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.

Legal Advice About To Buy Real Estate

Buying real estate can be a great investment if you are looking to create long term, sustainable profits. It can also be one of the biggest moments in your life if you are just buying a single home, as a home not only provides you with a lifetime of memories, but it can be the biggest single investment and piece of collateral that you own in your entire life. You buy real estate in the hope of making substantial gains or securing your future and the future of your children if you are looking to pass down real estate to them.

But estate law is perhaps the most needlessly complex and tedious of all laws. This is largely because of its wording, which most people don’t fully understand because of the legal jargon, as well as contracts being intentionally vague. The result is people getting conned or buying properties that end up being financial liabilities.

It’s All in the Details When it Comes to Real Estate

Buying is not the only major concern in regards to the complexity of real estate law, as the fields of management, repair and foreclosure all fall under the expansive and complicated world of real estate law. Foreclosures in particular are difficult to deal with for a number of reasons. Firstly, they bring significant hardships on families, in terms of financial, emotional and personal anguish. Secondly, zoning and housing regulations can change fairly regularly, which can result in costly penalties and unnecessary fees whether you are buying, selling, or own a house. The difficulty of this subject is only exacerbated by the fact that housing and zoning codes can be influenced by neighborhoods, counties, states and even federal matters. The end result is a myriad of legal issues that will leave you burned out and frustrated.

All of these reasons should encourage you to do two things. The first of them is to take your time, regardless of whether you are selling or buying. Knowing the market is incredibly important. If the market is bad, you should look more into buying, rather than selling, and if the market is good, you should look more into selling. If you sell or buy at the wrong time, you can end up costing yourself a small fortune!

The second and by far the more important thing to consider, is looking into hiring the services of a firm. Given the complexity of the legal codes, and the volatility of the market, you are going to want an expert assisting you every step of the way. They can assist you in all matters ranging from codes and regulations, buying, selling, and even in the unfortunate event of having to foreclose on your home.

Real estate firms are the unquestioned masters of their craft, and if you make the decision to pay for their services in the short term, you are likely to end up saving a tremendous amount of money in the long term. So if you are looking to buy or sell real estate, contact your local law firm today!

Some Steps for Buying Real Estate

Buying Real Estate is part of the American dream. For those who have never been down the “buying real estate” path yet, you just…

1. Get Pre-Approved. Even if you don’t think you can afford it, or are concerned about a down payment, or your credit – the first thing you should do is talk to a skilled mortgage lender. It’s their job to help you fix your credit, tell you how much you can afford, and help make it all happen. They will advise you if a down payment is needed (it may not! Many people arrange to buy a home with nothing down, $500 down, or 5% down), how much your monthly payment will translate to (i.e. tell them you want to spend $X a month, and they’ll translate that into a purchase price of $Y). If you need to repair your credit, they’ll be able to refer someone or give you some tips and help on how to fix it up.

2. Once you meet with a mortgage lender, you’ll get a letter of pre-approval. It looks informal, but what matters is the listing agent (representing the sellers of a house you later want to buy) calling them and doing some research on whether you can in fact close and purchase the property. You then take this letter to a Realtor (R) / Real Estate Agent (note: Realtor is a real estate agent that adheres to a code of ethics; for practical purposes they’re essentially the same, though a Realtor(R) has more accountability and is therefore more highly recommended). This is step 2 of buying real estate.

3. The fun part: Shopping! Step 3 of buying real estate usually involves you looking at a bunch of properties on the internet, driving around some neighborhoods, then when you see some homes you think you might like, just email or call your agent and ask to go see it. Don’t get too hung up on this, and at first, go see some houses even if you know it’s not quite right – just to get some ideas of what you like and don’t like. On paper, or on the computer, a house is just a bunch of numbers – 3 bedrooms, 1873 square feet, etc. – but in person, you’ll find that the “bones” of a house, they layout, and the materials vary widely. On each home, communicate what you like and don’t like to your agent. Ideally, you should do this on each home, and by listing your favorite points, and factors you didn’t like, you’ll help your agent slowly hone in on what you really want. This is step 3 of buying real estate, and it usually turns out to be more work than you expect. By the way, it’s OK if a house or condo or lot seems OK on paper, but just doesn’t feel right. Trust your gut…buying real estate is emotional and you want to feel at home. Usually, if something doesn’t feel right, it’s because it reminds you of some other home, and many times, people ultimately buy a home that feels like a home they lived in as a child and therefore feel at home in.

4. The exciting part of buying real estate comes when you find a home you want. Just tell your agent this one feels right, and you’d like to put in an offer. Let your agent do the negotiating for you, it’s their job, and they get paid by the seller so the service is essentially free. You can call the mortgage lender back now and tell them you’re finally buying real estate, and give them the purchase price you want to offer, along with any other expenses such as taxes and insurance. They can give you a more exact payment on the house, which you’ll then give your agent a range to offer, starting low with a walk-away price. The agent helping you in buying real estate will know the conventions and strategy best for your local market and sniff out competing offers, etc. This offer will then be accepted or declined or counter-offered.

5. The nerve-wracking part of buying real estate is closing the actual transaction. Once your offer is accepted, you then start a 2-way “dance” called “escrow” or “under contract” or “closing”. This means the further you get into the deal, the more committed you are financially, and the more committed the seller is because they’re packing their life into boxes. Expect a bit of buyers remorse – it always happens about a week in, and just remind yourself why you like the house and imagine your life in your new home. Also, expect that the closing date is just a guideline, and it could be earlier by a few days, or later by a few days. Most commonly, people close in about 30-45 days. Depending on your state, you’ll sign a new loan on about day 25 or day 29, and then move in about day 30 (or 45, depending on your contract period). You’ll sign a binding loan and get keys, the seller gets cash (and their old loan paid off, if they have one), and the bank gets an enforceable contract that you make house payments toward. Once it “records” the deal is 100% done, you own the home, and about 6 weeks later you’ll make your first house payment to the bank.