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5 Ground Rules for Home Buying Success

There are few purchases in life that carry the financial and psychological weight of buying a home.  Whether you are buying your first home, moving up to your dream home, or downsizing your home and your life after the kids have gone, it is important to understand the ground rules for success in the world of buying a home.

Making the wrong decision in buying a home can have devastating and long-lasting effects, while making a wise decision in home buying can greatly enhance the overall value of the investment.  It is necessary to learn all you can about the world of home buying and mortgages before setting out to purchase the home of your dreams.

While there are plenty of web sites designed to help first time homeowners learn all they can, most financial experts say that there is no substitute for the good old one-on-one learning. Fortunately, most mortgage lenders, home inspectors and real estate agents will be able to provide this kind of one-on-one learning.

When buying a home it is often best to use a systematic approach as this is often the best way to be sure that all decisions are based on information and reason, not on impulse or emotion.  Buying a home can be an emotional process, nevertheless it is imperative to keep your emotions under control and not let them cloud your judgment.

There are five basic ground rules when it comes to buying a home and shopping smart, and they are:

#1 – Get your financing before you get your home.

There are few things in life as disappointing as losing out on the home of your dreams due to not being able to secure funding.  While the desire to get out there is search for that great home is understandable, it is vital to line up the financing you will need before you start shopping for a home.

Getting the financing ahead of time has a number of important advantages, including knowing how much you can buy and gaining more respect from the listing agents.  By knowing how much home you can afford before you shop you will avoid wasting your time looking at unaffordable properties, and the listing agent will be more than willing to show you the homes in your price range.

It is also important to take a good look at the various types of mortgage on the market before getting started in the home buying process.  These days, mortgages come in far more choices than the typical 15 or 30 year. For that reason, potential home buyers need to understand how each type of mortgage works, and to gauge which mortgage is the best choice for their needs.

#2 – Look at the community, not just the home.

It is a good idea to look at the entire community, instead of focusing on a single home. This can be a particularly important thing to consider for those moving to a new metropolitan area, as these buyers will be unfamiliar with the local climate and lifestyle.  It is crucial to determine the areas of town that are most desirable, and to consider things like distance from work and local shopping opportunities.

We have all heard that location is the key consideration when it comes to real estate, and that is certainly the case.  Buying a house in the wrong area can be a big mistake, and it is important to choose the location as well as the home.  Potential buyers can learn a great deal about the nature of the various neighborhoods simply by driving around town, as well as by talking to other residents.

#3 – Be fair with your first offer.

Trying to lowball a seller on the first offer can backfire, as can paying too much. It is important to carefully evaluate the local market, and to compare the asking price of the home with what similar houses in the neighborhood have sold for.

Comparing the sales of comparable homes, what are known as “comps” in the industry, is one of the best ways to determine what is fair, and to make sure that you neither overpay or underbid on the property.

#4 – Always get a home inspection.

Always investigate the home for any possible defects before making an offer.  Compared to the cost of the average home, the price of a quality home inspection is virtually negligible. Hence, get a good home inspection done before you buy.

To find the best home inspector, it is a good idea to seek out word of mouth referrals as many of the best home inspectors rely on word of mouth advertising.

#5 – Do not alienate the sellers of the home.

Many real estate deals have fallen apart due to the personal animosity of the buyer and the seller.  It is important to avoid alienating the seller of the home during the process, and to avoid nitpicking every little detail during the sale.

Keeping the good will of the seller will help the transaction go smoothly, and it will provide the best environment for seller and buyer alike.

Why You Might Not Want to Sell FSBO

Selling your home for sale by owner seems like an excellent idea.  You can do so much more with a few thousand dollars than pay it to a real estate agent for commission.  Even though saving money is a good reason to sell your home for sale by owner, the money savings might not be worth the work involved with selling your home.  This is especially true if you have to lower your asking price as many for sale by owner sellers end up doing.

 

When you sell your home for sale by owner, you take on all the responsibilities real estate agent would normally handle.  This includes marketing the home, fielding phone calls from potential buyers, having open houses, making the negotiations, and closing the deal.  If these steps were as easy as they might seem there would be more real estate agents.

 

Consider that a real estate agent’s only job is to sell real estate.  The agent doesn’t have an emotional attachment to the home.  He (or she) is experienced in juggling multiple priorities and can quickly determine what a buyer is looking for in a home.  In many cases, buyers feel more comfortable working with a real estate agent because they feel freer to voice their true opinions on the home than they would with the home owner.

 

Many for sale by owner sellers are not able to show the home to potential buyers in an objective manner.  Often the seller skews the home showing to his own point of view, talking about experiences that he and his family have had in the home.  This can make it difficult for the buyer to truly get a feel for what it would be like for them to live in the home.

 

Pricing the home is vital to the sale of the home.  A for sale by owner seller with no prior experience in setting home prices might end up setting a price that is too high.  Often homeowners have unrealistic expectations of how much their home is worth.  This expectation stems from emotional ties to the house.  A real estate agent, who might work with several houses a day, is better able to look at the home objectively and set a succesful selling price.

 

For sale by owner sellers often lack the negotiation skills necessary to ensure that they are getting a good deal from the sale of the home.  If the buyer has an experienced real estate agent, it could be difficult for the seller to negotiate a favorable deal.  This is the reason that many for sale by owner sellers end up walking away with a lower price on the home than they initially expected.

 

Buyers have schedules just like sellers do.  Selling for sale by owner put the seller in a position where he must schedule his day around showing the home to prospective buyers, some of which might not even show up.  This can end up being extremely frustrating for the for sale by owner seller.