There is an article over at US News, that is of great interest to buyers, highlighting some of the rules of home buying.
Yes, some of these rules have changed during the downturn, but some did not, and now we are seeing some of the "old" rules come back. It all depends on your locality. Here in Knoxville, we are experiencing multiple offers on some properties, particularly when properties are priced right.
I think these "rules" are also important for potential sellers to read, so they know what they will be facing. So, here are my top 5 rules of home buying:
1. Get pre-approved for a mortgage. Talk to your preferred lender and know how much house you can afford. Too often, home buyers surprised that they do not qualify to buy as much house as they thought. To strengthen your offer, a pre-approval letter from your lender will go a long way. If you do not have a preferred lender, I am happy to recommend a few.
2. Consider foreclosed properties and short-sales. Bank-owned, HUD-owned, Fannie Mae-owned, Freddy Mac-owned properties can be a good deal. Be forewarned, if the property is in relatively good condition, it will be priced at or near market value in our area. There are extra steps to take when purchasing these properties, and the process may take a little longer. Purchasing a foreclosed property or short-sale property, a pre-approval letter must be attached to your offer to purchase.
3. Work with a Buyers Agent. Many first time home buyers think they will get a better deal if they work with the listing agent. This is simply not true. The listing agent has a contractual agreement with the seller to represent them and their best interests, not the interests of the buyer. Your buyers agent will work for you, look out for your best interests. The best part for buyers is that you don't pay your buyers agent, the seller does.
4. Research your desired neighborhood. Or, ask your buyers agent for a market analysis of the neighborhood you are interested in. Take note of the percentage difference between the List Price and the Closed Price. Days on market still does not mean a lot here in Knoxville, as the average DOM (days on market) is just over 4 months. As that changes your buyers agent will tell you.
5. Expect competition. As I mentioned above, we are seeing multiple offer situations on properties that are priced right. What does that mean for a buyer that needs financing? You are competing with cash buyers, this is one instance a pre-approval letter will strengthen your offer. Sellers aren't just looking for the most money the market will pay, they are also looking for the best terms.
As you can see, my top 5 rules of home buying are similar to what the financial experts are advising. I do have a few different reasons for some of the same tips, those just show our local market. With mortgage rates still low, and rents on the rise, this is a perfect time to buy a home. I am always happy to help.