So you’ve considered buying real estate in some form, and you’re just not sure where to start. You may have heard all kinds of advice from friends or family about buying, whether it’s a home, a real estate investment property, a second home, or a condo.
Can buying real estate really be a simple thing? If you know me, you know I can’t even pick out a cantaloupe at the grocery store. Let’s face the truth: buying real estate is not that simple, and it takes some real risk, and you have to make an effort to educate yourself about what you’re doing. But what if the grocer walked over to me, and offered to help me in choosing a melon? He/she says that they really know how to tell a good one from one that’s going bad, they have lots of experience with all kinds of fruit. I’m going to trust them because they are the expert! Again, buying real estate is not as simple as buying fruit, but if you find experts that you trust it will make the entire process so much better.
We recently made a request of real estate professionals in our real estate news blog. Specifically the question we posed to the pros was:
“ If you could offer one piece of advice to today’s consumer who wants to buy a home or investment property in the next year or two, what would that advice be?”
Their suggestions were all very much applicable to buying any kind of real estate.
Here is what we’ve heard so far:
“TALK to a lender at least 6 months before they are ready to actually make an offer. The lender can counsel to the individual or couple about THEIR situation and what they need to do to qualify. You can imagine the borrower frustration when I tell them I cannot use any of their large cash deposits (mattress money) for instance. Ideally a borrower will talk to a lender at least 6 months before considering making an offer. If they can get an approval great, but if not they will have a plan and work towards the recommendations to qualify. It will avoid much frustration to get everything in order and have a plan. Same is true for the investor….have a loan officer look at your whole financial/income picture first.” (Us: Obviously some folks won’t have the luxury of talking with a lender six months before they are ready to buy. The key message here is: talk to a lender first.)
Real estate agent:
“They definitely need to be pre-approved with a really good lender; They need to know what they want and communicate that with their agent, and the agent needs to be aggressive in getting offers in and written up completely. There are a lot of competing buyers out there and the successful buyers are able to act quickly as there are almost always multiple offers on well priced properties.” (Us: There are lots of great opportunities out there for great prices on some excellent properties. This agent happens to be writing from the perspective of a market that is recovering quickly.)
Real estate agent:
“Meet with a lender asap to review current credit situation and receive coaching from lender on what to pay off, pay down, ignore, what not to do (buy a car, or any big ticket item, etc.). This way when it’s time to get that loan, your credit score will be as high as possible enabling you to get the most favorable rate possible equating to the savings of big bucks. Also, some creditors will not report the last payment made on a consumer loan. Therefore, your credit report will look as though these amounts are outstanding when in fact they’ve been paid off….thus lowering your overall credit score. Discovering this early on, will allow a person to contact these creditors and eliminate these amounts showing.”
I think we’re seeing a trend here of “talk to a lender first”. This obviously applies only if you plan to borrow when you buy. It’s certainly applicable whether you are looking at a home, condo, second home, or an investment property. If you plan to borrow, call a lender you trust first.
Real estate agent:
“My advice for consumers who are thinking of buying or want to buy is “DO IT NOW”!! On the home obviously buy it with location in mind and buy what you want even if it is a little more than the comfort level….. as long as it is in the affordable range today. In the long run I believe we will see some fairly strong inflation numbers which will end up raising pay and home prices. You can buy at todays prices and todays interest rates. On investment properties I would buy in the sun belt areas to take advantage of prices, rates, etc. understanding the demographics of the aging population and a high degree of retirees wanting to escape winters and harsher weather. Value, appreciation, and possible retirement home.” (Us: More good advice here. We would add that just because you are thinking about buying real estate doesn’t mean that it’s right for you. Talk to a Realtor and/or lender and see if buying property fits your plans, goals, and budget.)
“ 1. List minimum acceptable needs to be fulfilled – bedroom count, size of lot, urban vs. rural, etc. Writing this down upfront means you are less likely to violate later when you find that dream home you just have to buy.
2. Decide on what neighborhood characteristics you want – it does matter! If an urban liberal lifestyle is important don’t buy in (?)….. If you want to raise chickens and be self-sufficient in case of anarchy then a different neighborhood will suit you better. Once you’ve moved in and find yourself surrounded with neighbors who are living a contradictory lifestyle to your own it’s too late. Better to think about it ahead of time.
3. Get pre-approved by a lender so you know EXACTLY what your monthly payment will be for a certain price range and the cash needed to close. Afraid to commit to a particular lender? Don’t be – you ALWAYS have the right to cancel and go somewhere else for your loan and your only expense for the pre-approval should be $20 or so for the credit report.
4. With the first 3 items in hand you can how start shopping for individual homes. Bring out your needs list and don’t deviate, unless you give careful thought to what you are sacrificing and whether you can mitigate in any way.
5. Owner occupied advice – while the decision to purchase a home is incredibly emotional try to do the best you can to stay in “business” mode until the transaction is fully negotiated.”
Stewart Title of Spokane
606 W. 3rd Ave. Spokane, WA 99201
509.328.7171 or 509.321.3939
Acarollo@stewart.com Anthony Carollo