For most people, home buying is one of the biggest purchases of their lifetime. And it is the most rewarding of all other investments too. After all, which other investment let's you use it, improve it, enjoy it, raise your family in it, leverage it, write off taxes, and most likely realize a nice appreciation too?
Like all other investments, there are precautions you must take to make sure you don't end up making a wrong decision. Here are 7 we suggest.
1) Do NOT buy much more than you can afford: This is critical. Buying what you can't afford, just to show off to your friends or for false ego satisfaction, can cause a lot of headaches with time. You will end up working many more hours to keep up with your mortgage payments. You will be stressed out. You will not have time to enjoy the home as you are working harder. And, as seen many times, buyers who over buy, end up defaulting.
2) Do NOT buy unless you plan to stay in the home for atleast 3 years: Even in an slightly appreciating market, it takes that long to get your money back including the closing costs. So while buying is an excellent idea and everyone should, you must analyse your situation first.
3) Not working with one agent: Many buyers will call from ad to ad and sign to sign. They want to work with the listing agent but they don' realize that they are losing out on seeing many great values that didn't even have the time to get a sign or be advertised. Hiring a right agent and then trusting him/her can make a big difference between finding the right home at the right price. Ofcourse, the key here is interviewing few agents and making sure that the one you are about to choose does this for living (full time) and has your best interest in mind.
4) Not buying the right home: Many times, we see a buyer loose out on the right home just because they wanted to negotiate harder while someone else was willing to pay the price for the home. It is more important to find the right home that you will love to come back to every night instead of buying one that is a little cheaper. We are not saying you should buy more than you can afford here, what we are saying is that within your budget, buy the right one. Also, make sure that the home meets your basic needs.
5) Reading wrong books: There are books out there that guide homebuyers to make an offer 15% below asking price. Nothing can be more misleading than this. Remember the author is making his/her money by selling books and more they misguide, more they sell. While they may have an excellent point for overpriced homes and while they may be giving a great advise in a falling market with no demand, they make many miss out on right homes that are priced right to begin with. While reading such books is OK, following their advise blindly can almost guarantee no home and if you get one cheaper, it was overpriced anyhow so you got no bargain.
6) Waiving a home inspection: Such a large investment and you want to save few hundred dollars in inspection money? Not a good idea at all. Home inspection not only helps you possibly find defects, it also helps you renegotiate the price if there are major issues, thereby paying back many times the inspection price. Just make sure the inspector is licensed and insured and will stand behind his/her inspection.
7) Not hiring an attorney: Again, remember this a large investment and you want to be protected by a good professional, specially if the opposing side has an attorney to represent them. Don't consider this as your cost, it is an investment.
This advise has been brought to you by the professionals at On Track Realty in Edison, NJ. http://www.ontrackrealty.com/. For any questions, please feel to call us at 732.494.2211.
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