what you have told them regarding your income is, your debt obligations, etc. A pre-approval is the next step, where the lender verifies through your employer and other documentation everything you have told them. Either one suffices to be able to write an offer on a property.
DISTRESSED OR NOT DISTRESSED? Now that is a BIG question! I know you want a “deal”, but most loan programs will bar you from purchasing a truly distressed home. Keep in mind the difference between “ugly” versus “not mortgageable”. The lender wants all utilities on, a roof that doesn’t leak, a furnace that can heat the house, plumbing that is not broken/missing/compromised, etc. The appraisal process will discover those items and if the seller is not willing to correct those issues, the lender will not lend on that property! There are a FEW loans out there that will allow this type of transaction, but they are very time-consuming and no, they won’t let you do the work yourself! So, how does “ugly” or “needs updates” sound to you? In my experience, homes that are on the market after a long-term resident has lived in the property, most big-ticket items are well cared for, but the carpet may be decades old, the countertops may be orange/yellow/green or the bathroom is pink! THOSE types of updates you can do yourself or have done later! So, bank repos are probably not going to be within your focus to “get a deal”.
PICK AN AGENT! No, you are not going to be able to get a price reduction by simply calling every agent that has a listing you’re interested in seeing. The seller is going to pay a set commission, no matter who sells the home! And do you really want the seller’s agent to represent you? It is a common practice, but this could take awhile and you may be looking at many, many homes! So, it is within your best interest to have your own representation, and in many instances, at no cost! Ask relatives/friends/acquaintenances who they suggest, and interview prospects to see if they are a good fit and someone you can feel comfortable working with. And always ask if there is a buyer’s fee for their service. Many companies charge buyers a nominal fee, but many do not. Can the prospect set you up with an automatic MLS search so you are notified immediately when a new listing that fits your criteria comes on the market? Can this agent be available virtually on a moment’s notice to show you the properties? And finally, pick one that you feel a rapport with, someone who has your back and can be a true advocate for you!
BE AGGRESSIVE! Should you decide to take advantage of these historically low interest rates and that now is the time to try, don’t be timid! Make time in your schedule to see homes as soon as possible when they become available. Consider that the new listing may have many appointments for showings within the first one to three days! There could very quickly be competing offers on the home. Make your first offer your last, since competing offers presented at the same time generally do not provide the luxury of getting back a “counter offer”. The “highest & best” will simply be accepted and the house is now gone. Ask your agent or lender the cost per month of an extra $5,000 or $10,000 purchase price to get a better idea of what that extra cost really means in the big picture! It could be the cost of a pizza once a week or that extra latte twice a week! How long do you plan on staying in the home? Many buyers are afraid they are going to be “upside down” with the home’s value down the road, meaning owing more than it’s worth. IF this is a home you plan on staying in for years, then you shouldn’t let that be a big factor. But if you plan on growing out of it in the next five years or so, perhaps you should be more careful. Also, consider the cost of updates versus buying a slightly more expensive home that already has those updates. The interest rates on a big box home improvement charge card can be far more expensive than the extra cost on your low interest loan for a slightly more expensive home!
Interest rates are lower now than I have ever seen them in my adult life! When I purchased my first home, I had 20% down, carried a very high credit score and STILL paid 13.5% interest! Take advantage of the interest rates, get help to find the right home, and have fun acquiring the “American Dream” of homeownership! It is nerve wracking and scary, but it is ALSO very exciting! Remember, a seasoned real estate professional should be able to guide you to a good outcome, one that fits your needs and plans! Happy Hunting and Good Luck!