Wednesday, July 2, 2008

Ready to Buy?

UPDATE: Thanks for coming to my blog. Regardless of how you got here, this series was written in 2008. The market is ever evolving and hopefully you will find this information outdated. A better source of CURRENT information about buying an REO can be found by clicking HERE: REOs in 2010. FINANCES How much cash do you have to purchase this property? Will you need financing? What will that financing look like? Interview a few lenders. Find someone that has competitive rates and a wide range of products, and find someone that explains things to you well, and most importantly WHO YOU TRUST. Then, examine your options. Consider both the cash for closing and the monthly payments. Don’t forget about taxes and insurance, and HOA fees. (Tips: If you already have a buyer's agent, ask for a referral to a couple of lenders. Other good sources include a bank or lender you already have an established relationship with; and/or a referral from someone you know.) FIND AN AGENT Now, interview a few buyers agents. Most buyers NEED one, but even those that don’t NEED one, will find a great amount of convenience and pleasure in having someone coordinate this process for you and advise you at every turn. Working with a true professional will bring you great value. Plus, if you make a bad decision, and you don’t have a buyer’s agent, who will you blame? (Tips - find good agents through referrals of friends and relatives; but then interview them. All agents are not alike.) LEARN ABOUT THE MARKET An agent can tell you what’s available that meets your criteria based on an automated search. From there, drive the neighborhoods, get a feel for the areas you like best. Have your agent set you up with an automated search so you’ll be notified of homes coming on the market that might fit your criteria. This online studying will be the start of your education about price fluxuations, neighborhoods, available inventory and the activity level in the areas you're considering. If you are an investor, consider the strength of the rental markets, too, and the property price vs. the rental rates. Your agent should be able to help with this. After you’ve selected a few potential neighborhoods, consider looking at a homes. Here, there may be some minor differences between looking at “short sales”, REOs, or traditional sellers. Choose what homes you’ll see based on your criteria and the price. Don’t specifically target REOs, Short Sales or Traditional sales just yet. I learned along time ago to consider what I hear but to make my decisions on my first hand knowledge. Your agent should share their experiences with you, and be able to prep you on what to expect - like the things I will tell you in my next post… So, before you run out to get that first hand knowledge, wait for tomorrow's post. You'll be glad you did.

You’re an investor or a personal home buyer, and you are looking for a great deal. You’ve heard that “foreclosures” are the way to go, but after reading my last post, you now know that those “layman” are mostly talking about REOs. Anyway, where to start? Start where all buyers should start – outline your goals and get a plan together. Consider: WHAT DO YOU LIKE For a personal purchase, this is about where you'll live and the quality of your life. Consider what your household needs to be comfortable and happy. How much space, what kind of neighborhood, schools, communities amenities. How many bedrooms, bathrooms? What kind of finishes? How big of a yard? How will you get to and from work? For an investment property, who will be your renter? What will they like and need? How will the property be managed? Can you do it or will it be too far from your home? Are you OK with handling maintenance issues? HOW LONG YOU WILL OWN For a personal property, think about how you believe your family will evolve over the next several years. How’s your health? What about your parents – will they be moving in? Do you plan to have kids or do you have kids going off to college? Will you be getting married, divorced, or getting a dog? How’s your job stability? Are you likely to be transferred? If you lost your job could you find another close by? Really think about this. Based on the answers to these questions, how long do you think you’ll own the property? The average is 7 years, by the way. Some people move more often, some people only move once in their adult lives. What kind are you? Here’s a tip – if you won’t live there (or don’t want to own the property) for a MINIMUM of five years, then consider renting. For an investment property, it's part of the basics. Real estate is a solid investment as a long term hold. This not the market for a fix and flip or pure short term speculation – it’s entirely too risky, so skip it. Put your money somewhere safer. If you’re planning a long term hold, more power to you – this is a great time to buy.
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