Tips on Home Buying in Today’s Market

Buying (and also selling) a home used to be so much less complex than it is today. Twenty years ago, all you did was find a Realtor and get them to show you houses. The commissions were all 6%, 7% in some areas. The closing process was pretty much predictable. You didn’t have to worry about issues like whether or not the house had been improperly foreclosed on, which could lead to title problems. Mortgage rates were higher twenty years ago, that’s one minus, but also whenever you bought a house you pretty much expected that it would rise in value year after year. So, if you wanted to sell the house four years from the date of purchase, you would be pretty secure in knowing that you could sell it for more than you bought it for.

Now, all of this has changed!

Today, many, if not most, folks find their houses in the Internet. The buyer has a lot more control over the whole process. With that control, however, comes the work and responsibility of finding the house and contacting various Realtors. Buyers tend to work with Realtors later in the buying process, rather than earlier.

Before the mortgage crisis, virtually everyone could get a loan. There were even loans called “ninja” loans, because you didn’t even have to have a job to get one of these babies, just a great credit score. Well, we can all see where that policy lead! Today, if you want a mortgage, you’d better be squeaky clean. And the more money you have for a down payment the better.

Another issue in today’s market is price. Housing prices have dropped quite a bit in virtually all markets. This means two things. One: You can’t depend on the value of your house rising, so you better buy it below market value, if you’re thinking about selling it any time soon. And, Two: often you’re negotiating not only with the seller of the house, but the seller’s lender. A huge number of sellers are trying to sell their houses before they get foreclosed on. They owe more than the house is worth, so they have to negotiate with the lender to reduce the payoff on their mortgage. This is called a short sale, and unfortunately, it’s quite common in today’s market.

Not all lenders are as willing to do short sales as others. What does this mean to you as a buyer? Well, it means that although you might have found the house you love, and although the seller might be quite willing for you to buy it at your price, the lender might not go along with the deal. This added layer of complexity can get very vexing for buyers. Patience is the watch word for today’s buyers.

Probably the best thing you can do in today’s market is get with a very experienced Realtor who understands short sales and also who has solid contacts in the lending community. With their expertise in dealing with sellers and lenders, you’ll increase the chances of not only finding the right house, but being able to negotiate a deal with the seller and the lender.

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