As the market continues to change, lenders are chaning their requirements, foreclosures are in abundance, and the government is giving buyers the kitchen sink, also come the misconceptions about buying.
Many buyers listen to the national media and begin to believe everything they hear. STOP! Here in Texas, things aren't as good as they were in 2005 and 2006, but how could the market ever keep up with record breaking sales? Yes, it is a buyer's market. Yes, there are lots of foreclosures. Yes, you can find a pretty good deal. But, realize that in real estate there is nothing set in stone. Every home has a different seller and different circumstances. Some sellers have more equity in their homes, some are negative as far as equity is concerned, banks do want to sell their current foreclosure inventory, but they are not going to just give properties away. Consistently, the Houston, Dallas, Austin, and San Antonio markets are at the top of the nations best seller's markets(call us the best fo the worst). But, the best fo the worst means that things aren't nearly as dismal in Texas real estate as they are in the res of the country.
Although, this article was not written by a Texas REALTOR®, it is loaded with truth about buying real estate in any market.
"The declining home values that are plaguing homeowners are just one of the factors creating an opportunity for prospective home buyers.
Standard & Poor's latest Case-Shiller index, which tracks home prices across 20 major U.S. cities, reported that values dropped 19% in January from a year earlier.
Those depressed values, combined with near-record-low mortgage rates and government incentives (an $8,000 first-time home buyers' tax credit included in the stimulus bill), are luring more first-time home buyers into the market. Indeed, a recent Century 21 Real Estate survey found that more than three-quarters (78%) of potential first-time home buyers say now is a good time to buy.
If you agree, be aware that buying a home comes with plenty of potential missteps. Here are 10 all-too-common mistakes first-timers make.
1. Not knowing how much house you can afford.
Many novice home buyers spend a lot of time researching homes - comparing kitchen layouts and backyard square footage - but very little time researching their financing options. One of the first things buyers should do is talk to a qualified lender and get preapproved for a mortgage, says Claire Clark, senior vice president of business development at Prudential California Realty. Without first figuring out how much house you can afford, you risk falling in love with one you can't.
2. Assuming foreclosures are great deals.
Just because the previous owner owed $450,000 on a house before the bank took it over doesn't mean it's worth that much now. Values have slipped significantly, says Jay Michael, partner at Estate Property Group, a Chicago real estate brokerage, so you may not be getting the bargain you think with a foreclosure. Also, most homes owned by lenders or banks have been sitting vacant for months and may have been vandalized. That could require extensive renovation or repair. Weigh the costs of fixing up the property against the savings you'll likely reap by buying a lower-priced foreclosed home.
3. Letting your true feelings show.
No matter how much you've fallen in love with a house, don't let the seller's agent in on it. Otherwise, they will gain the upper hand in negotiations.
4. Failing to find a good buyer's agent.
Landing a mortgage is tough these days. So buyers should rely heavily on knowledgeable agents to help them get their finances in order, says Michael. After all, buyer's agents have a fiduciary responsibility to the buyer exclusively -- and should be looking out for their best interests. Start your search at the National Association of Exclusive Buyer Agents, a nonprofit representing buyers. Or consider using an agent recommended by a relative or friend. Interview each candidate about their experience, if they've worked with first-time buyers before and what kind of service you'll get from them.
5. Underestimating the costs of owning a home.
Whether it's a rusty pipe or a leaky roof, things go wrong and need to be fixed. Many home buyers don't anticipate the additional costs for repair and maintenance, or for an increase in utility costs, says Erin Baehr, CFP and president of Baehr Family Financial. Consider the age of your new home and how well it's been treated by the previous owners in your budget. Be prepared to set aside a small percentage (1% at most) of the home's purchase price annually for repairs and upkeep.
6. Failing to budget for property taxes.
Property taxes - and the likelihood that they'll climb over the course of your time in the house - should be factored into any home-buying budget, says Baehr. To get an idea of how much you'll be paying, call the local assessor's office or talk to people in the neighborhood.
7. Assuming your first offer will get accepted.
As home prices get even more affordable, competition is bound to heat up. "You can't assume you'll walk in there, make the offer and get it," says Clark. Try not to get discouraged if you lose out on the first - or second - house you make an offer on.
8. Skipping the inspection.
Before signing anything, hire a professional inspector, says Justin Lopatin, a mortgage planner with American Street Mortgage Company. The seller isn't likely to tell you there's mold in the basement or the walls are poorly insulated. Lopatin advises buyers to find and hire their own inspector - independently of the realtor - to ensure there's no conflict of interest. (You can find inspection companies in the phone book, or by doing a simple web search with your zip code.)
9. Doing too much too fast.
Some buyers want to make the house their own right away, says Baehr. They overextend themselves on credit to do so, and assume the improvement will pay for itself by increasing the home's value. But that's not always the case - especially in today's market. Instead, buyers need to exhibit patience and make changes over time.
10. Failing to include a contingency clause in the contract.
A mortgage financing contingency clause protects you if, say, you lose your job and the loan falls through or the appraisal price comes in under the purchase price. Should one of these events occur, the buyer gets back the money he used to secure the property. Without the clause, he can lose that money and still be obligated to buy the house, says Lopatin."
To read this article form it's original source, click on this link:
Yahoo! Real Estate News
Original Title: 10 Mistakes First-Time Home Buyers Make
Original Author: By Lisa Scherzer, SmartMoney.com
Written: Apr 10th, 2009
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Oziel "Ozzie" Ramirez was born and raised in Pearland and has lived his entire life in the Greater Houston area. His birth parents are originally from Mexico, but he was raised by an Irish woman(THE most influential woman in his life, along with his wife and daughter), in Pearland, Texas. His roots run deep in Pearland, due to the fact that his family has called Pearland home since before 1950. His father graduated from Pearland High School in 1963 and attended college at Texas A&M. Ozzie would later graduate from the same high school in 1999. He loves Pearland, he loves the commercial growth of Pearland as well, but still misses the small town feel that Pearland use to have when he was younger. There is nowhere he would rather live or do business than in Texas, The Greater Houston area to be exact.
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