Monday, May 10, 2010

Guidance on your home search

There are eight common emotional mistakes that people make when buying a home. Avoiding these pitfalls will help you find the best home-sweet-home. (To learn more about how your emotions can cause financial distress, see When Fear And Greed Take Over and Master Your Trading Mindtraps.)

Mistake 1: Falling in love with a house you can't afford
Get approved for a loan before looking at homes and know what the most you can afford to pay for a home,with the loan and cash.
Once you've fallen in love with a particular home, it's hard to go back. You start dreaming about how great your life would be if you had all the wonderful things it offered - the lovely, tree-lined streets, the jetted bathtub, the spacious kitchen with professional-grade appliances. However, if you can't or won't be able to afford that house, you're just hurting yourself. To avoid the temptation to get in over your head financially, or the disappointment of feeling like you're settling for less than you deserve, it's best to only look at homes in your price range.

Further, start your search at the low end of your price range - if what you find there satisfies you, there's no need to go higher. Remember, when you buy another $10,000 worth of house, you're not just paying an extra $10,000 - you're paying an extra $10,000 plus interest, which might come out to double that amount or more over the life of your loan. You may be better off putting that money toward another purpose. (For further reading, check out Buying a House in a Down Market.)

Mistake 2: Thinking that a particular house is the only one that will suit you
Unless you are a high-end buyer looking at custom homes, chances are that for any home you find that you like, there are quite a few others that are nearly identical to it. Most neighborhoods have multiple homes that are the same model. Further, most neighborhoods are full of homes that were all constructed by the same builder, so even if you can't find an identical model for sale, you can probably find a house with many of the same features. If you're considering a condo or townhouse, the odds are also in your favor.

Balance out your wants and needs.

Mistake 3: Being so desperate to become a homeowner that you buy a place that doesn't suit you
When you've been looking for a while and you're not seeing anything you like - or worse, you're getting outbid on the houses you do want - it's easy to start thinking that what you really want simply won't happen. Balance what you want in a home with what you need in a home. If you think that you will live at the home you buy for the next 20-30 years,then continue in your home search to focus highly on your wants as well as needs. Be patient with your search if you can comfortablly live in your current home.

If you think you will be moving again in a few years,the home doesn't have to be everything you dreamed off. That being said, don't buy a home for the sake of buying. If you move into a house you'll end up hating, the transaction costs to get rid of it will be costly. You'll have to pay an agent's commission (up to 6% of the sale price) and you'll have to pay closing costs for the mortgage on your new house. You'll also deal with the hassle and expense of moving yet again. If you decide not to move but to try to make the best of what you have, remember that alterations and renovations are expensive, time-consuming and stressful. The best advice is to wait if you have the luxury of time, or to correct your vision for your future to what you actually need, not want. (To learn more, check out McMansion: A Closer Look at the Big House Trend.)

Mistake 4: Overlooking important flaws in the structure, appearance or location of the house
For any of the three reasons we just discussed, you might be tempted to ignore major problems with the house that will be difficult, expensive or impossible to change. Carefully consider your options before you make a commitment, and consider waiting until something better comes along. New houses come on the market every day.

Mistake 5: Thinking you're a handyman when you're not
Don't buy a fixer-upper that's more than you can handle in terms of time, money or ability. For example, if you think you can do the work yourself then realize you can't once you get started, any repairs or upgrades you were planning to make will probably cost twice as much once you factor in the labor - and that may not be in your budget. Not to mention the costs involved to fix anything you may have started and the fees to replace the materials you wasted. Honestly evaluate your abilities, your budget and how soon you need to move before purchasing a property that isn't move-in ready. (For related reading, check out Your Car: Fixer-Upper or Scrap Metal?)

Mistake 6: Putting in an offer before carefully considering all the pros and cons of the property
In a hot market (or even a hot submarket, with dirt-cheap, bank-owned properties during a housing slump) it may be necessary to pull the trigger very quickly if you find a home you like. However, you have to balance the need to make a quick decision with the need to make sure the home will be right for you. Don't neglect important steps like making sure the neighborhood feels safe at night as well as during the day and investigating possible noise issues like a nearby train. Ideally you'll be able to take at least a night to sleep on the decision. How well you sleep that night and how you feel about the home in the morning will tell you a lot about whether the decision you're about to make is the right one. Taking the time to consider the decision also gives you a chance to research how much the property is really worth and offer an appropriate price.

Mistake 7: Being too slow to pull the trigger

The home you are looking at today and may be thinking of placing an offer on tomorrow may be the same home that somebody saw yesterday and is thinking of placing a good offer on today.
It's a tough balancing act to make sure you make a careful decision yet don't take too long to make it. Losing out on a property that you were almost ready to make an offer on because someone beat you to it can be heartbreaking. It can also have economic consequences. Let's say you are self-employed. Perhaps for you more than anyone else, time is money. The more time and energy you have to take out of your normal activities to search for a house, the less time and energy you have available to work. Not dragging out the homebuying process unnecessarily may be the best thing for your business, and the continued success of your business will be essential to paying the mortgage. If you don't pull the trigger quickly, someone else might, and you'll have to keep looking. Don't underestimate how time-consuming and routine-disrupting house shopping can be. (A small business can increase your disposable income. To learn how to set one up, see How To Make A Million In Your Small Business and Starting A Small Business In Tough Economic Times.)

Mistake 8: Offering more than a house is worth
If there's a lot of competition in your market and you find a place you really like, it's all too easy to get sucked into a bidding war - or to try to preempt a bidding war by offering a high price in the first place. There are a couple of potential problems with this. If you offer over asking,strongly consider an appraisal contingency. The bank won't give you the loan if the home doesn't appraise. The seller reduces the price or you pay cash for the difference. Make sure the purchase price for the home you buy is reasonable for both the house and the location by examining comparable sales and getting your agent's opinion before making an offer. Your buyer agent will help you with this.

Thinking about buying a home? Let's talk. I am here to help


Adam Bashein
Licensed in MD & DC
Weichert Realtors
7821 Tuckerman Lane
Potomac,MD 20854
301-718-4100 ext.132

Tuesday, May 4, 2010

What is your home worth? What did it appraise at and what is the home assessment?

Surprised,perhaps unhappy with your recent home appraisal or assessment on your home,let's talk. I spoke with a client about his home.
He is trying to refinance his current mortgage. In his opinion,the appraisal came in low. So we discussed his home and the real estate market. I then looked up similar homes that recently sold and gave them to him so he can start the appeal process.
I can't guarantee a result since I am a realtor and not a certified appraiser.
If you are in a similar situation,give me a call, I am here to help.

And,if you hear of somebody who is thinking of selling his/her home,I always appreciate your referrals.

Life is good!


Adam Bashein
Licensed in MD & DC
Weichert Realtors
7821 Tuckerman Lane
Potomac,MD 20854
301-718-4100 ext. 132