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Buyer Information

You've come to the right place to start your home search. The individuals selling real estate here are just like you and me. They're not real estate "professionals" whose business it is is to extract the highest price from the buyer as possible.

While everyone wants to sell high and buy low, buyers and sellers here know they have more room for negotiation because they're not paying six percent to an agent or broker.

As a potential home buyer there are several questions you should answer for yourself:

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Should I buy a house?
  1. Does it make sense economically?
    1. Is my rent cheaper?
      1. Would the saved money get a higher return elsewhere?
      2. Would I invest saved money?
    2. Do I have a large down payment?
      1. Down payments of less than 20% typically require private mortgage insurance.
      2. FHA 3.5% down payment mortgages are still available despite the credit crunch.
    3. Can I afford the added expenses?
      1. Mortgage Payment.
      2. Property taxes.
      3. Homeowner's insurance.
      4. Emergency repair fund.
    4. Is this a good investment?
      1. Is the current real estate market high, low, stable?
      2. Will real estate out perform the market?
      3. Would I invest the money not spent on a house?
      4. How much would I save through mortgage payment tax deduction?
  2. Does it fit my lifestyle?
    1. Like or tolerate yardwork and maintenance?
    2. Kids?
    3. Am I handy?
    4. Am I rooted in the community or am I likely to leave in a few years?
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How much can I afford?
  1. Current budget?
    1. Monthly rent.
    2. Renter's insurance.
    3. Utilities.
  2. Homeowner's budget?
    1. Monthly mortgage payment.
    2. Homeowner's insurance.
    3. Property taxes.
    4. Utilities (could be much higher for an older house).
    5. Emergency fund (it's -10°F and your furnace just died!)
    6. Mortgage tax deduction.
  3. Get pre-approved.
    1. Get your credit report.
      1. Get it free from www.equifax.com, www.experian.com or www.transunion.com.
      2. Correct any mistakes.
    2. Find out your credit score.
      1. Order it from www.equifax.com, www.experian.com or www.transunion.com.
        1. Unlike credit reports, the scores are not free ~$15.
      2. Improve it if necessary.
    3. Try at least three lenders (you want a good rate, right?)
    4. An actual loan commitment letter is best.
    5. A pre-approval letter with lots of caveats isn't worth much.
    6. A pre-qualification letter is worth less (maybe worthless).
    7. Gather your financial information for the lender.
      1. Last year's tax return.
      2. Latest statement of all existing loans.
      3. Latest statement of all current credit card accounts.
      4. Last two years W2s or 1099s.
      5. Last two months of all bank statements.
      6. Last two months pay stubs.
      7. Latest statement of each retirement account.
      8. Evidence of any other assets.
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Do I need an agent?
  1. No!
    1. If you're buying a FSBO property they increase costs.
    2. They get paid when you close so they want to close, close, close!
      1. When you pay too much they get paid more!
        1. A good buyer's agent will have a remedy for this.
      2. The sooner you close the better for them.
      3. The more discerning you are the worse for them.
  2. Maybe
    1. If you're buying a FSBO property they increase costs.
  3. Yes!
    1. If you're buying a "full service" MLS listed property you should have an agent.
      1. But only if you have a buyer agency (BA) agreement.
        1. Without BA "your" agent works for the seller.
        2. With BA the agent must legally represent your best interests.
      2. If an agent shows you a property they're "your" agent for that property.
        1. Unless they specifically agree in writing to disavow any claim to commission or representation as a result of showing you the property (not gonna happen).
        2. If you don't have a BA with them you'll be locked into representation with an agent who is legally obligated to put the interests of the seller above yours.
    2. If you're buying a "flat fee" MLS listing you shouldn't have an agent.
      1. Flat fee sellers are FSBOs who are willing to pay a buyer's agent's commission (but not a listing agent or broker).
      2. If you have no agent the flat fee seller has more room to negotiate a lower price.