BUYING A HOME

Homes appreciate about five percent a year on average, and recently in Story County, quite a bit more than the average. Appreciation helps the value of your investment. 

The interest on your mortgage and your property taxes are both tax deductible; the government is essentially subsidizing your home purchase. Income taxes paid are less due to the IRS interest rate deduction. 

As you are thinking about your offer to purchase a home, look at the condition of the home, what other homes have sold for in that area recently, how many other people are making offers, and how much you want this particular property. 

Whether you’re a first-time homebuyer or a seasoned real estate investor, buying a home is a an exciting process. However, there’s also a lot to consider when you decide to buy. So before you begin your search for the perfect property, here are four questions you should ask yourself:

1. WHAT DO I WANT?

Take the time to figure out what type of property you want to buy. From single-family and multi-family homes to condos and co-ops, there are many different options on the market and it’s important to choose the type that best fits your needs. Figuring out the town or neighborhood you want to live in is equally important. While a property might have all of the amenities you’re looking for, factors like crime rate and proximity to highways can impact the overall home-owning experience. A good idea is to list out and prioritize your needs (e.g. large backyard, great school system) before you begin your search.

2. WHAT CAN I AFFORD?

The rule of thumb is that you should never spend more than 30% of your monthly income on a mortgage payment. An alternate rule states that you can afford to buy a property that runs about two-and-a-half times your annual salary. For a more tailored look at what you can afford, use an online mortgage calculator to see what your monthly mortgage payments would be if you bought a home today. 

3. AM I FINANCIALLY PREPARED

A few months before you start searching for a home, review your credit history and make sure it is in good standing. Get copies of your credit report, ensure that it’s accurate, and fix any issues you discover. It’s likely that you’ll also want to get pre-approved for a home loan, which will put you in a better position to make a serious offer once you find the right property. Pre-approval from a lender is based on your credit history, debt, and income.

4. HOW DO I MAKE THE BEST BID POSSIBLE?

Do your research! Your opening bid should be based on the sales trends of similar homes in the area. So before making your opening bid, get online and review the selling prices of comparable properties. If these properties sold for less than the current asking price of the home you’re looking at, you can feel comfortable make a bid that’s slightly lower than what the seller is asking.

A professional realtor has immediate access to the latest data on sales in the market area you desire. She can provide detailed information on active listings, as well as a history of sold properties in the area. 

Buying a home can be an overwhelming process. From negotiations to financing and closing, there are a lot of moving pieces that can leave home buyers bewildered. As Real Estate Agents, we can help guide you through each step of the buying process, offering sound advice along the way. By working with a professional agent who knows the ins and outs of the real estate industry in Story County, you’ll not only end up with a great home, but you’ll also walk away with a great experience.

Here are some of the key areas that we can help you with:

1. GETTING PRE-APPROVED

By providing us with some basic information about your income, savings, and debt, we can assist you in getting pre-approved by a reputable lender. The lender will then go over your financing options, what monthly payment amount you can afford, and what you can expect for down payment requirements and closing costs.

2. CHOOSING A HOME

For most buyers, choosing a home is an emotional process. An agent can assist you in this process by offering objective information about each property you look at. From local community information like schools and zoning to home-specific details like condition and amenities, an agent can help you find exactly what you’re looking for.

3. MAKING AN OFFER

Once you’ve found the home of your dreams, an agent will research recent comparable sales of similar homes in the area to help determine a fair selling price. Based on those comparable sales, as well as other factors like inspections and repairs, an agent will then help you structure an offer and negotiate to get the very best deal possible.

4. CLOSING

Closing, or settlement, can be a complicated process. In some areas, the escrow or title company handles the closing process, while in other areas an attorney handles it. Regardless of where you’re buying, a real estate agent can help ensure that everything goes smoothly.

In addition to the offer on the home price, buyers may choose to ask the seller to cover some of the other costs associated with the transaction as a bargaining tool. 

If you make an offer which is too low you run the risk of losing out to a higher offer and/or alienating the seller. 

If you find a house that you absolutely love, don’t play games: work with your agent to come up with a reasonable offer based on the sales of comparable properties in the area. Some buyers seem to think that taking their time and making a seller “sweat” is a good strategy for getting the best price possible. Don’t fall into this trap! You will likely never be the only one interested in buying a particular home, so if you find one that you love, get it before it’s gone. Don’t kill the deal by making too low of an offer or by making excessive estimates for repairs.

Most buyers are unlikely to make an offer that is too high, but in some cases people just fall in love with a certain house and offer over the market value. The danger here is that if they pay too much, and the home does not appreciate past that amount, they could lose money at the point they decide to sell the home. 

Your pre-approval amount should act as a guide, showing you what you could pay for a home if you maxed out your finances. Your pre-approval amount should not, however, be the price that you buy at. Buying at the tippity top of your price range will likely leave you “house poor,” which means you’ll be able to make the mortgage payment and cover recurring expenses, but then you’ll have little or nothing left for recreation or other projects. So instead of buying at the top of your approval level, but within your comfort level: a level where you’ll still have sufficient money left over for other things