In the Real Estate world there are some people that I listen and learn from. One of them is Barbara Corcoran, a self made Real Estate mogul with great spunk and even more wisdom. I am going to share some of her answers that are great stuff for first time home buyers.
1. What is the biggest mistake new home buyers make?
According to Barbara, first time home buyers go in way over their heads and put themselves in an uncomfortable financial position. So, as we have spoken about in countless articles, it is imperative to visit your loan officer before you start your home buying adventure. To avoid this mistake the new home buyer needs to figure out just how much money they feel they can afford each month and stick to that number. When you know that number you can find out from the banker and your Realtor just how much house that will buy. It is important not to go looking and get emotionally attached to something that will strap your budget. If you start out with houses that are not in your range then the others do not quite measure up.
2. How do you know if you are getting a good deal?
Today, that is a fairly easy answers since pretty much across the board the deals are great. Appraisal values are extremely conservative these days and the new home buyer can be assured that everyone is on their toes because of our sins of the past. Ask your Realtor to give you the last 3 homes that were comparable that sold. This will be a really good indicator that you are getting your deal.
3. What is the least amount that a buyer can put down on a home?
Typically the amount down depends on several factors not excluding your buying power and credit score. If you are conventional it is usually anywhere from 15 to 20%. There are programs such as FHA and Rural Development where your down payments are much lower. For FHA it can be around 3.5% but again it is best to call your lender and he or she can tell you what is the best bet for you.
4. How can you improve your credit score?
This is a really big one now and lenders are getting tighter on some issues that were a little loose before. For instance it is very important that during the time that you are applying for a home that you DO NOT go out and make any major credit purchases such as appliances or cars. This is true during the entire process and not just when you put in your application. Now lenders are checking on these things right before close. If you have specific questions concerning this your loan officer is in the know about these guidelines. Another thing that you would not want to do is cancel any of your paid off credit cards thus lowering your credit ratios. Many people think it is a good idea to cut those offending pieces of plastic up but put down those scissors and get the facts from you bank.
5. What is a good opening bid?
Now this is one of my really hot topics and I have plenty of chances to address this in today’s market. I am probably asked this more than any other question of my buyers. The opening offer is a very important number and coming in with a low ball offer on a property that is worth more will not usually get you the deal. Your Realtor is really astute at figuring out what the value is. If it is priced too high then, of course, you can go in below and be closer to market value. Usually if you start off too low people are aggravated and do not take you seriously and in the meantime someone else waltzes in and gets a great deal. Again, this is a case where looking at what the comparables have sold for will help you with your decision. Look at what houses are selling for per square foot and that can be one of your guidelines with the help of your Realtor to go by.
It remains a very exciting time for new home buyers especially with great interest rates and house prices lower than we have seen in years. Florida continues to rank third in the nation in foreclosures, according to Realty Track’s U.S. Foreclosure Market Report. This sad state of affairs continues to be a great opportunity for Florida buyers. As usual there is a blessing tucked in every negative.
Thanks for following us on Pcbdaily.com and until next week you know the drill. Find someone that needs a hand up and a little hope and share it and remember, “The only people we need to get even with are those that have helped us.”
Karen K. Smith
“The only people we have to get even with are those that have helped us”