Market Update – Time To Buy!

The Best Time to Buy is During the Holiday Season

The Market is Ready for Buyers:  As we head into the holiday season our collective thoughts turn to shopping for presents and spending time with family.  The kids are back in school and most house buyers have put their plans on hold until the springtime.  If you are a real estate buyer who is looking for a deal, NOW is the time to get your best buy of the year!  Buy between now and March 2014. 

The Buyer’s Market is Back!  Remember back in May and June when every house you went to see had 30 other people looking at the same time?  Do you remember writing an offer on a house only to find out that the seller receive multiple offers way above the asking price and higher than what was reasonable for the house?  Those days are gone!

Who are the Players Today?
Sellers = Today’s sellers are typically motivated to sell by some need that compels them to list their house for sale during the holiday season.  These are called “Motivated Sellers”. 

Buyers = Today’s buyers understand that the best deal can be had when sellers are motivated and the number of other buyers is limited.  These are called “Savvy Buyers”.

NOW IS A GREAT TIME TO GET OUT AND LOOK AT HOUSES! 

Are You Ready to Buy?  Even in this “buyer’s market”, it is important for prospective house buyers to have their financial and credit house in order.  This week’s article, from CNNMoney.com, will provide some helpful tips for buyers and will prepare you to make an offer when you find a property that feels right for you and your family. 

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Ten Things Buyers Must know

1. Don’t buy if you can’t stay put.
If you can’t commit to remaining in one place for at least a few years, then owning is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner.  (There are exceptions.  Now may be a very good time to buy a distressed property to improve and sell. – TB)

2. Start by shoring up your credit.
Since you most likely will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. A few months before you start house hunting, get copies of your credit report.  Make sure the facts are correct, and fix any problems you discover.  (I can help you get your credit report. – TB)

3. Aim for a home you can really afford.
The rule of thumb is that you can buy housing that runs about two-and-one-half times your annual salary. But you’ll do better to use one of many calculators available online to get a better handle on how your income, debts, and expenses affect what you can afford.

4. Don’t worry if you can’t put down the usual 20 percent.
There are a variety of public and private lenders who, if you qualify, offer low-interest mortgages that require a down payment as small as 3 percent of the purchase price.  (There are also mortgage programs that are available for people with less than “perfect” credit scores.  Ask me for a referral to a mortgage professional that can help you find these programs. – TB)

5. Buy in a district with good schools.
In most areas, this advice applies even if you don’t have school-age children. Reason: When it comes time to sell, you’ll learn that strong school districts are a top priority for many home buyers, thus helping to boost property values.  (I don’t agree with this statement.  If schools are not important to you, you can pay less now for your dream house.  When it is time to sell, you will pass that discount along to the buyer. Buying and selling in the same “less desirable school neighborhood” is a wash.  – TB)

6. Get professional help.
Even though the Internet gives buyers unprecedented access to home listings, most new buyers (and many more experienced ones) are better off using a professional agent.  Look for an exclusive buyer agent, if possible, who will have your interests at heart and can help you with strategies during the bidding process.  (Come on!  An “exclusive buyer agent” is just a real estate agent that doesn’t have any listings. Look for a great agent! – TB)

7. Choose carefully between points and rate.
When picking a mortgage, you usually have the option of paying additional points — a portion of the interest that you pay at closing — in exchange for a lower interest rate. If you stay in the house for a long time — say five to seven years or more — it’s usually a better deal to take the points. The lower interest rate will save you more in the long run.  (You have got to do the analysis to see if paying points to reduce your interest rate makes sense.  – TB)

8. Before house hunting, get pre-approved.
By getting pre-approved will you save yourself the grief of looking at houses you can’t afford and put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history.

9. Do your homework before bidding.
Your opening bid should be based on the sales trend of similar homes in the neighborhood. So before making it, consider sales of similar homes in the last three months. If homes have recently sold at 5 percent less than the asking price, you should make a bid that’s about eight to 10 percent lower than what the seller is asking.  (ARE YOU KIDDING???  This paragraph is ridiculous!  The asking price may have very little relevance to the actual market value of a property you are interested in.  A professionally prepared Comparative Market Analysis (CMA) is the best way to determine the REAL comparative value of a property. – TB)

10. Hire a home inspector.
Sure, your lender will require a home appraisal anyway. But that’s just the bank’s way of determining whether the house is worth the price you’ve agreed to pay. Separately, you should hire your own home inspector, preferably an engineer with experience in doing home surveys in the area where you are buying. His or her job will be to point out potential problems that could require costly repairs down the road.  (A professional home inspection should always be a part of your investigative process. – TB)