A gift for buyers: Real-estate pros stuff your stocking with advice
December Buying Advice: Here are the best tips for making a smart home purchase, from agents, investors and other experts.
Sound advice is always a smart gift. In this holiday edition of Buying Advice, we've asked real-estate agents, investors and other housing pros around the country to give us their best tips for making a smart home purchase, and we've included a couple of our own favorites. (Bing: Checklist for first-time homebuyers)
We'll also review the latest housing statistics and what they mean for the fledgling real-estate recovery and look at 10 surprising factors that could cause your mortgage application to be rejected.
The top 10 buying tips
1. Create – and keep — a good credit score. All lenders use a credit score to help them understand what kind of risk you would be as a borrower. Pull a copy of your credit history and FICO score. The better the score, the better the interest rate you will be offered. To get the best mortgage deals, you need a score above 760, says Ilyce R. Glink, publisher of ThinkGlink.com and author of "Buy, Close, Move In!" Once you have it there, don't jeopardize it with bad financial decisions. (For more on this, keep reading.)
2. Find a good agent. Don't just use a friend or family member, or someone you run into regularly at your kid's school. Do some research, says Melissa Anderson, an agent with Coldwell Banker Homestead Group in Harrisburg, Pa.
"The best advice is to look for a highly respected buyers agent," she says. Ask your family and friends for recommendations and then meet with several agents. "Find someone that you feel comfortable with, feel you can trust and that has experience in the areas you are searching for your home."
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Alicia Trevino, president and CEO of Century 21 Fine Homes & Estates in Dallas, also advises working with an agent who has a lot of experience with distressed properties, including short sales, as they make up a good portion of available homes.
Just be sure the agent sells real estate full time, so he can respond quickly. Ask the agent for the names of buyers he has helped in the past six months, Anderson says. If the agent can't come up with several, you should keep looking.
- On our blog, 'Listed': Best and worst housing markets in the next 5 years
3. Set a budget and get preapproved by a lender. "It is important to know what you can afford and what a comfortable monthly payment would be," says Dallas Croft of ERA Oakcrest Realty in Winchester, Va. Some homebuyers learn the hard way that they can qualify for more than they can comfortably afford to pay, says Amber Arwine, an online mortgage broker with Guaranteed Rate in Chicago. "Getting a preapproval before starting shopping for a home is also a must," she adds. That way, when you see a house you like, you're ready. And we do mean preapproved, which means submitting pay stubs and tax returns, not prequalified, which is more of a cursory estimate.
4. Check out the neighborhood just as carefully as you check out the house. "Once you find a house that you really like, drive by that house at several times during the day and during different days of the week to really gauge the type of neighborhood you are buying into," says Jennifer Darby Metzger, of ERA Justin Realty in Rutherford, N.J.
5. Be ready to pull the trigger when you see the perfect home. The supply of for-sale housing is limited in many parts of the country, and that means good houses go quickly.
Buyers need to be ready to sign when they see a keeper, which means having their financing in order, says Tony Geraci of Century 21 HomeStar in Highland Heights, Ohio. Likewise, don't "overnegotiate."
"Sometimes we're so busy worrying about getting a 'good deal' or negotiating small deal points that we miss the opportunity to buy the house we want," says Bill Lublin of Century 21 Advantage Gold in Philadelphia.
6. Don't be penny-wise and pound-foolish. Spend the money on any and all inspections that are suggested in the primary home inspection -- and for heaven's sake, don't forget to get an inspection before you buy. Some buyers skip this step, because the house looks OK and because they figure they are getting a home warranty, so why worry? But often this doesn't cover all of the property's problems. "The amount you could end up spending in the long run because of a defect you didn't know about is far greater than the expense of having a professional come out and take a look before you buy," says Raylene Lewis of Century 21 Beal in College Station, Texas.
- MSN Money: Best things to buy in December
7. Buy the cake, not the icing. You can change the paint, paper, carpet and fixtures fairly easily, but you can't readily change the home's layout, size of the rooms or location. Look past the cosmetics to the bones of the house. And think about resale. While a one-bedroom home may fit you just fine, how easy will it be to sell five years from now? Likewise, will that extremely busy street be a turn-off for others?
8. Get on the same page with your spouse. So many times, couples have a hard time agreeing on a house because they're not exactly sure what they want, says Jessica Riffle Edwards of Coldwell Banker Sea Coast Advantage in Wilmington, N.C. "Know your must-haves and would-like-to-haves early in the process," she says. Both spouses should sit down and make their own lists and then get together and see what they agree on and where they differ and talk this through. This will save a lot of time and arguments down the road.
9. Know the landscape. Once a home that looks interesting comes up on the multiple listing service, you and your agent need to do some research. How many homes are on the market in the blocks around it? How long have they been on the market? What condition are they in? What's in escrow? What have houses nearby sold for in the past 90 days? These questions will help buyers recognize a good deal when they see it, says Doug Clark of SpikeTV's reality show “Flip Men.”
10. Don't get emotional. Don't stretch your budget just because you love a home. Think like an investor and tell yourself, "There will be others out there for me." It's kind of like dating, Clark says: You need to know what else is available, rather than falling in love with the first one.
"We see more than 100 homes for every one we buy," he says.
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still waiting on the zombie apokolypse
Housing is still over-priced and with the recent band-aid TARP, bank bailouts and artificially low interest rates from the Fed a true market correction will still take place....which it should, and sooner rather than later. Get gov't out of the market and these bubbles will never happen
Ohio taxpayer stuck in the rut..
I was one of the people that was fortunate to get a nice home for my daughter and i in 2006, by way of the Rural development USDA loan program. There is alot of people that have been able to pay thier mortgage on time and keep their home, despite the economy, i am one of them. I was able to help send my daughter to college and see her get a good paying job from the result of education, even at its rediculus costs. The best we can do for our children tho is to educate them on the economy, as it is now, and show them the importance of saving money and investing in the future. getting a life ins plan when they are young and keeping it inforce. these are hard times and we need to prepare our future generation for this.
FIX THE DAMN MESS YOU MADE CONGRESS, I don't need my road paved !!!!!
AS for the banks... WELL DONE!!! you have fleeced us all, gotten filthy rich, and walked away with the governments praise and the taxpayers cash!!
Leaving America middle class to clean up your greedy mess while congress sucks your toes seeking more contributions for the next race.........
Slow growth is what's needed but only if wages grow along with it. I can never understand why people think that quick and constant growth in the real estate market is a good thing. This kind of thinking is what's caused us so much trouble
You are absolutely right! Nearly every middle class American took some hits over the last 6 years but the ones that didn’t overextend themselves, made financial sacrifices and cut back on spending to pay their mortgages received nothing. Lenders who gave risky loans to people who could not afford driving up the market prices knowing that it would eventually burst walked away without any sanctions. Their actions were reckless and careless all for making enormous profits. Some of the executives even received bonuses as the financial market collapsed around them. Today when the home owner who paid their mortgage on time for over a decade wants to refinance at a lower rate, with the same bank, they want to charge PMI because house value has sunk below 20 percent equity and bring $7000 to closing. That same bank, however, still accepts the mortgage check at the higher interest rate every month. I understand the bailouts, believe that government has responsibility to help maintain and monitor but they need to find a way to hold those who irresponsibly caused the bursting the of bubble for their own personal gain accountable.
I am Chinese and just bought one of your homes you lost as a result of your friend Clinton. If you can remember history his administration created Fanny & Freddie to spread the wealth. How is it that your young students consider taxes to be revenue? They do not take economic courses in USA anymore? There is no housing crisis as the news says in California where we Chinese are buying at bargains cash on the barrel. Thanks Democrats and Nancy Pelosi. I also heard your created 100K jobs and this is terrible. Look at how big your government is and Unions like when we had Mao here. I also heard there is an Increase in debt for credit card purchases, school expenses and car purchases drove U.S. consumer debt to an all-time high in October. WOW we are becoming capitalistic and you are following the EU and Greece on making people lazy and students learn nothing. Oh by the way, I studied first two years at China University and than came to states for degree. Will go home and find a job now. Keep paying the Egyptian Brotherhood Billions of your taxpayer’s dollars and the rich are invited here to setup and sell into our market. We own you because you have already fallen off the Cliff and have been fooled by Obama and his gang. Ha Ha.
To rent property and move on is far easier than relying on the benevolence of any employer to consistently pay a decent wage, especially when you realize that the economic house of cards that has been stacked too high on the side of the 1% will most likely collapse the economy again.
Since the vast majority of the nation's wealth is concentrated in the hands of the fewest people, then only economic instability should be counted on as a certainty.