Friday, October 16, 2009

Avoid These Home Buying Bungles

There are plenty of incentives these days for people to buy a home. In most areas prices are lower, inventories are flush, sellers are motivated and rates are low. As if these weren’t incentives enough, until December 1st of this year, the $8,000 first time home buyer’s tax credit is still available.

At the same time there are still questions about the relative safety and stability of our housing market. The nation remains in a fiscal crisis and nationwide unemployment continues give signs that it’s not finished its climb. I spend a large portion of my time networking with people in the real estate business. They have a combined experience of hundreds of years and a knowledge base that can help just about anyone circumnavigate these potential home buying disasters.

Let’s Make a Quick Buck. Nationwide, home prices are beginning to stabilize but categorically are not showing any signs of growth. Homes in our local market for the most part have remained stable or shown only modest increase in value.

In recent years there were plenty of opportunities to find homes on the cheap, drop $10,000 to $50,000 in repairs and updates and still turn a quick dollar when the house sold in a few months. This practice is called house flipping and while it is still possible to find these diamonds in the rough, the shouts of “Eureka!” have become fewer and farther between.

If you’re buying a home to live in for the next three to five years, you’re probably in good shape. It may be another year or two before we see our local housing market get back on the steady path to growth. If you’re still thinking about making a home purchase to flip, make sure your plans can weather the “worst-case” housing scenario.

Myopic Misunderstanding of Our Local Market. Oklahoma is still one of the nation’s best and safest places to buy a home. This remains an established fact in just about every report both nationally and regionally. Not buying a home based simply on the national news reports of a continued housing slump is just not good sense. Throughout the OKC metro area, home values have remained steady and in most areas have actually seen a modest increase. Home values is just one reason Oklahoma remains one of our nation’s best kept secrets.

Not Finding the Best Deal. House shopping is a team sport. Finding the right house at the best price that meets all (or most) your expectation, requires the focus and efforts of everyone involved. Use every available resource.

Start by locating the right buyer’s realtor. Everyone knows someone in real estate, and just because they have a license doesn’t mean they are the best agent for you. Take some time to visit with several realtors before making the final decision on whom you will hire to serve as your guide.

Focusing on Foreclosures. Even veterans in real estate purchasing have been burned when purchasing a foreclosed property. If this is the direction you have decided to go, hunt down a realtor with experience in foreclosed properties. These properties come with baggage, some of which you may not be prepared to unpack. But once you buy the home, you also have bought the problems. You want the best information on your side before you write the contract to buy.

The Lender Says We Can Afford It…Let’s Get It! Come on, hasn’t the horror stories of the past two years convinced us that just because we can doesn’t mean we should? You may have found the perfect home, but it’s up to you to make sure it’s something you can afford.

Make sure you’re not being na├»ve in your thinking that your current level of income is guaranteed. Never forget that realtors and your mortgage provider both work on commission. The higher price home you buy most often translates into higher commission for them. That’s not to say the people you are dealing with are motivated entirely by greed. At the same time, they are human, so it’s up to you to use your head.

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