What Do You Need to Know Before Buying Real Estate?

Everyone wants to get a bargain when they buy real estate. I’ve NEVER met anyone who said, “I hope can find property to buy today and pay the owners a lot more than it is worth.”

But what you may not realize is that not everyone is trying to sell their property at retail market value.

I know that may sound a little crazy when you first hear it. But the fact of the matter is that people sell real estate for a lot of different reasons. And sometimes those reasons mean that a quick sale is more important to them than selling for a high price.

The most critical factor in real estate purchases is finding the “true value” of a property.

Once you know the value of a property, you’ll know whether you are getting a bargain or a money pit.

After you’ve figured out the true value, there are other things you will need to consider:

* after repair value – what will the property value be after needed repairs?

* the comparative market analysis – how does the property compare to similar properties?

* gross rent multiplier – is this property worthy of further research and consideration?

* capitalization rate – what is the valuation of a rental property?

* vacancy and credit loss – what if you have no tenant?

* gross potential 1ncome – what will your potential fully-occupied rental income be?

* and much more…

There’s a saying in real estate, “You make your money when you buy a property, not when you sell it.” Don’t make the mistake of buying a money pit. If you educate yourself and buy correctly, you can follow the footsteps of others who have generated their fortunes by buying real estate wisely.

Remember: It’s important to know both the market value of any property you are considering as well as its’ personal value to you.

And now, I’d like to invite you to determine your own destiny. You, too, can build wealth with real estate, and I’m here to show you how.

Something to Need Before Buying Real Estate

According to the Real Estate Roundtable (non-profit public policy entity based in Washington D.C. that works on public policy issues concerning the real estate industry), real estate plays an important role in the economy of the United States as a whole. It generates 1/3 or an equivalent of $2.9 trillion worth of GDP (gross domestic product) that results in the creation of 9 million jobs. In addition, real estate is the major source for about 70 percent of local tax revenues that are used to pay for public schools, health services,
roads, peace and order, and other essential services.

That is why many individuals are attracted to buying and selling real estate properties for
a profit. Real estate market is one of the active markets in the U.S. economy, with real
estate brokers and developers bidding on different properties available for sale and
searching for hot properties from MLS (Multiple Listing Services). They will try to make
more money out of these properties and attempt to sell these properties for about 30 to 40
percent of its original purchase price.

With the continuous competition rising among different real estate players, there are things
that you need to know about buying real estate properties. Of course, you do not want to
spend much of your money acquiring a real estate property that is not properly maintained.
In the same manner, you would not want to purchase real estates that are overpriced by more
than 50 percent, excluding applicable taxes and fees.

Here are some of the things that you should consider when buying real estate properties
(especially those who are first-time buyers):

1) Value Does the property have a good value? It is a common procedure that banks will
conduct an appraisal to protect their interest on the property. In case that the value of
the property is lower than the contract price, you must renegotiate the contract price and
prove to the seller that it is not worth of what they are asking. However, in case that the
value of the property exceeds the contract price, then most likely you got a good buy based
on the value.

2) Condition as previously mentioned, you must not spend your money on real estate
properties that are not properly maintained. You should always conduct a property inspection
to make sure that it bears no deficiencies.

3) Parking make sure that there are parking spaces allotted (especially if the property is
for commercial purposes). You would not want your visitors to park their vehicles several meters away from the property.

4) Safety- many real estate buyers are focusing on the value and condition of the property
that they often forget to inquire about the neighborhood where the property is located. If
you are familiar with the area, then it is not a problem (whether you will stay in that
property for good or you will lease it to other individuals). However, you might as well
check the premises for any obscure atmosphere (high crime incidence, for instance) so that
you will be able to establish the safety around the neighborhood to yourself or to other interested buyers.

Make sure that you consider the aforementioned essential aspects when buying real estate
properties. Keep in mind that the success of your real estate purchases lies beneath on your purchasing strategy and not just on what the seller tells you.

The Right Way Buying Real Estate

After years of representing buyers of Real Estate I decided it was time to write a post that would give advice to anyone dipping their toe in the Philadelphia Real Estate home buying pool for the first time or for the first time in a while. The current economy has pros (low interest rates) and cons (high unemployment, shaky economy) like any others but I firmly believe that one thing holds true in any economy – the advantages of buying far outweigh renting for most people in most cities. So without further ado, here’s the advice that I can offer after a decade of buying, owning, investing in, managing, leasing, and selling Real Estate

    1. Find an experienced, honest, straight shooting, full time real estate agent. This is not a shameless plug! I firmly believe that smart, successful people surround themselves with smart, experienced, experts that can help guide them to a well thought out decision. If you don’t buy and sell Real Estate every day all day for a living, how could you possibly understand the local Real Estate home buying process and all of the nuances and intricacies of the available inventory, purchase contract, title insurance and mortgage process? How could you possibly know what a good deal or a great deal looks like? You can’t! Get referrals from friends, use Google to search, go to open houses and keep looking until you find someone you feel has the experience, resume and personality to represent you and your interests.
    1. Get Preapproved. This is synonymous with get pre-qualified. Every day soon to be buyers of Real Estate call and tell me what the upper limit of their property search is. I always ask “how do you know that’s your limit?” and the answer is inevitably the same – I used an online mortgage calculator. Getting preapproved is a 100% free, no obligation way to find out what you can really afford from someone who specializes in local mortgages. If you are represented by an established agent (see above) he or she may be able to get you a better rate than the one you were quoted online or by another lender. Be honest with yourself about what you can afford every month and remember that you don’t have to spend the max amount you can qualify for. Find a monthly payment amount you are comfortable with and stick with the correlating loan amount.
    1. Create A Hierarchy of Priorities. I subscribe to the House MD theory of Real Estate sales (i.e. everyone lies) but it’s not that clients are intentionally being misleading, rather they really don’t know what they ultimately want because they don’t know the inventory and they may not know what features are must haves and what features would be nice to have. Buyers should consider everything before looking at homes: price, beds/baths, square footage, outdoor space, parking, location, walkability, floorplan and neighborhood. Be realistic about what you can afford and then sit down and actually write down what features are essential, and which would be nice but are not deal breakers. Try to rank the features because you will ultimately be forced compare and decide. No buyer at any price gets 100% what they want, everyone makes concessions and compromises.
    1. See Everything. Obviously you shouldn’t literally see everything but you should plan on seeing enough homes that you are ready, willing and able to pull the trigger when you see the right one. Somewhere in the 15-20 range is probably reasonable. Take advice from your agent on which homes you should see because he or she has likely seen many with other clients or during broker’s open houses.
  1. Enjoy the Journey. There is one thing I am entirely certain of and that is that buying Real Estate should be a fun, enjoyable process with an equally fun and satisfying ending. There will be inevitably be stress and emotion because of the costs, time, complexities and personalities involved but at the end of the day try to enjoy the process. Work with smart, honest agents and lenders who make you feel comfortable and allow you to breath, smile and just maybe even laugh occasionally.