The real-estate market has been in a slide, no doubt about it. Homeowners are now looking to sell their homes at prices that would have seemed inconceivable just a couple of years ago, and this is a great time to buy. One of the fundamental unwritten rules of investing in real estate is to do so when it is possible to buy low and hold on until the market goes back up. There are some common mistakes that buyers make in a market like this though, and I am going to help you avoid them.
Location is still key. Prices have fallen in many areas, but that does not mean they are all areas worth buying in. If an area is experiencing a downturn due to a rise in crime or the departure of an industry or institution, don’t be so sure the value of the home you are considering will climb back up anytime soon. Even if the price just seems too good to pass up, make sure you do your research. What are the area schools like? Are property taxes out of control? These factors are all important to consider.
Don’t let the real estate agent strong-arm you. Both sellers and real estate agents are feeling the pinch right now, and they have to explore a variety of tactics to get homes sold. Many agents are cutting their support staff and lowering their commissions. Considering the circumstances, it is possible to negotiate with your agent and even to comparison shop if you think you are not getting the best deal. A veteran agent will understand that this kind of flexibility is necessary in a down market. If yours does not want to budge, do not hesitate to go elsewhere.
Look out for that mortgage. There is simply so much attention paid to finding the right home and negotiating the deal, that many home buyers ignore the one factor that can save or lose them the most significant sum of money over the course of a few years: The mortgage. It should go without saying; you absolutely must shop around for the best rates and terms. Do not get suckered by something with a low monthly payment but that has a high Annual Percentage Rate (APR). This is your chance to do this thing right to make a sound mortgage choice for the long run, and a bad mortgage will flat-out ruin those chances. Make sure you have time in your mortgage to ride out the storm, no short term ARM’s if you buying to resell when the market turns.
The most common advice in the investing world is, of course, “Buy low, sell high.” You must apply the very same logic to the real estate market if you hope to make a sound financial investment. Lower prices are great, but also make sure the home you are buying is in a good area and that you get a good rate (and low fees) on your mortgage. And if you do happen to make a killing on the property, just remember who gave you the advice that helped you to do so.
Article by GetPreQualified.com editorial staff. This Article is designed to be of general interest and should not be considered legal advice. The specific information discussed may not apply to you. Before acting on any matter contained herein, you should consult with your personal legal adviser.
