When you sell one house and buy another, the overall market conditions don’t matter as much. Unless the two houses involved are in areas with drastically different market conditions, you are exposed to the buy side and the sell side at roughly the same time. Whether it’s a “buyers’ market” or a “sellers’ market,” you will in theory have the advantage with one deal and the disadvantage in the other.
The situation is different when you’re buying your first home. Financial wisdom would say that it would be beneficial in the long run to understand the market condition and buy only when the pricing makes it advantageous, in reality you buy your first house when it’s time. Usually external forces drive that decision.
No matter what the market condition, consider these ten suggestions from MSN Money for buying a home.
1. Determine your limit and stay within your budget. You may have heard recently that the United States is experiencing a credit crisis. Banks are freezing up their capital and not sharing with borrowers. However, if you were well qualified for a mortgage before, you can most likely still get one now. I have noticed that I’ve stopped receiving poorly targeted spam email with home loan offers, so it’s possible the more risky mortgages have dried up. But for those who qualify for a mortgage, stick to a reasonable, affordable amount.
2. Find the right real estate agent for you. A co-worker of mine had a horrible time dealing with a real estate agent provided by our company as one of our “benefits.” The agent called incessantly, wouldn’t respect her price range, showed her houses that were a poor fit, and wasted her time. She fired the agent and tried again a year later with a new agent recommended by a friend and had a much more pleasant and fruitful experience.
Before working with an agent, interview them. Discover how they like to work and whether you will be compatible.
3. Research beyond the information provided by your agent. For this I recommend a useful tool: the Internet. Search listings to find houses you’d like to see. Find out as much as possible about the community in which you are considering living. If it’s relevant for your family, look into the local public school system. Find blogs written by residents about the community.
4. Visit the neighborhood. I can explain from first-hand experience why this is a good suggestion. for me, it has applied to my search for apartments in the past. Don’t only visit the neighborhood, visit the neighborhood at night. the character of the community might change, either for better or worse.
5. Be ready to negotiate. Houses are usually priced with negotiation in mind. This also goes back to your choice for agent. Since they may receive 3% of the sale price if split with another agent, they might not be extremely motivated to work with you to negotiate a lower price. Also, if the same agent represents the buyer and seller, it’s in the agent’s best interest to keep the price high.
If the house has been on the market for a while or if the local market is weak, you may have the ability to offer a price 20% lower than what the seller is asking.
6. Use caution when buying foreclosed properties. Across the country, foreclosures are at all-time highs. These homes can present great values, but they can be risky. It’s going to be difficult to snag a great deal because the best foreclosed houses in the best areas are priced knowing that there will be a lot of interested buyers. The best deals are left for the people who are willing to put a lot of work into fixing up a house to get it to the point that it is appealing for living.
7. Find the right lender and mortgage. MSN Money suggests dealing with lenders with roots in their communities but still look for the best deal. If you’ve been saving for a down payment and you have good credit, you’re in a good position to find the best interest rates.
8. Find a good home inspector. The same co-worker who had problems with her agent had problems with her inspector. They did not keep appointments and did not complete the job. Stay with the inspector while he or she walks through and around your prospective purchase and ask questions about anything that looks suspicious.
9. Buy long-term. Try not to view the house you plan to live in as an investment. Yes, it is a major purchase and will provide you with a major asset, but don’t go into home ownership thinking that you’ll make a lot of money. First of all, to see any appreciation, you’d have to sell the house. most likely you’ll buy a new house with the proceeds (if any) when you sell. Over the long term, real estate barely beats inflation. And keep in mind that if you consider your house an “investment,” your mortgage interest, maintenance costs, community fees, and any other house-related expense should be considered your “cost basis.” That will reduce whatever you consider your “profit” when you sell.
10. Don’t time the market. For the last four years or so, people around me have told me that the best time to buy a house, when the prices will be at their lowest and homes will be most affordable, will be in 2009. The best time to buy a house is when you need to buy a house (if ever).
10 home-buying tips for uneasy time, David Koeppel, MSN Money
Updated May 27, 2015 and originally published October 17, 2008.
{ 5 comments… read them below or add one }
One thing I would add, and it’s very difficult to do, but try to take emotion out of the buying process and especially the negotiation process. Emotions can cause you to pay too much and make a decision that you’ll later regret.
All good points. I would also add the following.
Check out Google or Yahoo maps to research the area before actually visiting, so you can have a good idea about the area, saving you and your agent time. You might not want to buy a home in a heavily industrialized area.
An agent should care much about you negotiating as it doesn’t really affect the bottom line that much. Agent doesn’t necessarily get a 3% commission. Its usually much less because the agent has to split that commission with his brokerage company, anywhere from 50%-100% with 60-40 more common.
Agent representing Buyer and Seller is called Dual Agency and is not very common, as it poses many conflict of interest issues. If that happens both the buyer and the seller must agree to it. Checkout this article for details http://xmplary.blogspot.com/2008/06/who-are-you-client-or-customer.html
Meant to say “An agent shouldn’t care much about you negotiating” Its certainly a buyers market and its now the time to negotiate.
Gee…I haven’t heard all that before.
Before i bought my house, i went to zillow.com they had all they info on the neighborhood, and how much the house should cost.