Step One: Deciding to Buy!

Making the personal decision to transition from a renter to a buyer who would like to buy their first home can be a nerve-racking one.  You might be asking yourself what feels like a million little questions, in fear of making such a momentous step.  However, the fact is that fears will be fears, but we have to overcome them. Instead of fearing what could go wrong, focus on what could go right—the beautiful life and investment you will be establishing when you find that special place where, at the end of the day, you can say, “Dorothy was right.  There’s NO place like home.”

The Seven Main Concerns of a First-Time Buyer:

  1. Affordability
  2. Stability of the Market
  3. Lack of a Down Payment
  4. Poor Credit
  5. No Chance at Dream Home
  6. Tradition to Wait ‘til Marriage
  7. Process Too Complicated

Word of Advice: STOP fearing the unknown.  You don’t have to know everything, and you certainly do not have to know all of the answers.

The Truth is…                

  1. Homeownership is the best “accidental investment” you can make in your future.  When you think about it, the classic cliché, “Home is where the wealth is,” is true.  It provides freedom of personal expression and financial security for life in the long run.  With that home come equity accumulation, value appreciation, and tax benefits.  You are spending money to make that money back in interest.
  2. Equity is the fraction of the home’s value that you actually own.  In other words, it is your home’s value, minus what you owe.  It is the money you make after you sell the property, pay off your mortgage, and handle all selling expenses.  As you pay off your mortgage, equity increases so that the $175,000 that you originally paid comes back to you, along with addition monetary benefits gained thanks to price appreciation or an increase in the home’s worth.

i.     Purchase Price + Appreciation – Remaining Debt = EQUITY

  1. You can’t afford NOT to buy now.  The sooner the better to build the bank!  There is always that “right” home you can afford; it’s all about making the smart purchase.  You have to choose which one you find yourself thinking over more often: “What kind of home do I want?” or “Where would I want to live?”  Once you have that decided, your search will become simpler.  It’s a case of a property vs. location.
  2. If you’re paying rent, you CAN afford to buy!  The tax savings you will get back on mortgage interest make up for the difference between rent and a mortgage payment.
  3. Please don’t wait for the market.  You could miss a perfect opportunity waiting for “primetime” in the buyer’s market.  It’s not so much about timing as it is about “smart shopping.”  The first step is to make a list of your needs and wants in a prospective home and get started.
  4. There is a sea of down payment options as low as 5% or even less.  Delaying your purchase to save up for a down payment means delaying your financial benefits of ownership.  The problem is that waiting to SAVE will COST you money.
  5. Common Dilemma: A poor credit history or no credit history.  It’s not the end of the world; there is actually NO better way to establish good credit than to have a mortgage and make timely payments.
  6. The best way to get closer to owning your dream home is to own your first home!  You need a stepping stone.  In this sense, buying your first home acts as a “forced savings plan.”  Build up your credit and buy with the potential to sell.  More than half of U.S. home buyers compromise for their first home.
  7. Whether or not you will get married should not delay your decision to buy a home, although many individuals do not purchase a home until he or she is engaged and in the process of planning his or her wedding.  This may be a traditional outlook, but it doesn’t necessarily account for the couple’s best interest.  Deciding on a home and getting into the game early will pay off in the end—single or married.
  8. Buying a house is a detailed, complex process.  That’s the truth when it is done right.  You want to know as much information about the home you are about to purchase, the contract you will sign, and the area you will be moving into.  We at are here for you, to help you make the most informed decision for your future.  Our expansive technology, listing catalog, and client base are what have provided us with the education to help you find the home just right for YOU.

Cardinal Principles of the Real Estate Buying Process:

  1. Rules are localized from county to county, state to state, and city to city.  Don’t accept the common absolutes, such as “Always offer below the list price” or “Never look above your price range” without first building an understanding of how the market is operating in your area.  Transactions may be handled differently in Staten Island than they were for your cousins in Lakeland, Florida.
  2. Shop for WIN-WINs.  In preparation for any real estate negotiation, decide your limits: where are you and aren’t you willing to compromise?  The best deals incorporate a little give and take so that in the long run, both parties are satisfied.  Of course, this is easier said than done, BUT it is possible!
  3. Learn the difference between Price and Value.  It is important to be conscious of the cost, but be more concerned with the value!  You get what you pay for, which is all the more reason to search for what is most valuable to you.  Define value based on quality and reliability.  REMEMBER: You are investing in your future!
  4. Follow your heart, WHILE using your head.  One should never trump the other in your decision-making process.  You want to have that gut feeling and emotional attachment to the home you set your sights on.  However, at the same time, be rational.  Make sure it meets your needs and will in fact function as a solid financial asset.

Congratulations on taking Step One: Deciding to Buy!  Now, think long and hard about what you are going to be looking for and what you can afford.  The journey has just begun.

STORY TIME: Sharon & Bill

Rocky Start, But Great Investment

Take the first step and start putting some money together for a down payment.  Make a wish list.  Ask yourself what you want in a home.  Do you like the area you currently reside in?  Would you like to stay?  What are you likes and dislikes about this area?  You never know; sometimes your ideal home may be right around the corner from you to accommodate all of your needs.  See a For Sale sign?  Don’t be shy, ask your neighbors about the sale.  It might be just what you were looking for.

Sharon and Bill did just that.  They lived in a small, one-bedroom apartment on the corner of Beach Avenue.  To their surprise, when Sharon was walking her dog, she discovered a newly-placed For Sale sign outside a house eight doors away from her on the same block, but opposite side of the street.  She called the owner immediately, whom she knew in passing, and arranged for a tour for her and her husband.  She fell in love—it was perfect!  In less than a month, they had a contract drawn up, and Sharon and Bill took ownership.  The main problem here is that due to their familiarity with the seller, they cut out the middleman.  There was no selling agent involved and the deal was considered a For Sale By Owner.  However, although cost-effective at first, not using an agent was a mistake.  This decision saved the seller money on closing costs, but then cost the buyer money later, when they discovered that the property had a leaky roof that needed serious repairs.  A time-sensitive issue, the couple spent the money they had saved up to fund imminent repairs before they could buy any furniture or décor.

Whatever you do, don’t fear the possibilities and keep an open mind.  Sometimes, trying to save a little money here and there can come back to haunt you, depending on the situation.  Think in terms of what is best for you over a short—as well as long—term basis.  Unfortunately, in this particular situation, the buyer was unaware of any preexisting damage to the roof before closing.  Also, due to a lack of guidance by a buyer’s agent, the couple foolishly relied on a not-so-dated inspection that the seller had records to save some money.  Roof issues weren’t specified in this report.  New to the home buying process, the couple didn’t think to shop for an inspector and have another inspection done—A ROOKIE MISTAKE that could have been avoided with the right Realtor® leading the way!

Despite any and all issues, they loved the house.  It was everything they could ask for and it met so many of the specifications of their wish list, especially the swimming pool and large family room they wanted for entertaining.  Sure, they chose the right house for them and made it all work, but the right deal wasn’t made.  With a proper inspection, the problem may have been uncovered, repairs could have been budgeted into the seller’s closing costs, and all could have ended fairly for both parties.

For their first home, their investments and attention to home maintenance helped them sell for $28,000 twelve years later and use the money to buy a brand new, exceedingly-larger home.

Purchasing their first home so independently taught them, in the long run, the payoffs of homeownership, as well as the trials and tribulations of home maintenance.  If taken care of properly, one can definitely double the price of the home for which they originally bought it.