How To Buy A Used House

By: Jeff Ostroff

You'll find everything you need to know to come out ahead when buying a used home, including negotiating tips, scams and pitfalls to avoid, where to buy, where not to buy, and legal tips. We'll also cover how to choose a good real estate agent. Many concepts here can apply to homes and condos, or any other big purchase.

Be sure to get your credit score before you shop for a house
Everyone has a credit score calculated at the time your credit report is requested. It's based on over 100 different proprietary variables and algorithms developed by Fair Isaac (FICO). The range is 300 to 850. You can get your credit score from Equifax Score Power, True Credit or Qspace. Most lenders consider people above 650 to be prime borrowers, meaning they will most likely be approved at favorable rates.

Every person you come in contact with wants to sell you something.
Don't you dare think that anyone you'll come in contact with is looking out for your best interest. Every person you come in contact with wants to sell you something. That's their job, their #1 priority. Your happiness is 2nd to their mission statement. Once you overcome this common naive mistake that most home buyers make, you'll be able to make much better informed decisions that will save you the most money.

Just because you are approved for $200,000 does not mean you have to spend that much. If you can get a great house for much less than you are approved for, then that is the best move financially for you. There is no rule that says you have to spend the max, although most people finance on the outer fringes of their ability to sustain the payments. Don't let your agent try to qualify you for more than you are comfortable spending. They act like they are doing you a favor. They'll tell you "Oh, I can get you approved for a higher mortgage through my banking contacts".
Translation: "I want to sell you a more expensive house and get a higher commission. Buying a more expensive house does not always mean it's better, it just costs more." Your credit score will be used against you so find out what it is from The "merged comprehensive reports from the big 3 credit bureaus" are the ones to get, from sites like Equifax Score Power, True Credit and Qspace.

Common Home Buyer Mistakes
Many home buyers mistakenly think that they are protected by using a "Buyer's Agent", or a mortgage broker who will "find them the best mortgage". When I ask them who is paying the buyer's agent, they respond with "They just get a percentage of the sales price". OK, and how is this different from a seller's agent? You can put a sheep's clothing over a wolf, but it's still a wolf. The higher the selling price of the house, the more commissions are earned by the seller's and buyer's agents. Another common mistake home buyers make is thinking the price in writing is set in stone. The pen is mightier than the sword and sellers use it to their advantage when selling houses. But you can bypass this common buyer’s mistake by adopting a counter intuitive method of thinking. Just remember this one important rule:

Sellers do not set the price, it’s the buyers who set the price
How many times have you sold or traded in a used car and not gotten anywhere near what you wanted for it? This is because you thought you could set the market, but the market told you otherwise. Whether it’s a house or a car, the market sets the price, not the seller. Once you get past this mental roadblock, you'll find it much easier to offer much less than the asking price. The stock market is a good example. If you were unfortunate enough to buy the over hyped $150 “dot bomb” stocks in early 2000, you soon found they were selling under $1. Although you wanted $150 when you sold them, no one wanted your shares, and you suffered a huge loss. Houses are the same and many sellers are under the wrong impression that real estate must appreciate. There are no rules of what appreciates or depreciates. So don't be bashful about offering a low price on a house. Some homeowners who are selling their homes get the idea in their head that their house should sell for say $200,000 because they bought it a few years ago for $175,000.The seller may become indignant when you present them with a low ball offer. They may have bought the house when the market was hot, and in a soft market, their house may not be worth the asking price.

During the dot com rush of 1998-2000, many homes in Silicon Valley sold the day they went on the market, selling for much more than the asking price, thanks to foolish buyers and bidding wars. See my point? The buyers set the selling price, not the sellers. People were shelling out $500,000 for tiny 2 bedroom 2 bath, one car garage "doll houses" that you and I would never consider living in at all. When the dot coms became dot bombs in 2000-2001 and layoffs were in full swing, it took weeks to sell their homes, and many people took a bath on the resale. Sellers often got thousands more than their high asking price thanks to idiot buyers caught up in bidding wars.

By nature, us foolish humans have a hard time dealing with the fact that our property might be worth less than we paid for it. In overdeveloped areas, houses can lose their value rapidly, and you can use this to your advantage when buying a recently built home. One area of Pembroke Pines, Florida was bursting with development for a few years straight. People selling homes they bought new 2 years before were losing $20,000 on the sale of their homes because they were competing with all the new construction nearby. Buyers bypassed 2-3 year old houses for brand new homes with better amenities and updated building codes for the same price or slightly higher.

You cannot guarantee impartiality
Anytime your real estate agent's commission is based on the selling price of the house, you cannot guarantee that the agent has your best interest at heart. The only way to guarantee that is to pay a large fee to a real buyer's agent, and they don't get any percentage of the selling price. That fee however, removes the benefit of bypassing the commissioned real estate agent in the first place. Never tell anyone but yourself how high you are willing to go. By law the seller's real estate agent has a fiduciary responsibility to the seller, and they WILL tell the seller everything you say, so pretend you are in a police interrogation. The agent will ask you how high you are willing to go on the house. Don't fall for this trick. Just give them the price you want to pay for the house and if they ask how high you are willing to go, tell them that's it.

Don't buy a house in an urgent rush
Don't wait until the day you have to move out of your old house or get transferred to buy a house. You need time to carefully plan your purchase. It can take 2 months or more to get an agent, shop for the house, get approved for a mortgage, and close escrow. If you know you will be relocating and need a house soon, you should start looking now, because you don't want to be pushed up against a wall and forced into making costly and hasty decisions with adverse financial ramifications that will come back to haunt you. Just like on our other site CarBuyingTips.com, we warn car buyers not to wait until their old clunker dies before buying a new car. If your car is dying, you'll be forced into making hasty decisions and signing deals you should never have signed. Never let a dealer know you are desperate for a car. If the sellers know you are desperate to get a house soon, they will not drop the price. This little mistake can cost you thousands. Always make the sellers think you have plenty of time and resources to analyze each deal carefully. Make sure they know you are the one that they have to chase. then the deal will proceed on your terms, not theirs.

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Tips for finding an apartment

The Off Campus Housing Service is pleased to provide students with some general tips on apartment hunting in Montreal. While we aim to keep our information as up-to-date as possible, students are advised to also check with the Regie du Logement (Rental Board) which is the body which is empowered by the Government of Quebec to oversee the laws that govern landlord-tenant relationships.

Since Off Campus Housing does NOT inspect the accommodations on our listings, we strongly recommend following the checklist below before deciding on an apartment. We have also listed a number of important questions to ask a prospective landlord before signing a lease.

It is important to visit several apartments before signing a lease. DO NOT sign a lease without visiting the accommodation first--price and the description in the ad are no guarantees of the quality of the accommodation. If you cannot come to Montreal to look for accommodation, have someone visit the accommodation on your behalf. Please be advised however that most landlords or people looking for roommates will not sign a lease with someone they have never met in person.
Checklist

Before committing yourself to a lease, the following items should be checked. Be certain of your choice before signing a lease or filling out an application because, once signed, these are both legally binding contracts.

Do all the appliances work? (Ice in the freezer; an oven that heats adequately; burners that heat evenly.)

Are the locks on the entrance door of the building and on the door to the apartment in reasonable condition? Check the doors for signs of break-ins. As it is impossible to determine who has a key to your apartment, the lock on the apartment door should be changed when you move in (this is usually at the tenant's expense).

Check the taps for hot water and the water pressure. Are the drains clogged?

Are the sinks and bath-tub cracked or leaking? Check for water damage.

Do the pipes freeze in the winter? Rust in the sinks, mould on pipes, and leaking faucets are all evidence of poor plumbing.

If the apartment or room is furnished, is the furniture in reasonable condition? Does it belong to the landlord or to the previous tenant?

Are there three-pronged electrical outlets in every room? Are there enough electrical outlets for all of your lamps and appliances? How would you shut off the electricity and the water in case of an emergency?

Is heat included in the rent, or does the tenant pay for it? Is the apartment heated with gas, oil or with electricity? Does the apartment have its own thermostat? Are there radiators or heating ducts in each room? If you are responsible for the costs of heating the apartment, make sure that you do not simply accept an approximation of what these costs are likely to be from the landlord. If the apartment is electrically heated, contact Hydro Quebec at 385-7252. If it is heated with gas, contact Gaz Metropolitain at 598-3222 and if it is heated with oil, contact the company that provides oil to this address. These companies will provide you with the exact electricity, gas and oil costs over the last twelve months for the dwelling.

Is the dwelling well insulated? Check to see if the windows fit properly. The number of outside faces (roof, outer walls) the apartment has will also affect heating costs.

Is there proper ventilation? Do all the windows in the unit open? Are there locks on windows that are at street level?

Are there fire exits in the back and front of the building? How would one get out of the building in case of fire? Make sure that fire exits are not blocked or used as storage space. Is there a smoke detector in the apartment or hallway?

Are janitorial services offered? Find out from someone in the building how responsive the landlord is to problems with the dwelling.

Is there enough storage space? If there is a locker in the basement, find out who has access to that area, and what kind of lock is on the door?
Questions to ask a prospective landlord before you sign a lease
Are there other students living in the building?
Have there been any major repairs or renovations done in the past year?
Are any major repairs anticipated for the upcoming year?
Who will be responsible for repairs, including small ones?
Will any repairs, including small ones, that are to be completed before I move in, be put in writing?
Is there a phone number at which the landlord or superintendent can be reached in case of emergency?
How is rent payment to be made (by mail, by giving it to the janitor or directly to the landlord)?
Where is the nearest laundromat if there are no laundry facilities in the building?
How long did the last tenant stay, and what rent did she or he pay?
How often does the nearest bus run?

source : http://www.mcgill.ca/offcampus/tips/

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Top things to know

1. Don't buy if you can't stay put.

If you can't commit to remaining in one place for at least a few years, then owning is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner.

2. Start by shoring up your credit.

Since you most likely will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. A few months before you start house hunting, get copies of your credit report. Make sure the facts are correct, and fix any problems you discover.


3. Aim for a home you can really afford.

The rule of thumb is that you can buy housing that runs about two-and-one-half times your annual salary. But you'll do better to use one of many calculators available online to get a better handle on how your income, debts, and expenses affect what you can afford.

4. Don't worry if you can't put down the usual 20 percent.

There are a variety of public and private lenders who, if you qualify, offer low-interest mortgages that require a down payment as small as 3 percent of the purchase price.

5. Buy in a district with good schools.

In most areas, this advice applies even if you don't have school-age children. Reason: When it comes time to sell, you'll learn that strong school districts are a top priority for many home buyers, thus helping to boost property values.

6. Get professional help.

Even though the Internet gives buyers unprecedented access to home listings, most new buyers (and many more experienced ones) are better off using a professional agent. Look for an exclusive buyer agent, if possible, who will have your interests at heart and can help you with strategies during the bidding process.

7. Choose carefully between points and rate.

When picking a mortgage, you usually have the option of paying additional points -- a portion of the interest that you pay at closing -- in exchange for a lower interest rate. If you stay in the house for a long time -- say five to seven years or more -- it's usually a better deal to take the points. The lower interest rate will save you more in the long run.

8. Before house hunting, get pre-approved.

Getting pre-approved will you save yourself the grief of looking at houses you can't afford and put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history.

9. Do your homework before bidding.

Your opening bid should be based on the sales trend of similar homes in the neighborhood. So before making it, consider sales of similar homes in the last three months. If homes have recently sold at 5 percent less than the asking price, you should make a bid that's about eight to 10 percent lower than what the seller is asking.

10. Hire a home inspector.

Sure, your lender will require a home appraisal anyway. But that's just the bank's way of determining whether the house is worth the price you've agreed to pay. Separately, you should hire your own home inspector, preferably an engineer with experience in doing home surveys in the area where you are buying. His or her job will be to point out potential problems that could require costly repairs down the road.
Source : http://money.cnn.com/magazines/moneymag/money101/lesson8/index.htm

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TIPS TO BUY PROPERTY

Once you decide to buy a property you would have to look for a number of things, which are, mentioned hereafter. But the first thing is to decide the need for which the property is to be bought.

Need comprises of several factors :

You intend to buy a residential, commercial or industrial property.
Based on these details you can draw a list of your preference, which should list the following:

Property type (Residential, commercial, etc.)
Accommodation
Area of the Plot
Preferred floor·=]
Preferred Location (park/road facing etc.) ·
Preferred Locality Property ownership (lease/free hold)
Price range
Room sizes
Builder's/Govt. properties
Parking
Servant Quarter

Other requirements : like distances from Office/School/Markets/Bus/Rly station/Airport,etc.

Here it is essential to mention that it is very rarely possible to get everything (listed above) to your choice in one property but you can try to find out the maximum of above while selecting your property. You would have to compromise on number of counts depending upon constraints like price and locations. Remember, more the positive points, more would be the price.




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