First Time Buyer

An important part of buying a house is sitting down with your real estate agent or a mortgage lender to get a clear idea of how much you can afford. They will add up all of your monthly expenses, the mortgage payment, insurance, real estate taxes, homeowners or condo association fees–and the grand total can throw you into shock!

The important thing to remember is that the grand total isn’t really the bottom line. When you add your tax savings to the equation, you may be pleasantly surprised. During the early years of your loan, almost all of the mortgage can be deducted from your state and federal income tax. The same is true of your real estate taxes. If you use part of your house as a home office, you may be able to qualify for additional tax savings. In some areas, homes with ground floor apartments are popular for offsetting part of the mortgage and offering even more tax savings

When you make calculations about the monthly costs that include the tax savings, you may find that owning your own home is less expensive than renting a house or apartment of comparable size.

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Home buyers must often deal with deferred maintenance or repairs. For example, you may have found a terrific house and like many competent home buyers, you included a structural inspection contingency in your purchase agreement. What happens when you find out that your “perfect” house needs some work? Do you ask the sellers to pay for the repairs? Before you answer “yes”, there are some important considerations.

Some contracts require that all of the home’s systems, such as plumbing, heating, electrical and central air conditioning, be in working order. In this case, the sellers may be obligated to repair any problems with these systems. Leaky roofs, damp basements, or other structural problems may not be covered, however. If you ask the sellers to make these types of repairs, you may void the contract by doing so. The sellers might prefer to negotiate the repairs to keep from losing the sale. If there are other buyers waiting in the wings with back-up contracts, you run the risk of losing the home.

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When we help prospective buyers locate a new home we listen carefully to their goals. What are their criteria for selecting a neighborhood, what style of house do they prefer, what price range and floor plan meet their needs? Will any special considerations go into making the home buying decision? When we have a good picture of what the buyer wants, we will go to work to find the best property on the market that will accommodate those needs.

Our real estate agents succeed when they can make the buyers’ goals their goals. Finding the perfect home is a collaborative effort. The buyers communicate what they want, why they want it, and where compromise might be possible, and the agent listens carefully and selects the homes that come as close as possible to meeting the needs expressed. When there is trust and communication between the buyers and the real estate agent, miracles can happen! Creating these miracles for buyers and sellers is “Job #1” for us.

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When you are in the market for a home, how should you evaluate the properties that appeal to you? There is an old cliché about the three most important factors of a piece of property–location, location and location.

Some neighborhoods have a certain distinction that attracts buyers, but there are other factors to take into account. A house in the best part of town may have a few points subtracted if it is located on a busy street. There are buyers who would like to be close to schools, shopping, and churches, but don’t want to live across the street from these facilities. You may want an easy commute to your job, but would not consider a location close to the “on” ramp for the major route into town. A location close to a airport could be convenient if you are a commercial pilot, but could make it difficult to sell even the most wonderful house.

As you balance all of the factors, remember that a location liability which gets you a great house at a reasonable price will probably require you to pass a similar savings on to future buyers.

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Perhaps no single decision in a real estate purchase has more variables than “How much money do I put down?” Conventional wisdom centers around either putting down as much as you can or as little as the lender allows.

If you put down a large payment, you get some leverage with the lender, such as little or no mortgage insurance, a good equity position, and perhaps a preferred mortgage deal. You will also have lower mortgage payments. One potential disadvantage of a large down payment is that you will be using after-tax dollars on which you could be earning interest. You will also have less tax-deductible interest.

When you buy a home with a low down payment, you will have more tax deductible interest, and your investment value percentage will increase faster. You will have little equity at the outset, and your monthly mortgage payments (and perhaps your interest) will be higher. However, you will also keep more of your own money in hand to potentially earn more interest in other investments.

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The first step toward matching you with the perfect home usually involves an in-depth interview with the real estate agent who will help you establish a price range and determine the features that you need in a home.

The agent will ask a lot of questions, and many of them will seem very personal. What is your income and debt situation? Where do you work? Are schools an important factor? Do you have children or pets? Do you have hobbies that will create special needs?

The more information your real estate agent has, the easier it will be to eliminate the homes that will not work for you and show you the ones in your price range that should fit your needs. A good agent can be a tremendous resource in this process, providing you with information about the homes that are available, shopping facilities, community services, and public transportation. The best real estate agents are excellent listeners and counselors.

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Most home purchase agreements have clauses that deal with termites. After the agreement is ratified, a termite inspection is arranged. Before the closing can occur, the sellers must be able to produce papers signed by a licensed exterminator stating that the house is free of infestation and that any termite damage has been repaired.

Before you sign an agreement to buy or sell a home, you should read the termite clause and be sure that you understand it. Who selects the exterminator and pays for the inspection? If bugs are found, who pays for the treatment? Are the sellers obligated to repair any damage and have they placed a limit of the dollar amount they will spend on those repairs? If treatment is required, the buyers may want a chance to discuss the options with the pest control company, especially if someone in the family is sensitive to the chemicals used to control the termites. Ask about the exterminator’s guarantees or service contract options.

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If you have a house for sale your buyers will probably include a structural inspection contingency in the contract. This allows them to have an expert check out the house, the major systems and the appliances.

A professional structural inspector can help buyers to “know” the house and to feel comfortable with it, but the inspection does not result in a pass or fail grade. The buyers will learn important facts about the house, such as where the water cutoff valve is located, in case of an emergency. The inspection may also help buyers set up a budget for repairs and determine if they want to invest in cost-effective measures to increase energy efficiency.

Buyers rarely back out of a sale after a structural inspection. Even if there are problems, you have the opportunity to negotiate a compromise and to avoid any obstacles that could seriously threaten the sale.

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It’s an old adage that “the best things in life are free.” One of these things is extremely valuable to home buyers — the advice of an experienced real estate sales professional.

In the traditional home sale, it is the seller who pays the commission that is divided among the various sales professionals involved in the transaction. Unless you are hiring a buyer’s broker, the buyer gets several free services from the real estate agent: 1) Target marketing that locates the homes you can afford; 2) Loan pre-qualification that saves you time; 3) Guidance in obtaining the best mortgage terms.

The marketing professional knows that if there is no financing, there is no purchase. Most real estate agents have become quite expert in the mortgage market. Please contact a real estate professional if you are seeking advice about buying or selling a property.

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Real estate agents begin their professional relationship with buyers by asking numerous questions about the buyer’s personal and financial situation. The answers to these questions will give the real estate agent a clear idea about the buyer’s housing needs and price range. It is a waste of time for an agent to show a buyer homes they can’t afford, and it can be disheartening to consider unrealistic possibilities.

In order to do a great job finding you a home, your real estate agent needs to have some basic information about your income, debts, and the amount of cash you have available for a purchase. Your agent also needs to know something about your lifestyle. How large is your family? Where do you work? Do you have school-age children? Do you enjoy entertaining? What hobbies would you like to accommodate?

The real estate agent who helps you find your new home will get to know you very well, so it is very important that you feel comfortable with that person and free to communicate openly.

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