Improve your home buying experience. There are home buying advantages and disadvantages. Searching for a home is a process. There are advantages and pitfalls in the process. Learn home buyer benefits and avoid disadvantages. Buyers have a mental picture of what they are looking for in a new home. Maybe first time or seasoned home buyers. Reason vary: renter ready to purchase a home, growing family want a larger home, kids are grown downsizing, want a better neighborhood and school district, changing from condominium to home, changing from home to condominium and etc. Purchasing a home is a large investment and should not be taken lightly. Home buyers guide home buyers advantages disadvantages.
Home Buyers Guide Home Buyers Advantages Disadvantages
1. KNOW QUALIFYING MORTGAGE AMOUNT.
As a Realtor, I meet prospective buyers inquiring about purchasing a home. You will ask the prospective buyer if they have a PRE-APPROVAL from a direct lender? Unfortunately, the answer is NO. BUT they know they can qualify for this home at this asking price. THE ADVANTAGE: FIRST THING a buyer should do is get a PRE-APPROVAL. Obtain from a direct lender. Have lender give rates and terms on both conventional and FHA financing. Once you have Pre-Approval will have a reality about what you can afford. Know your home purchasing power. Areas are dictated by price ranges. The home price ranges vary per area. Culver City price ranges are different from Cheviot Hills. Disadvantage not being pre-approved.
Suggest not making large purchases three to six months before buying a new home. A large purchase before purchasing a new home will affect your credit rating. It may lower mortgage loan amount and FICA score. Home Buyers Dealing With Finance.
2. Find A Home You Can Afford.
3. Home Buyer Tip Find A House You Can Afford.
There’s a general rule of thumb when it comes to buying a home. There are also a number of tools and calculators online that can help you understand how your income, debt, and expenses affect what you can afford. Don’t forget, that there are lots of considerations beyond the home’s selling price. Include in monthly housing expenses property taxes, home insurance, energy costs, etc. Note: Property taxes in California are 1.25% sales price. In California adjust accordingly.
Estimated Cost of Homeownership
3. GOING TO SALE EXISTING HOME AND PURCHASE NEW HOME?
The housing market has improved and sellers are planning to purchase a new home after they have sold their existing property. Contact a local Realtor get a Comparative Market Analysis of your existing home. Home Buyers Guide Home Buyers Advantages Disadvantages Is there enough equity in the existing property to purchase a new home? Or will the new purchase require selling your current home? The process when selling requires time. Current property has to be listed and receive an accepted offer from a qualified buyer. After an offer has been accepted home enters escrow. The escrow period can be about 30 to 60 days. If your home is currently on the market the total selling process can take a few months. Prospective buyers allow time to sell your current home.
Now you know the estimated equity in your home. Head off to a direct lender see your purchasing power for a new home. Will you be able to purchase a new home in the desired area? If not consider homes in surrounding areas. Home Buyers Guide Home Buyers Advantages Disadvantages
4. LOCATION, LOCATION, LOCATION
The 3 L’s may not be everything but close to it. Best locations are higher priced neighborhoods for good reasons. It is to a home buyers advantage purchasing home in best affordable location.
- Established Neighborhoods
- Surrounding homes well kept
- Notice updated, renovated and new construction in residential and commercial areas.
- Low Crime Rate
- Good School District
- Surrounding homes in the same neighborhood well kept. Condominium project well kept.
- Well maintained shopping centers and activities.
- Low police presence.
- Is block location is home on commuter or residential street?
- Compare neighborhood annual appreciation rates. If considering different neighborhoods contact local Realtor® for neighborhood’s appreciation rates.
5. The School Districts
Home Buyers Guide Home Buyers Advantages Disadvantages. Neighborhoods with the best schools have higher home values. Parents want their children in the best public schools. Even if you do not have children school districts are good indicators of property values. Checking school districts in areas of interest.The advantage good school district. Disadvantage poor school district.
This is a big one. Check crime rates in the area of interest. Get an idea of the crime rating over time. Searching for a home check community crime rates. Areas with high crime rate and heavy police presences have lower home values than communities with low crime rates. Home Buyers Guide Home Buyers Advantages Disadvantages. Advantage neighborhood with low crime rate. Disadvantage neighborhood with high crime rate.
7. Homes Position
Verify if the residential street is a busy commuter street with heavy traffic. Does the home provide privacy? Does the master bedroom look into the neighborhood’s bathroom? That may be a location problem. Condominiums with the highest value tend to be top-floor and end units. End units have one common wall. Does condo view brick wall or greenbelt? Things to consider when searching for home or condominium. Resell values base on home or condominium location. Financial advantage good location and disadvantage poor location
8. Walkability – Skateability – Driveability
Homeowners want the ability to walk to shopping centers, parks, beaches. Want to walk or bike to work? What is driving time to kid’s school? What is the driving time to work? Where is local Medical Center? Where is the closest freeway. In West Los Angeles what is the driving time to downtown Los Angeles and LAX? 21st century trends have mixed-use communities. Complex with commercial use on ground level and living spaces on upper floors. Or community where commercial, residential, entertainment is inter-mixed. Example would be Playa Vista Silicon Beach. Residents are able to work, live and play.
9. Neighborhood’s Character
May have found the perfect house that has everything you want. Pause just a moment. Check out the surrounding area. Los Angeles, CA is funny. Maybe a FAB area but just two blocks away an area of lesser value with higher crime rate. Just be aware of your surrounding area.Check local schools, crime rate, parks and shopping centers. Visit areas shopping centers and coffee shops. Home Buyers Guide Home Buyers Advantages Disadvantages
10. Best House on the Block
I have conflicting views about the best house on the block. Some may suggest buying the best house on the block does not leave any room appreciation. I do not agree because if the real estate market appreciates that home should appreciate based on average rate in the area. On the other hand, if home appraises for much less than your offered amount proceed with caution. Do not let emotions dictate paying to much for an overpriced home. If home is over improved/overpriced for area it will be tough recouping your money. Buyers choice just be aware of purchasing a home over the appraised value. Home Buyers Guide Home Buyers Advantages Disadvantages
If you buy a fixer-upper know the cost to get the home up to your standards. What are the repairs cosmetic or major repair/replacements? The home may be in the most desirable area, with great schools and a low crime rate. Have a professional inspection of roof, plumbing, electrical, chimney and etc. Shop contractors for estimated costs for replacement items including labor. Request referral from all contractors. What appears to be a simple cosmetic job in the kitchen may end up being a home renovation. How to determine value of fixer upper? What are the costs involved to get the home up to snuff. Cosmetic repairs/replacements maybe $10,000.00 to $30,000.00. On the other hand, major replacements like roof, plumbing or foundation can run in the tens of thousand dollars. Do your homework. Add home’s purchase price plus repair/replacement costs. Calculate the total purchase price with repair/replacement costs if value is current market or over market values? Cosmetics repairs and renovation takes money, time and energy. Compare fixer home price plus repairs to homes in standard condition. Compare to renovated homes.The fixer maybe a great deal. On the other hand, the total price maybe discouraging.Get out your calculator. Is A Fixer-Upper Worth It?
12. Will Home Hold Value?
The “Great Recession” saw a decrease in property values of approximately 20% to 40%. Mid 2012 some areas had seen a stabilization of values. Short sales and foreclosed properties diminished. In 2013-2014 the real estate market rebounded. The market maybe depressed or strong. Ask yourself, what will happen to the values if the market changes tomorrow? The real estate market is up and down.Purchasing real estate is a long term investment. Average time frame is 7 to 10 years. Have your Realtor give you a snap shot of property values in last seven to ten years. A good real estate agent familiar with your neighborhood can supply statistical information needed. As a homeowner find ways to add value to the property. As time goes by homeowners may have to replace items (roof, plumbing, electrical and etc). Remodeled kitchens and bathrooms translate to higher values.
13. Planned Unit Developments Dues, Fees and Special Assessment
Purchasing a Plan Unit Development (condos, townhouses, and homes) have monthly homeowner association dues. West L.A. newest PUD Playa Vista. Playa Vista has mello roos fees as well. Generally, these fees are due monthly. Verify the homeowners associations month dues and reserves. Verify if there are any special assessments or law sues against association. Verify what are included in HOAs gardening, landscaping, pool spa and or tennis maintenance, insurance, earthquake, etc. Another big item is the homeowner association’s reserves.Reserves used for emergencies and major repairs. Buyers want project with large reserves. Have written verification.
- House vs. Condominium
- Be aware of condominium HOA’s dues and special assessments.
- Advantage homeowner association with large reserves. Disadvantage homeowner association with small reserves.
- Is condominium project an apartment conversion or built as condominiums?
- Consider units location. Top floor corner units have the highest values. Where is unit located does it look onto greenbelt or parking lot?
14. Always Have a Professional Home Inspection.
You have found the perfect home. You have entered escrow. There is a home inspection contingency in purchase agreement. Buyer has about 5-15 days to perform physical inspection of the home. ALWAYS hire a professional home inspectors. They will inspect all elements of the home. Never rely on Sellers or Realtor® opinion. The home buyers can visually see elements of a home. But what about the roof, electrical, plumping, foundation, etc. It is to a home buyers disadvantage not to hire a professional home inspector. It could be a costly mistake. Hire A Professional Home Inspector.
- Location, Location, Location
- School District Ratings
- Neighborhood Crime Rate
- Search of home you can afford
- Home location on block
- Walk ability to shops, restaurants, shopping centers, recreation centers, public transportation, health centers and etc.
- Commuter time from home to work, freeways, schools, shopping centers and recreational centers and etc.
- Neighborhood and surrounding areas characteristics.
- Best House on the Block
- Fixer-upper pricing compared to home in original condition, remodeled or renovated home.
- Homeowner’s estimated home maintenance.
- Advantage: New or renovated commercial development in neighborhood?
- Community involvement in maintenance of neighborhood. Are surrounding homes well maintained?
- Condominiums and townhouses be aware of HOA’s dues, fees, reserves and special assessments.
- Is condominium project well maintained?
- Is condominium project apartment conversion or built as new.
- Condominium location (floor level and location in complex).
Home Buyers Guide Home Buyers Advantages Disadvantages. The home buyers process takes time and planning. The first step is getting a mortgage pre-approval. Once, you know your purchasing power narrow down neighborhoods. What are the neighborhood’s characteristics. Research the school district and crime rate. Realtor will give statistical market data .Walk and drive around neighborhood and surrounding areas. Visit shopping center, parks and etc. Decide if you want fixer, standard, remodeled or renovated home. Home Buyers Guide Home Buyers Advantages Disadvantages.
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