WHY IT MAKES SENSE TO BUY NOW

Many buyers are “sitting on the fence.” They don’t know whether there will be a “double dip” in the economy. They feel they missed out on the tax credit incentive etc. While these and other issues, like job uncertainty are keeping many away from making the commitment, there are also excellent and unprecedented reasons to buy now.

Sellers too, have been hesitating, concerned that they won’t receive a “reasonable price” for their homes. They seem to want to wait until prices have come back to pre-bubble bursting times. There is a belief (wish, desire) that things will recover and do so pretty soon. Not only that, many aren’t considering the fact that while their home will rise in price, sometime in the future, so too will the property they want to buy, as well as the cost of their mortgage (when rates rise as well.) Consequently, there are excellent reasons for some sellers to market their homes now as well.

As reported by the LA Times below, interest rates are the lowest they have been in the 39 years Fannie Mae has been tracking these rates.

Prices as most are aware, are back where they were 5-7 years ago and have either stabilized or begun to inch up. With the “affordability index” at its highest point in over 10 years, there are more potential buyers available.

It takes a simple math calculation to document to people how much they will save by buying now @ 4.5% then waiting a year or two when interest rates move up to and over 6%. It will make it even more expensive if property values increase a slight 3% over the next few years.

Below the link to the LA Times article is a link to the mortgage calculator I used in my example.

http://latimesblogs.latimes.com/money_co/2010/07/30year-mortgage-rate-edges-down-to-new-record-low.html

http://www.mortgagecalculator.org/

SAMPLE COMPARISON – BUY NOW @ CURRENT PRICES - BUY LATER (3% appreciation)

Sales Price today $600,000 $618,000

Loan Amount (20% DP) 480,000 494,400

Interest rate (4.5% current) 6.5% projected

Payment (30 year) $2,432.09 $3,124.74

Total interest paid $395,552.22 $630,579.95

TEN WAYS TO SAVE THOUSANDS WHEN BUYING OR SELLING REAL ESTATE

#8 BUYERS
OFFER THE SELLER EVERYTHING YOU CAN (as long as it doesn't cost you anything)
Many buyers "shoot themselves in the foot" by to let the seller know how tough a negotiator they are. Needless to say, in most instances this has the opposite of the desired effect. The listing agent and seller thing the buyer is going to be a pain and tend to be dismissive of the offer.

Compare this with a buyer who puts up a large deposit (costs him nothing since it is refundable if the offer isn't accepted), has short inspection periods (contractor already lined up), has been pre-approved for the loan (has to do it anyway) and offers to close escrow at a time convenient to seller (costs don't accrue until escrow closes). Now, even though the seller might not like the buyer's price, they know if they can get some movement on price, they have a deal that is very appealing. This of course gives the buyer much greater leverage in the negotiation of price.

#9
NEGOTIATING BASED UPON INSPECTIONS
Here again, novice buyers often make mistakes. When a buyer believes the inspection period is an opportunity to further negotiate the price down, or get some other freebies, and combines this by being "real cleaver" and having his brother-in-law the handyman do the inspection, things do not usually end well.

First, and perhaps most importantly, the buyer doesn't get someone very experienced to look over the home in detail. If there is something serious going on with the foundation or roof rafters, will the brother-in-law catch it? If not, it's the buyer that will have to deal with the consequences.

Secondly, whatever is "found" will need a bid from a professional to be seriously considered. That will require an independent third party. (The seller may already have bids as well, which will make the buyer's goal even more difficult.)

Buyers, please remember, serious and expensive issues arise with some homes. Make sure you have the inspections you need from competent professionals. If there is an issue, you will be in good responsible hands when it comes to negotiating, knowing how much it will cost to resolve. And your claim will be considered valid.

#10
A Short List of Money Saving Suggestions

* When escrow closes and work, if any is completed, re-key the locks. You don't know who has keys and though this will cost you some money it could save you a great deal.
* If escrow is supposed to close on a Monday, see if it can be postponed until Tuesday. (In order for a Monday close, your lender will need to fund your loan on Fri. That's when you begin to accrue interest charges. By waiting until the next business day, you save those per diem charges, which only benefit the lender.)
* If you are going to be in your home less then 5 years, it is possible to get 90% of your title insurance back by securing a "binder" on the property. (Please see your title company for details....it's really easy.)
* Shop for insurance early on in the transaction. Many buyers get so caught up in the day to day issues during the transaction that they forget and then rush at the end without giving appropriate time to shopping for the best rate and terms. Please educate yourself! As someone who lost his home in the Oakland Fire, I know what it's like dealing with insurance companies. You might want to check out the following site: http://www.fool.com/personal-finance/home/foolish-advice-on-homeowners-insurance.aspx