Thursday, June 14, 2007

Home Buying Advice

This is coming from someone who has only bought one house, ever. However, in buying my current home, I made a lot of mistakes. So here I will try and help someone else learn from my mistake.

Rule #1:
You do not need a buyers agent. This will cost you money in the long run. Just know the market you are buying in and do not doubt yourself.

When I bought my home, I started working with a buyers agent. He showed me houses and took me around and looked up great houses for me. He promised all sorts of extra protection for me as a buyer. So I found a house I sorta liked and found that a buyers agent can be just a pushy if not more so than a sellers agent. So, I put down my $700 earnest money, $500 was not enough according to my buyers agent. We wanted the seller to know we were serious.

Well, between the sellers bank and my financing, we could not get it together. However, my wonderful buyers agent that was supposed to be protecting me from all sorts of things, stood idly by as I lost my $700 earnest money.

When I started looking again, I dropped the buyers agent and the real estate broker he worked with and went out on the wide world of the Internet to do my searching. Finally I found my dream home. It was exactly what I wanted and about $20,000 more than I could afford. However, I made an offer, albeit a very low offer in an attempt to get it into my price range. They countered and I threatened to walk away. The sellers agent, as it is his job to make sure the home gets sold called me up. As I talked to him I let him know that the counter was exactly $3000 more than I could afford. However, since there is no "buyers agent" involved, he was getting the full cut of the commission, so in came my counter offer. The bank (as it was under voluntary foreclosure) would eat $1000 of it, he would give up $1000 of his cut and I would find an extra $1000 and we would do the deal.

Well, needless to say, when he is looking at losing $2000 to make $5000 on selling the house, you betcha he did what he needed to do to sell me this house. I say $2000 because I know banks and they did not take the other $1000, the agent did.


Rule #2: Know

As in Know how much you can afford. Know where you want to live so you can Know the market in that area. Know where to look. Namely the Internet. There is a wealth of information out there, use it! Know everything you can about the area you are looking in and most of all KNOW your rights as a buyer! Know everything you can about what you are signing and if you do not understand it DO NOT SIGN IT!!!

Rule #3: Make a lower than acceptable offer

When I made any offer, I offered a full 20% less than they were asking. That gave them the ball and they could come back with a reasonable offer. Usually it will go something like Asking price $100,000 Buyer offer: $80,000 Counter Offer: $90,000. So look at homes that are about 10% higher than you are able to afford and go from there. If you find your dream house and offer 20% less than they are asking and they accept, GREAT! Double bonus!

There are lots more rules and I will post more as they come to mind. Good Luck and Happy House Hunting!

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