Photo by The Truth About…
With all the negative news these days about the housing markets, you might mistakenly be thinking now is not the time to buy. However, if you've got a steady job and are ready to take the investment plunge, now may be the best time to starting looking for a home.
By David Plough
With the housing market down it is becoming more and more of a buyers market all over America. It has gotten to the point in many areas it could be beneficial for you to start looking for a place to buy as opposed to your next apartment. If you are in a steady job there is really no good reason to not consider buying a home. Being a homeowner is not only a great fact to drop on the ladies (for you single folk); it is also a very solid investment.
If after doing some research on the area you plan on living you decide to start looking for a house, be prepared for a long and mentally draining process. You will look at what seems like hundreds of houses. You'll see places you hate, places you like, places you like in neighborhoods you don't, and houses you don't like in neighborhoods you want to move into. There is very little room to just settle for the sake of ending the search. This is where you are going to live for the foreseeable future and a place you are going to hope to make a profit on. Remember if you don't like where you live, why would any future buyers like it?
How Much You Should Spend
First thing you need to do is figure out your budget. There is no point in looking at a $400,000 house if you can only get a loan for $150,000. While in the current market sellers are more then willing to negotiate a price, anything over a ten percent drop shouldn't be expected. When it comes to budget using what you pay in rent is a decent barometer for what you can afford. If your rent is around $800 a month and you are constantly in a money crunch; then a house payment of $850 should be out of the question.
Also, if your budget is tight with that $800 a month rent, you don't want $800 a month in house payments. This is due to, what I call, the hidden home owners costs. Things like property tax, your typical home maintenance (plumbing repairs, lawn care, roofing repairs, etc.), and homeowners insurance are going to cause you to spend more money then you think. Keep in mind things like your heating and a/c bills are going to go up now that you have more space to heat and cool also.
Beginning the Hunt
After you have a general idea of what you want your budget to be it's time to start looking at houses. Many realtors have websites where you can take virtual tours of houses, see interior and exterior pic's of houses, and using something like Google Maps or Mapquests' street view, you can even get an idea of what the neighbors houses are like. Finding these websites can save you tons of time and money. Find three or four of these sites so that you can cover most every available house in your area and price range.
Don't skimp on looking at government owned properties or foreclosures. Websites like hud.gov have plenty of great houses on them. If you have time for a bit of a long closing process and don't mind doing a little work; you can find real steals on it. I can say this with confidence as my house was a HUD buy, and it's been appraised at twice what I paid for it.
A very important part of this process is your realtor. Talk with your friends and family to see if they can suggest anyone for the job. If you have a close friend or family member who is a realtor, go to them. You are going to want someone you can trust. Finding the right realtor is a big a part of this process. You want someone who is knowledgeable about the city you are looking in and knows that city's current trends. Buying a house is a lot like playing black jack. You're not always going to be up when you walk away from the table, but if you have the right information, you have a better chance. The realtor is like the dealer who hands out information while you play. If you have a good one and he is giving you good info, you stand a better chance then with the dealer that tells you to double down on sixteen.
Satisfying Your Better Half
There is a variable left to address before you start looking for houses. Are you looking for a place for just you, or is there a significant other involved? If you are single, then you are ready to pick out a few places and go see them. If you have someone else who will be buying with you then it is time to go over all of your selections with them. There are going to be places you like that they don't, the trick here is finding out what is absolutely necessary to them and what is to you. Once you have that figured out you can easily navigate through the sea of homes for sale. Still be sure to slip in one or two of the houses you liked and they didn't when you setup you showings. You never know, maybe there will be something they realize they like about the house. On the flip side, you have to be willing to walk through some of the ones you were absolutely against. This is a good way to make sure of what you want and what they want.
This all may seem like nothing, but when your lease is starting to creep up on you and you decide to start the search, everything above becomes a chore. You start to consider houses that are out of your price range, houses with floor plans that make your skin crawl, neighborhoods you are afraid to drive through start to seem not so bad. You have to keep focused and remember what it is you like and don't like. If you hate small backyards but there is a house that is in your price range and you kind of like the floor plan, and you “think” you can deal with the cement slap with a six inch strip of grass around it for a backyard, don't do it. You will wind up hating the home and wishing you had held out for the place down the street that was perfect and went up for sale the day after your closing. Remember, houses go up for sale every day. You can always find someplace you like; sometimes it just takes some patience.