My Pinole Real Estate

For many deciding to buy a home is an exciting and proud moment. Whether it’s your first or third home, the likely scenario is you don’t know what to do first or you don’t remember what you should do first. I can’t tell you how many times I’ve received phone calls from prospective buyers who, when I start asking them questions about financing, closing costs, repair costs, say, “I don’t know,” or , “I haven’t done that yet.” Talk about putting the cart before the horse!

Most of the time I start out with the requirement that they get their financing in place before we start actively looking for a home but in fact there is a lot to think about before you even decide if buying a home is a good idea for you.

THINK ABOUT YOUR DECISION!

1. In today’s housing market, buyers need to think long term. If you cannot safely say you will be living in your home for 7 years or more, it’s not a good idea to buy.  It’s likely that a slow or depressed trend in housing is going to continue for a few more years. If you suddenly had to move or are thinking of starting a family and needed to sell, you would most likely not recoup your costs if you sell within those seven years. The one caveat to that sentiment is that if you could rent your home for as much as or more than your total payment, that would be a good option. However, most people use their equity from their existing home when they sell to put down on another home. You will not be able to do that for a while as no one is doing seconds on homes when the first is over 65% loan to value.

2. Where do you really want to live? Of course price is always a factor in purchasing your home. Consider what you have to pay for a home and know where you can afford to buy. Visit those areas extensively and decide where you will be happy living. If you won’t be happy living where you can afford to buy then don’t. Keep saving your money. But if you will be happy, be specific. When I was buying my last home, I had specific zip codes where I wanted to live and I told my Realtor to only send me listings in these zip codes.

3. How much can you really afford? This is a very important. BE REALISTIC!The money to buy a home is not just your down payment. Closing costs can be somewhere between 3-4% of the purchase price of the house.  Many cities and counties have point of sale ordinances that are the buyers responsibility in this market. A sewer lateral replacement can cost up to $4,000 and must be done within a certain time period after the sale. If you are buying a foreclosure, it’s likely the condition will be poor and repairs will be needed. Assume you will need at least $5,000 in reserve money for repairs to the home.

4.  Find a good agentwho you can work well with, whom you trust, and who knows the local market. Be willing to trust their knowledge. Being a realtor myself, I can’t tell you how important this last point is. I can’t tell you how many times I’ve received calls from people who are looking for homes but who refuse to work directly with an agent. They drive around and call when they see a property they like. What a waste of time! That’s the Realtors’ job. Realtors make sure you are getting the listings that match your criteria. I’ve also had conversations with prospective clients who don’t want to hear what I have to say about pricing and writing offers. I have refused to write offers for people who won’t listen to me. I had a client the other day want to offer $55,000 on a house listed for $65,000. I told him he would have to offer at least $80,000 to be competitive. I have confirmed that all 8 offers that were received were at least $20,000 over asking.

5. Keep your options open!Most people think that in today’s market, the deals are the foreclosures but that’s not necessarily true. For people purchasing with cash or large down payments, foreclosures may the right purchase for them. Keep in mind that these home are in poor condition generally and need a lot of work. For most home buyers, you’re goal is to purchase your first home, not your first project. Additionally, if you are using an FHA (Federal Housing Administration) loan to purchase, you will be limited to homes in relatively good condition. Short sales are becoming a good option too as more of them are closing and with less wait time.