Buyer's Classes

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Buyer's Classes Getting ready to buy ... Things to think about	Buyer Overview Getting Ready to Buy Things NOT to Do Is Buying a Good Idea? Advantages of Home Ownership. How to Recognize Value How to Make An Offer Are You a SMART Buyer?
Are you buying a HOUSE or a HOME? As you read and study about buying real estate, you will often find the words "house" and "home" used interchangeably. There is a huge difference between a house and a home. A house can be a place to eat, sleep, park your car, and put all your "stuff" (including other family members). It is a material possession and an investment. A home is where you feel comfortable, warm, safe, and protected. A home is where you live. A house is something you buy logically. A home is an emotional purchase. When buying real estate you have to balance your emotional wants and your logical needs because there will almost certainly be a time when the two conflict. For example, you may want a house with a view, but the payment is higher than you feel comfortable with on a thirty-year fixed rate mortgage. What do you do? Purchase the house anyway and budget more carefully for the next few years? Buy the same house without the view and get it cheaper? Make a larger down payment by borrowing from your 401K or family members, so you get a lower payment? Get an adjustable rate mortgage with a smaller payment instead of a fixed rate loan? Or buy a smaller house and still get the view? When viewing the house, most people look at it emotionally and envision it as a safe, happy, comfortable home. Later, when making the offer or filling out a mortgage application, your logic may begin to kick in, instead. The trick in buying real estate is to view all decisions with both a logical perspective and an emotional perspective. If a situation presents itself that requires a trade-off, decide on whether there is a huge conflict or a small one. Logic should win the big conflicts, but emotion should always be a factor, even winning the small ones. You will find yourself owning a warm, happy, safe home – and an investment for the future at a price you are willing to pay. When is the best time to buy? There are times when the economy is brisk and everyone feels confident about his or her prospects for the future. As a result, they spend money. People eat out more, buy new cars, and …they buy houses. Then, for one reason or another, the economy slows down. Companies lay off employees and consumers are more careful about where they spend money, perhaps saving more than usual. As a result, the economy decelerates even further. If it slows enough, we have a recession. During such a time, fewer people are buying homes. Even so, some homeowners find themselves in a situation where they must sell. Families grow beyond the capacity of the home, employees get relocated, and some may even find themselves unable to make their mortgage payment - perhaps because of a layoff in the family. If you are lucky enough to purchase a home during a slow period, you can be reasonably certain the economy will begin to show strength again. At times, real estate values may even surge drastically. In many regions of the country, this is precisely what occurred in the late eighties and nineties. One problem with attempting to time your purchase to the business cycle is that no one can accurately predict the future. Another challenge is that interest rates are generally higher during a depressed market and income may not be keeping up because less overtime is available and bonuses or commissions are down. With higher interest rates and lower earnings, fewer people can qualify for a home purchase than in more prosperous times. Plus, "timing the market" generally works best for first-time buyers. People who already have a home usually need to sell it in order to buy their next one. If a "move-up" buyer wants to buy a home during a depressed market, that means they usually have to sell one during the slow market, too. If a seller wants to sell his home to take advantage of a "hot" market when prices are fairly high, they generally have to buy their next home during that same hot market. It tends to equal out.
It can be SCARY... When you were in hot pursuit of the "American Dream" you were excited about the future and owning your own home -- researching neighborhoods, searching MLS sites on the internet, viewing homebuyer’s magazines full of appealing homes that were just "minutes from the beach" with "fantastic views" and "cozy family rooms." Next came the really good stuff – looking at houses. Full of imagination and optimism for the future, you wandered about each home envisioning a happy and contented life for you and your family. The first house might have been "too big," and another was "too small," but finally you found one that was "just right." So you made an offer and waited anxiously and excitedly for the counter-offer. Finally, you and the seller agreed on terms and you bought yourself a brand new home! Congratulations! Break out the champagne and celebrate! However… Later that night or perhaps the next day, you started worrying. Did you make the right decision? Can you afford it? Is it the right time? Should you have waited? What if you lose your job? What if this happens? What if that happens? Anxiety and stress set in. Sleep may be hours in coming. This is a normal reaction to buying a home. It is called "buyer's remorse." This is what you do... Take out a pen and paper right now and draw a line down the center of the paper. Calmly and logically, think of all possible advantages to buying a home and write them down on one side of the page. Afterwards, you should list all the disadvantages on the other side of the paper. This process is supposedly how Ben Franklin used to weigh tough decisions. After you get done writing your lists, you may think back on your anxiety and think you were being silly. After all, buying a home is obviously a good decision. Your list *proves* it. But your reaction was normal and shared by many. You see, buying a home is not entirely a rational process. It is an emotional process, too. You will not be totally stress-free, but it will help. [ Things NOT to Do ] [ A good idea? ] [ Don't Pay RENT! ] [ Recognizing Value ] [ The Offer ] [ SMART Buyer Guides ]