Buying a home is not a discrete event, it's a process - a sequence of events that happens over time. While general guides to buying a home are a dime a dozen, I'm excited to share with you some info you may not have heard before - one for each step involved in buying a home. Here's to helping you make the best decisions at every phase of your home buying process!
Step One: Deciding Whether It's The Right Time to Buy.
The market is the least important factor you should consider when deciding whether and when to buy a home.
Everyone knows home prices and interest rates are low. But don't try to time the real estate market, many who get caught up in that game of trying to make sure they buy at the absolute bottom will end up losing out on very, very favorable conditions.
The most important considerations when deciding whether and when you should buy a home are personal, not market driven. In todays market, it only makes sense to buy if it's going to be sustainable and work for you for at least the next 5 years.
Consider these factors:
When you work with a mortgage broker who has a strong track record of helping your real estate agent's clients out, your agent will take you much more seriously once a mortgage broker they know and trust has run your credit, checked your income and approved you for a loan, as well as communicated with your real estate agent about your qualifications and what you can afford. Your agent can help you communicate with your mortgage broker, sometimes helping get past appraisal glitches or facilitating other workarounds, as they come up. You get the assurance of working with a mortgage pro who has been vetted and vouched for by someone who can verify that the mortgage broker has the ability to get transactions closed in the timely manner required of today's real estate sales contract.
Sometimes the relationship may help you negotiate out of a couple of line item loan fees (if your particular mortgage rep has the power to get them down at all), if push comes to shove and cash is tight to close the deal. Working with a mortgage broker they trust can save you, rather than cost you, money.
Step Three: House Hunting "Distressed" homes for sale in Georgia doesn't always equal "discounted" in some cases, a "regular" sale can be a deeper deal.
Mortgage servicers and asset managers who make decisions about distressed properties (foreclosures & short sales) are on the hook to their investors to recoup as close as possible to the current fair market value of every home they sell. Some banks even have a general rule of rejecting offers more than 10 percent or so below the home's list price, preferring instead to reduce the price by that amount and put the home back on the open market to see if any new homebuyers are activated by the price reduction to make an offer better than the lowball offer that was initially put on the table. On short sales, the bank is trying to get as close as possible to recovering what the seller owes - and may or may not be concerned with what the fair market value of the home is. (9 times out of 10, there will be a big gap between fair market value and the seller's outstanding mortgage balance. If there wasn't, the seller wouldn't need to do a short sale!)
With so many distressed properties and homes with depressed values on the market, in Atlanta GA, the individual, non-distressed home sellers who are putting their homes up for sale right now are those who are very motivated to sell. They are more likely to be flexible with you on everything that is negotiable, from contingency and escrow periods, price, repairs and other included items.
Iindividual sellers can be emotionally motivated to sell to move on with their lives, get into their new house, or move on to their next job; banks, on the other hand, aren't people and they lack that emotional sense of urgency to get the properties sold, no matter how urgently you may think they should be trying to get rid of the foreclosed properties they own. (If you've heard the old advice that banks don't want to be in the home-owning business, I can tell you this. That is true, in a very general sense, but now they are and will be - for a long time to come. They have no emotions and no urgent need to sell or move, and are not willing to give houses away at pennies on the dollar to get out of it, no matter what.) You can sometimes negotiate a better deal with an individual seller on a "regular" sale than with a bank on a distressed home sale. So, don't limit your house hunt to foreclosures and short sales, if you're looking for a good deal on your home.
Step Four: NegotiationsYour family and friends can cause you to lose your dream home. With so much information on the web and the news every day about the recession and the buyer's market, everyone seems to be an armchair economist/real estate savant. But much of that news is national and based on medians, averages and trends. That is, it might not necessarily apply to every home on the market in Georgia, and more importantly, it might have nothing to do with "your" particular dream home. People who are not licensed professionals in Georgia have no idea what an individual home should "go for." If you tell your parents, church pals, or colleagues at work the blow-by-blow details of your offer, counteroffers, etc., you should expect to hear things like, "Oh, you're paying way too much!", "I think you should push them down another $10K," or "You know, you're in a better bargaining position than that." And sometimes, taking that sort of advice will end up blowing your deal. Work with your real estate broker or agent to develop a smart strategy - with their experience in your local market - about what price and terms to offer. Then keep working with them to manage and maintain realistic expectations as you proceed through negotiating the contract to buy your home.
Step Five: Escrow, Inspections and Underwriting When it comes to home inspections, many first-time home buyers expect that a home will either pass or fail. Except in a few jurisdictions where the government imposes certain condition requirements for a home to be sold, the home inspection is more about educating you, the buyer, as to the details and nuances of the home's condition than about seeing if the place hits a particular target for "good" or "bad" condition.
Home inspectors don't just look for things that need fixing, they also look to understand the home's systems and features, as well as to point out areas that will require your ongoing maintenance, highlight emergency shutoffs and indicating where you should have specialists further inspect items of concern. Many home inspectors create vivid, detailed electronic reports - some, complete with color photos.
If you're physically onsite at the home during the inspections, the inspector can physically show you the shutoffs for water, gas and electric - and how to use them. They can give you some tips for maintaining the place in tip-top shape. Also, in many states, the general home inspector is legally prohibited (vs. the pest, roof or other "specialty" inspectors) from issuing a written quote or bid for repairs, to avoid a conflict of interest where they'd try to fabricate flaws in the home to get the repair job. However, the repair costs are one of the most important things a home buyer wants to know!
My inspectors may be able to give you a rough range of what it would cost you to do various repairs, or otherwise indicate to you whether the repairs are a "big deal" or "$10 home improvement store" fixes; some will even give you a few references to contractors they trust, if allowed.
All around, you'll get much more of the detailed information you need to know whether and how to move forward with the transaction.
Step One: Deciding Whether It's The Right Time to Buy.
The market is the least important factor you should consider when deciding whether and when to buy a home.
Everyone knows home prices and interest rates are low. But don't try to time the real estate market, many who get caught up in that game of trying to make sure they buy at the absolute bottom will end up losing out on very, very favorable conditions.
The most important considerations when deciding whether and when you should buy a home are personal, not market driven. In todays market, it only makes sense to buy if it's going to be sustainable and work for you for at least the next 5 years.
Consider these factors:
- your life plans (are you comfortable making the commitment to live in the same town)
- your family plans (do you plan to get married, have children or empty the nest during the time you plan to own the home - and the implications of these plans on your space needs and location priorities)
- your career plans (including, but not limited to: whether you have a job or income security, whether you will be working in the same area for the foreseeable future, and whether you want to work less or start your own business in the months or years to come)
- your financial plans including foreseeable changes in income and expenses
When you work with a mortgage broker who has a strong track record of helping your real estate agent's clients out, your agent will take you much more seriously once a mortgage broker they know and trust has run your credit, checked your income and approved you for a loan, as well as communicated with your real estate agent about your qualifications and what you can afford. Your agent can help you communicate with your mortgage broker, sometimes helping get past appraisal glitches or facilitating other workarounds, as they come up. You get the assurance of working with a mortgage pro who has been vetted and vouched for by someone who can verify that the mortgage broker has the ability to get transactions closed in the timely manner required of today's real estate sales contract.
Sometimes the relationship may help you negotiate out of a couple of line item loan fees (if your particular mortgage rep has the power to get them down at all), if push comes to shove and cash is tight to close the deal. Working with a mortgage broker they trust can save you, rather than cost you, money.
Step Three: House Hunting "Distressed" homes for sale in Georgia doesn't always equal "discounted" in some cases, a "regular" sale can be a deeper deal.
Mortgage servicers and asset managers who make decisions about distressed properties (foreclosures & short sales) are on the hook to their investors to recoup as close as possible to the current fair market value of every home they sell. Some banks even have a general rule of rejecting offers more than 10 percent or so below the home's list price, preferring instead to reduce the price by that amount and put the home back on the open market to see if any new homebuyers are activated by the price reduction to make an offer better than the lowball offer that was initially put on the table. On short sales, the bank is trying to get as close as possible to recovering what the seller owes - and may or may not be concerned with what the fair market value of the home is. (9 times out of 10, there will be a big gap between fair market value and the seller's outstanding mortgage balance. If there wasn't, the seller wouldn't need to do a short sale!)
With so many distressed properties and homes with depressed values on the market, in Atlanta GA, the individual, non-distressed home sellers who are putting their homes up for sale right now are those who are very motivated to sell. They are more likely to be flexible with you on everything that is negotiable, from contingency and escrow periods, price, repairs and other included items.
Iindividual sellers can be emotionally motivated to sell to move on with their lives, get into their new house, or move on to their next job; banks, on the other hand, aren't people and they lack that emotional sense of urgency to get the properties sold, no matter how urgently you may think they should be trying to get rid of the foreclosed properties they own. (If you've heard the old advice that banks don't want to be in the home-owning business, I can tell you this. That is true, in a very general sense, but now they are and will be - for a long time to come. They have no emotions and no urgent need to sell or move, and are not willing to give houses away at pennies on the dollar to get out of it, no matter what.) You can sometimes negotiate a better deal with an individual seller on a "regular" sale than with a bank on a distressed home sale. So, don't limit your house hunt to foreclosures and short sales, if you're looking for a good deal on your home.
Step Four: NegotiationsYour family and friends can cause you to lose your dream home. With so much information on the web and the news every day about the recession and the buyer's market, everyone seems to be an armchair economist/real estate savant. But much of that news is national and based on medians, averages and trends. That is, it might not necessarily apply to every home on the market in Georgia, and more importantly, it might have nothing to do with "your" particular dream home. People who are not licensed professionals in Georgia have no idea what an individual home should "go for." If you tell your parents, church pals, or colleagues at work the blow-by-blow details of your offer, counteroffers, etc., you should expect to hear things like, "Oh, you're paying way too much!", "I think you should push them down another $10K," or "You know, you're in a better bargaining position than that." And sometimes, taking that sort of advice will end up blowing your deal. Work with your real estate broker or agent to develop a smart strategy - with their experience in your local market - about what price and terms to offer. Then keep working with them to manage and maintain realistic expectations as you proceed through negotiating the contract to buy your home.
Step Five: Escrow, Inspections and Underwriting When it comes to home inspections, many first-time home buyers expect that a home will either pass or fail. Except in a few jurisdictions where the government imposes certain condition requirements for a home to be sold, the home inspection is more about educating you, the buyer, as to the details and nuances of the home's condition than about seeing if the place hits a particular target for "good" or "bad" condition.
Home inspectors don't just look for things that need fixing, they also look to understand the home's systems and features, as well as to point out areas that will require your ongoing maintenance, highlight emergency shutoffs and indicating where you should have specialists further inspect items of concern. Many home inspectors create vivid, detailed electronic reports - some, complete with color photos.
If you're physically onsite at the home during the inspections, the inspector can physically show you the shutoffs for water, gas and electric - and how to use them. They can give you some tips for maintaining the place in tip-top shape. Also, in many states, the general home inspector is legally prohibited (vs. the pest, roof or other "specialty" inspectors) from issuing a written quote or bid for repairs, to avoid a conflict of interest where they'd try to fabricate flaws in the home to get the repair job. However, the repair costs are one of the most important things a home buyer wants to know!
My inspectors may be able to give you a rough range of what it would cost you to do various repairs, or otherwise indicate to you whether the repairs are a "big deal" or "$10 home improvement store" fixes; some will even give you a few references to contractors they trust, if allowed.
All around, you'll get much more of the detailed information you need to know whether and how to move forward with the transaction.
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