The following is a guest post from real estate economist and expert Alex Vasser, based out of Manhattan.
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If it’s a sellers market or a buyers market, it doesn’t matter. There are solid fundamentals that should be considered before buying a home. This is an unofficial list of the 5 most important things.
Get Preapproved from a Good Lender
A pre approval letter is simply numero uno when buying a home. All the other things are a moot point if a person can’t get the money to buy the home. A good lender, will not only get a competitive rate, but will spend the time and look at all the income and worth, to determine what can be afforded.
“Lenders aren’t giving away money anymore,” cites Arline Wong, a residential Real Estate agent in the Seattle area.
“It means something to get lender approval. Thsi shows you sat down and brought paystubs, W-2’s, and you worked to get that pre-approval letter. It shows you’re serious.”
Just remember, when submitting an offer, most will ask for an approval letter from the lender.
Hire a Qualified Buyers Agent
Not just any agent but a buyer’s agent. Like doctors, or lawyers, Realtors also specialize. Some just do listings or just concentrate a certain neighborhood. Don’t just hire the agent with the television commercials and all the signs around town. Make sure you get one that specializes in buyers.
“A good buyer’s agent will help you do everything you need to buy the home,” says Sue Brodie, , Prudential NW Realty’s VP and Managing Broker. “They’ll make sure you’re approved, tell you about the neighborhood and everything that comes with it. Even if they don’t have all the answers, they are qualified to find the answers you’re looking for. Realtors are held to a higher standard”
The husband wants to be closer to work, the wife wants a good school district and the kids want to a big backyard. But what’s the most important? As buyers, be on the same page and prioritize the needs.
“So much falls under this category,” explains Brodie. “Whether it’s location, schools, or being close to work, it’s important the decision makers are in agreement. If they’re not, it’s like they’re working against each other.”
The 5 Year Plan
Especially in a slow market, plan on being in the home a minimum of five years. There is no such thing as flipping the houseanymore.
“I tell all my people to prepare to live in the home for at least five years,” says Joseph Ho, a commercial and residential agent of 25 years. “To build equity and recapture your investment, you’ll have to be in it for a while. There’s really no way around it these days.”
Brodie adds, “It’s not a short or a long term investment. It’s a moderate investment. You can’t flip things now.”
Stay within Spending Limit
It happens all the time, people try and buy big when it comes to the new home. The lender says you can afford a $300,000 home, and the buyers stretch it to a $325,000 home.
“It’s called being house poor,” according to Brodie. “When all you can do is feed the house payment, and there’s no money left for anything else. You don’t have to have everything right away. The first home is usually not the dream home.”
Alex Vasser can be reached on Twitter at @alexvasser2.