A house is the biggest asset that the majority of people will ever own. But while most think that they actually know something about real estate, the truth is that few of us have any idea what we're talking about. And that does not just apply to first time home buyers. What follows are five things that most home buyers should know, but don't.
1. When you buy a home, you're making two purchases. You are buying the home, and you are buying the money to buy the home.
It is often tempting for homeowners to think of a mortgage as an incidental expense. But the reality is that the loan itself may be the most significant piece of the transaction.
"For every 1% rise in interest rates, home prices must fall by 10% in order for you to maintain the same monthly mortgage payment. What matters is the monthly payment. So take advantage of low rates; they add much more buying power to your purchase than low prices.
2. Homes are like people -- they all have problems
Another thing home buyers should know is that each house has issues. Some just have more than others.
The shock generally comes when buyers get their inspection report. Inspectors are paid to be professional pessimists. But many issues only require easy and inexpensive fixes. A typical inspection report will be 40 to 50 pages long, and inspectors will take close-up photos. So while the actual listing shows gorgeous pictures with updated bathrooms, the inspection report will show awful pictures of a roof at the end of its lifespan. By the end of the report you will think that this house is a total lemon.
3. Your real estate agent is your advocate, not a salesman
"Your agent’s number one goal should be helping you find a great property, not selling you something. It is not a bad idea to interview at least a couple of agents in order to find the right match." Find out if your agent is an expert in the area you are trying to purchase. It is a huge benefit if your agent knows the comps well and can help you evaluate school systems and provide other valuable resources.
At the same time clients sometimes forget that agents have other clients and lives outside of work. The key is to make sure that all parties have a clear understanding of communication expectations. Find out what their normal response time is. How much lead time do they need to arrange showings as appointments need to be made with sellers living in the homes you will be viewing? What type of communication is best -- text, call or email? These are the types of questions that home buyers and real estate agents need to settle up front to avoid misunderstandings and disappointments.
4. HGTV is not reality. Hundreds of hours or footage is shot and edited down to a 15-minute show (without the commercials. These shows are made for TV and lack reality most of the time. "Yes, they are real buyers, but you don't see the half of it. We have had listings on these shows just to find out after the shoot that the buyer had actually purchased their house months ago. Don’t think you're going to enter your market and find the perfect house immediately. Finding your perfect home can be tough work, and it can take time."
Get prepared for the home buying process. It's worth it, but it is not Hollywood.
5. Always think about resale value
People buying any type of assets should keep this in mind: Some time down the road you are going to resell it and will want to maximize future gains.
"When you're buying your home, you're probably not thinking of the day that you will have to sell it. But just remember three little things when evaluating homes ... location, location, location!" Are there power lines? Are you backing up to a main road? How good is the school system? Is the driveway a cliff? Those are all things you cannot change and can affect value.
The bottom line
Lots of people will buy at least one house in their lives. With that in mind, you should save yourself the trouble of making the same mistakes that most will. Take these five pieces of information into consideration. You'll be doing yourself a favor if you do.
For more information on all of the above points and more, contact Ursula & Associates at 678-569-4044. Ursula & Associates is a team of real estate professionals specializing in Cherokee County and North Cobb County, GA and surrounding areas.
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