Marc Slavit - Home Buyers Guide V2.pdf

THE ULTIMATE GUIDE TO BUYING A HOME

Marc Slavit

Table Of Contents

You Hold The Power

Advantages Of Buying Vs. Renting

Get An Agent On Your Side

Timing Is Everything

What You Need Vs. What You Want

A Guide To Searching For The Right Home 49

Common Buyer Mistakes

Home-Buying Horror Stories

A 12-Step Guide To Buying A Home

10. Loan Shopping 101

11. Negotiation Dos And Don’ts

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12. Home Inspections: Check It Twice

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13. Doubts? You Can Walk Away

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14. Home Buyer Programs

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15. Ready, Set, Close!

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16. Organizing Your Move

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Introduction Hi there! It’s nice to meet you. If you’ve received this book, it’s probably because you’re thinking about buying a home. And if you’re like most home buyers, you may be nervous about the entire process. But that’s why I’m here! My job is to make your job as a buyer as easy and seamless as possible. Throughout my years of experience in the real estate industry, I’ve amassed insider knowledge to help home buyers get great deals on their home purchases. And now, you’ve got all of that information at your fingertips.

In this book, you’ll find:

• An overview of the buying process • How to determine your wants vs. needs in your next home • Information on securing a home loan • Common mistakes to avoid • A negotiation guide to save money on your purchase • And much, much more Sure, you can try to employ these strategies yourself, but you should know that it costs you absolutely nothing to hire me to help you find your next home. Yes, buying a home can be stressful, but with this book (and my help!), we can make the process as seamless as possible.

About Marc Slavit

Top Agent Marc Slavit of EXP Realty in Medford, Oregon has seventeen years of solid real estate experience under his belt and has made a name for himself as one of the most respected, dedicated and hardworking realtors currently working in his area. After obtaining degrees in both Finance and Corporate Real Estate Management, Marc initially was a production manager for a corporate firm before becoming intrigued with the buying and selling side of the Real Estate business. “I decided it was something I wanted to pursue,” he says. “So I took my wife and six kids and moved to Oregon, and jumped right into real estate. It’s been a blast ever since. It’s increasingly satisfying to see so many clients that I can serve and help in this community. It’s just amazing the response I get when I help them, and it’s very fulfilling to me and my family.” Serving primarily Jackson and Josephine Counties in Southern Oregon, Marc can currently boast that almost 80% of his business is based on referrals from satisfied clients. “I think what my clients like, is the family-oriented, them-first mentality. I try to go above and beyond, and stay in communication with the clients during the entire buying or selling process. They like the personal touches where I always let them know I remember them, whether that’s sending birthday cards to their kids or congratulating them on the anniversary of the day they bought their home.” It’s this personal touch that sets Marc head and shoulders above his peers. “I want the relationship to transcend the transaction,” he says. “It makes it more personal, where I feel a part of their lives and they feel a part of mine.” Going above and beyond is

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also a hallmark of the exceptional client service Marc provides, and he has been known to drive to a client’s house to assist them post-transaction, as in a recent case where an elderly woman needed assistance with an electrical issue. “Her hot water heater went out,” Marc explains. “I understood that she was alone and elderly, so I drove to her place and it turned out to be a circuit breaker. She didn’t know. That’s the kind of thing I try to do with all of my clients.” A host of five-star reviews on Zillow attest to Marc’s willingness to go the extra mile. Reads one: “ He was the most amazing realtor I have ever dealt with, and probably the only one we ever will work with. He stuck with us, and even fixed a big mix-up that was entirely out of his control. He stayed after-hours, worked with us to the very end, and was very helpful. Even got the carpet cleaners to come back after hours to clean our carpets. First home buyer experience, and probably the best I will ever encounter…here's hoping he doesn't retire soon!” A host of commendations and designations make evident Marc’s superior knowledge of the industry. His current position at eXp Realty where the technology allows the best current integrated ways to communicate with people and recognizes his continual exceeding success for his clients. Not to mention, he was a Hall of Fame award recipient with RE/MAX and100% Club member for many of his seventeen consecutive years in Real Estate. He is also in possession of an Accredited Buyers Representative designation, and averages over six million dollars in closed transactions annually. When he’s not working, Marc enjoys spending time with his family and taking advantage of the beautiful local wilderness landscapes. “I love to fish and camp,” he says. “It’s all lakes, woods and rivers here, and that’s one of the things that attracted my wife and me to this area.”

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“The most important thing about real estate,” says Marc, “is to connect with your clients, and make sure they know that you have integrity and that you’re going to represent them 100% and do right by them.”

For more information about Marc Slavit, please call 541-890-6724 or email mslavit@gmail.com

Testimonials & Reviews for Marc Slavit

Here’s a list of people whom I have helped buy or sell a home, and what they said about working with me: Marc Slavit is a great, hardworking agent. I'd highly recommend him to anyone looking for real estate in the Southern Oregon area. He is highly knowledgeable, and you want him on your team during any buy or sell transaction to protect yourself and make sure it's done right. Marc helped us find an investment property and even connected us with local contractors to get the job done right the first time. He also went through every step of the process with us and thoroughly went through every legal document we had to sign an explained everything. Thank you! Carey Marc Slavit helped me find and acquire my forever home. Anytime anything I was looking for popped up, he let me know. When I finally found the perfect place, he assisted in finding folks to do all the inspections and everything else that comes with buying a home. This was so helpful as a first-time home buyer. He is a great person, hard worker, and very helpful. I'm so glad our paths met, and he guided me to my perfect place before it even went on the market. Jennifer I have thoroughly enjoyed working with Marc Slavit for the last 17 years! I feel honored that he asked me, to write him a personal letter of recommendation, on his behalf. This incredibly brilliant man has worked not only beside me but has worked on the opposite side of the negotiating table from me, on numerous RE transactions, plus he has been a top RE Broker for me personally, at my Exit Realty Group Firm. Never xi

once, has this man disappointed me. He has never been reprimanded nor has his name ever been brought up on any unfair practices, of any kind. In the last 17 years, that I have known him. His reputation is untarnished, and quite frankly, having been in the RE field for close to 44 years, there are very few Brokers that I can make that statement about!!! Marc worked for me, nearly 5 years and I consider him an expert in his career field! He is hardworking, honest, decisive, and someone I would place in a management position with no questions asked! He truly is a pleasure of a man to work with and his stellar reputation precedes him! Marc lives an authentic life, here in So. Or, where he and his wife raised 6 awe-inspiring children. Marc dwells in utmost Integrity and has always come to the negotiation table with true character. We always look forward to working with him on our next RE transaction! We know that with Marc on the other side, it will get done, it will close escrow, and it will be with perfection! In my humble opinion of Mr. Slavit, I have always believed that his client’s needs are his top priority. His clients trust him, they believe in his integrity, and best of all they know he offers undeniable competency in retaining the perfect home for their family!!! I have witnessed this firsthand from my front row seat, of watching this man work. Sheila Gunderson, Principal Broker " I give Marc Slavit the highest score (5) Stars in this review for the following reasons: Besides being a good and competent realtor and helping me find my dream home, Marc Slavic always answered all of my questions. He was never too busy to pick up the phone or return my calls. I can assure you that I had a lot of questions! Buying a first home at 79 is not easy and I had to be walked through the process with patience. I am very happy living in my new home. When I had a question or a problem, I called Marc Slavic for advice, and I got it! He connected me with the right people who could help me. Marc Slavic is cheerful, honest, and a good man. He is excellent at what he

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does, and you can trust him to find your new home at a price that you can afford. I highly recommend Marc Slavic to anyone looking for an honest and excellent realtor. He listens to what his buyer wants, stays within the budget and keeps looking to find the best house he can." Regina Marc Slavit has been outstanding. He was beyond a traditional realtor. He genuinely cares about his client. Marc helped us buying our first house more than 15 years ago. Since he did a great job, we used him again to help us make a very difficult and competitive house purchase of our dream home an utter reality. Thanks to him, my family and I can call that dream home my house. Not only I highly recommend Marc, I will say that I will not use any other realtor in the future. I forgot that he did a fantastic job in selling our old house in a record time within 2 months of us moving to our current beautiful dream home. Moody We could not have been happier with the services that Marc Slavit provided! After visiting the Rogue Valley, my husband Nick and I decided to relocate from Pennsylvania to Southern Oregon. I began my search for a home from Pennsylvania by browsing all the online listings. Whenever I saw a property of interest, I would contact the Listing Agent. None of those agents had much interest or enthusiasm for discussing properties because we were out of the area, that is, none except for one-- Marc Slavit--we had a dialog going from the first day I emailed him, and he had a great feel for what we wanted. Marc did all the legwork for us while we were still in Pennsylvania so by the time we arrived in the Rogue Valley Marc had a well-researched game plan ready and finding the right property was easy. Marc helped to navigate us through every step of the process, it could not have been smoother. Moreover, Marc is a joy to work with, he's personable, knowledgeable, and thoughtful, he's a family man and a real stand-up guy. I'm fortunate to have worked with Marc

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to find my home, I highly recommend him. Adrienne

When I first met Marc Slavit, I knew that he was someone I could work with. He took the time to understand my needs and worked diligently to help me through the process of locating and purchasing an investment property. His insight and advice has been invaluable. Norma Marc Slavit was the most amazing realtor I have ever dealt with, and probably the only one we ever will work with! Stuck with us, and even fixed a big mix up that was entirely out of his control! He stayed after hours, worked with us to the very end, and was very helpful! Even got the carpet cleaners to come back after hours to clean our carpets! First home buyer experience, and probably the best I will ever encounter! Here's hoping he doesn't retire soon!!! Anita When I first met Marc Slavit, it was on a general inquiry, although that fell through, I was impressed with Marc's professionalism, attitude and follow up on just a "general inquiry" Year later I started a new search, I knew from my previous encounter with Marc I needed to get him involved with my search for the right home. I have alot of questions not to mention flip flopping back and forth on questions, more than the normal person, he handled all my concerns far above my expectations, dealing with me is impressive alone... Marc's knowledge with values, locations, improvement costs and such was far above the standard real estate agent I'm use to dealing with. In addition, his overall process knowledge from making offers to escrow was a warm welcome...I look forward to having Marc sell my home some day since he helped me obtain an outstanding home at a great value. Thanks Marc, Jason

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I have had the privilege of working with Marc on numerous real estate transactions. Marc Slavit is very professional and knowledgeable of our current real estate market. Because of Marc's abilities he has had success working with large investors. Whether you are an investor or first-time home buyer Marc will work closely with you making the real estate transaction flow smoothly from start to finish. You cannot find a more professional real estate agent then Marc Slavit. It has been my As a Mortgage Consultant, I have had many opportunities to work with Marc Slavit over the years and each, and every one of those transactions Marc has been great to work with. Marc is a very proactive Realtor and is always striving to provide his clients with the best service to meet their needs. I would highly recommend Marc for anyone who is looking to buy or sell their home in the Rogue Valley and is also looking for someone who will be there to watch out for their own real estate interests and goals. Derek Winchell, Loan Officer pleasure to have worked with him. Don King WIN Home Inspection I am happy to write this reference for Marc Slavit. Marc helped my wife and me with the purchase of several investment properties and we were pleased with his responsiveness, knowledge and professionalism. He took the time to understand what we wanted and then he proactively brought relevant properties to our attention as they become available. He was willing to work around our schedules to show properties and sign paperwork on evenings and weekends. He made the overall process very easy and comfortable. He was additionally someone we felt we could trust throughout the process, never feeling like he was pushing properties that he didn't believe were right for us. In fact, the level of trust was sufficient that we were comfortable asking Marc's daughter to babysit our young

children after the investment purchases were complete. We would be happy to work with Marc again in the future or recommend him to our friends and family. Adam I worked with Marc Slavit to purchase a property in southern Oregon. I found this experience to be well above average. Marc did an excellent job of moving swiftly but carefully, and ensured all I’s were dotted and T’s were crossed. I found his knowledge of the market to be very valuable, and his advice was an important input in our decision making. I would have no problems recommending future customers to work with Marc. He is hard working, knowledgeable, trustworthy, and professional. Dave I have had the pleasure of working with Marc Slavit in real estate for the last 10 years. This 10 year has been spent at two different companies and in many different situations involving real estate clients. I have always found Marc to be competent and client oriented. Marc's trustworthiness and integrity is of the highest level. I know of his commitment to his clients and to the real estate industry firsthand by watching him over the years do business the right way. As a person, Marc has shown that he is guided by his understanding of a moral and ethical code that sets him above the standard in our society today. I see Marc exhibit a drive to work hard to take care of his family and to show compassion to those around him at a level far above the standard in our society today. Don Dixon, Broker “I have worked in Real Estate lending for nearly two decades. My experience with Marc Slavit as a realtor has been stellar. He is extremely knowledgeable about our market having experienced the highs and lows of the past 9 plus years. I find him to be a good representative of his clients and an expert negotiator. Marc’s honesty and integrity makes him one the top

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agents in Southern Oregon.” Jim Palazzolo, Loan Officer

I have known and worked with Marc Slavit since September of 2011. During this time, I have gotten to know Marc on both a personal and professional level. On a personal level, I know Marc to be a man a character that strives to make a difference in the world starting with his family and moving out the community. He has helped me personally when struggling to make the right decisions with my teenage kids and had a real impact. During the last 10 years I have watched and been involved in several transactions with Marc. During that time, I found him to be extremely professional in an industry that I often do not feel has enough true professionals. I also know that Marc really fights for his clients’ interests. He is an asset in my opinion to the Southern Oregon Real Estate Community. John Sellers, Principle Broker I am writing this letter on behalf of one Marc Slavit. I have known Mr Slavit for approximately ten years. Professionally, I have had the opportunity to observe Mr Slavit in multiple Real Estate transactions. He has never performed a transaction for me personally, but he has sold several homes for friends of mine as well as representing other friends as a buyer's agent. Without exception, Marc has always taken the high road and has proven to be the type of person that I can recommend with confidence. He is extremely diligent and thorough and exemplifies professionalism in all aspects of his business. Patrick J Havens, Broker

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CHAPTER 1 You Hold The Power

YOU'RE READY TO BUY YOUR FIRST HOME

You’ve saved enough for a down payment, you’ve secured the financing you need, you’ve researched the cities, areas, and neighborhoods to which you’d like to move, and you’ve got a good idea of what’s out there and what to expect. Now it’s just a matter of researching specific homes in your price range, hiring a real estate agent, attending a few open houses, and making a bunch of offers on the homes that strike your fancy or meet most of your criteria, with fingers crossed that the seller accepts your offer and you don’t end up in a bidding war. Right? Well, not exactly. Many buyers assume they are at the mercy of sellers. After all, the seller is looking for the right buyer, the seller wants to score the best deal, and the seller ultimately determines whether to accept or reject your offer. So, the ball must be in their court, right? Let me put this to you in simple terms: You hold the power. That’s right, you — the buyer. This book, the ultimate guide to buying a home, will explain what that means, show you how to increase your buyer’s advantage, and provide insider secrets that will help you gain the upper hand and get the best deal on your home purchase. Sellers are out to impress buyers. Everything a seller does to increase their advantage in selling their home is to impress you, the buyer. It doesn’t matter if it’s a seller’s market, in which the number of people looking for a home to purchase exceeds the

number of homes available, or a buyer’s market, in which there are more homes available for sale than buyers. A major mistake both sellers and buyers make in the real estate market is assuming that a seller’s market is to the seller’s advantage and the buyer’s market is to the buyer’s advantage. Forget the market for now. The seller’s ultimate goal is to get you to buy their home, period. Keep the ball in your court — with a trusted, professional real estate agent to guide you through the process — and you’ll have a less stressful and more satisfying and successful home-buying experience. If you have done your research, if you are fully prepared for the process, and you’ve hired a top-notch buyer’s agent, you are well on your way. For example, if you come in confident, with a strong offer and a mortgage pre-approval letter in hand, you’ll already stand out from all the other buyers interested in the same home and vying for the seller’s attention.

YOUR POWER IN A BUYER'S MARKET

Of course, it’s naturally easier to gain the upper hand in a buyer’s market, in which there are more homes available for sale than there are people looking for homes to buy. In this case the housing market is more favorable to buyers. Buyers gain ultimate negotiating power and can be much more selective about which home they choose to purchase in the end.

YOUR POWER IN A SELLER'S MARKET

Things get a bit trickier in a seller’s market, in which there are more people searching for homes than there are homes available for sale. This type of housing market is generally more favorable to sellers, as they tend to receive multiple offers, sometimes above their asking price, and buyers can end up in bidding wars. But this doesn’t have to work to your disadvantage. There are many

tips and tricks you can use to not only find the home you want, but get a great deal on it, too. One of the key tricks to holding the upper hand in a seller’s market is knowing the best times to buy; this process will be covered more in-depth in Chapter 3. Another must-have when buying a home in a seller’s market is hiring a real estate agent to guide you through every step and stage of the home-buying process. You’ll want to hire a professional who knows the ins and outs of buying a home, someone who knows how to negotiate well on your behalf, and someone who has access to properties and property details before they even hit the market. This alone could be the ticket to getting you the home you want at a price you can afford.

BE INFORMED

Regardless of the market, it’s imperative to be well-informed before going into the home-buying process. In this book, we’ll cover the following:

• The home-search process (Part 1) • The home-buying process (Part 2) • The final steps for closing the deal (Part 3)

Along the way, I’ll show you all the different ways — the insider secrets — that you can use to gain an advantage over your competition (other buyers) and get the upper hand over the sellers of the homes in which you’re interested and the one you’ll eventually purchase. Remember: You hold the power. Keep this locked into your memory as you continue reading this book, and you’ll be well on your way to not only finding and purchasing the perfect home for

you, but also getting the best deal possible.

CHAPTER 2 Advantages of Buying vs. Renting

Should you buy or rent a home? There is no “right” answer, and what works for one person or family might not be appropriate, doable, or even desirable for another. There are certainly pros and cons for both, and much of it depends on your situation, life circumstances, lifestyle, finances, and dreams. Owning a home has for decades been considered one of the defining characteristics of the “American Dream,” demonstrating a certain level of priorities, accomplishment, success, status, security, and hard work. Not everyone owns a home and not everyone wants to — but many who don’t wish they did, or are working toward getting that piece of the Dream. Today, about two-thirds of Americans own their own home, and many more are working toward their dream of homeownership, or wish they could get there one day. Lifestyle and age are two of the biggest factors in the buy-vs-rent decision. Home buying is usually driven by household formation; for example, when couples get married, they often begin with renting but start saving to buy their first home before deciding to start a family. Other families who rent choose to buy a home when their family expands and more children (or pets) join the family. Millennials have also reported that the primary reason for buying a home is owning a dog, as many rental properties won’t allow pets — especially dogs.

Age is another factor; in general, the older you are, the more

likely you are to own your own home. Currently, fewer than 40% of people younger than 35 own homes, but about 60% of people 35 and older are homeowners, and more than 80% of people 65 years and up own homes, although nowadays, more and more people nearing or past retirement think about downsizing and selling their homes to rent instead in their golden years, to avoid the physical demands, maintenance, and obligations that come with homeownership. Young people fresh out of college and beginning their careers often choose to rent so they can save up for a down payment and, in the meantime, enjoy lifestyle flexibility, particularly if they need to move for their job, enjoy travel, and are single, with no children or pets. Which is best — buying or renting? Each has its advantages and benefits, as well as disadvantages and risks, and as I’ve mentioned, the decision will depend on your particular situation.

Before you decide, you need to ask yourself some questions:

HOW LONG DO YOU PLAN TO STAY IN THE HOME

This question isn’t always considered when making the decision to buy or rent, but it’s an important one. Do you move a lot? Do you travel a lot? Have you found the city, area, and neighborhood in which you’d like to stay? What about appreciation? Typically, it takes about four to seven years to “break even” on a home purchase (this means that there’s been enough appreciation to pay back the cost of the transaction and ownership). So, for example, if you’re thinking about buying a home and selling it within one to three years, it won’t be worth it. You’re better off renting until you know you’ll be staying put for a while longer.

ARE YOU FINANCIALLY PREPARED?

Homeownership is a significant financial commitment for which buyers must be prepared. You’ll need to consider the overall price of the home, the down payment, closing costs, mortgage payments, maintenance costs, property taxes, homeowners’ association fees, and more. You can’t simply compare a month’s rent to a month’s mortgage payment. You must be prepared for all the costs of homeownership. • Down payment: The down payment refers to the lump- sum payment that funds your equity in the property. The amount varies, but in the U.S., 20% of the purchase price of the home is generally the norm, the preferred amount, and what will get you the best rate. • Mortgage payments: A monthly mortgage payment includes both interest as well as loan principal, and generally, any homeowner’s insurance and prorated property taxes. Some monthly mortgage payments are fixed; others are variable, depending on the type and terms of the mortgage loan.

DO YOU NEED YOUR HOME AS A RETIREMENT PLAN INVESTMENT?

A 2015 Gallup poll reported that, for the second year in a row, Americans named real estate as the best long-term investment, more than savings accounts, stocks, and bonds. Homeownership allows you to build equity that you can liquidate in retirement for downsizing. It’s important to pay close attention to the housing market: prices can rise and fall, and the value of your home can change.

ARE YOU EMOTIONALLY PREPARED?

Homeownership has many advantages over renting, but it can cause stress, and you need to be emotionally prepared to handle it. Stress that’s related to owning a home can include a change in financial state, a change in living conditions, and a change in residence. Other elements of stress related to homeownership include life changes, such as switching careers, getting married, and having children. If your life is constantly changing and in flux, and you’re experiencing a lot of stress, it might be wise to postpone owning a home until things are more stable for you and your situation.

ARE YOU READY FOR COMMITMENT?

Yes, owning a home is a major commitment, and you must be ready for it! You’ll need to have the confidence to make plenty of big decisions, from choosing a real estate agent and the right neighborhood that meets your needs to picking the right home and all the “little” decisions that come along with that — furniture, appliances, paint colors, décor, etc. Commitment also means devoting time and energy to the maintenance of both your home and yard. If you are prepared, then you’ll find that this commitment — taking care of your important investment — is most satisfying. If you think you might be ready to take the plunge into homeownership, it’s important to understand the advantages and disadvantages of both buying and renting your home.

ADVANTAGES OF BUYING YOUR HOME

1. Building equity. Every time you make a mortgage payment, you put down dollars toward equity — which means actual ownership of your home. Part of the payment goes toward interest from the loan, part toward homeowner’s insurance and property taxes, and part toward the loan principal, which

represents the equity. The other way homeownership builds equity is that, generally, your property should appreciate in value each year, giving you the option for selling it for considerably more than you paid for it, assuming you keep up with maintenance, improvements, etc., and sell at the right time. Typically, U.S. home prices appreciate nationally at an average annual rate of between 3 and 5%. Renter disadvantage: Renting does not offer any equity-building advantage. Your rent payments go to the landlord and not toward your property ownership, regardless of how long you live there. 2. Increasing your home’s value. As I touched on, your home’s value will increase through natural appreciation every year, but you can increase your home’s value by not only maintaining your home, but also improving upon it, such as small renovations, finishing a basement or adding a bathroom, improving the home’s curb appeal, and making small improvements around the home (newer appliances, a fresh coat of paint, new curtains, etc.). Renter disadvantage: If you rent your home, you will likely have limits on what you can do to improve the look of your home; in fact, you might not have permission from the landlord to make any changes. Further, any changes you might make won’t increase the value for you, but rather for the property owner. 3. Controlling housing expenses. When homeowners select a fixed-rate 15-, 20-, 25-, or 30-year mortgage, they have the assurance that monthly mortgage payments and overall housing costs will not increase over that period. Renter disadvantage: With renting, property owners are known to increase the amount of monthly rent and other expenses you must pay annually, and sometimes randomly, without much notice. You don’t have control over this. 4. Tax advantages of homeownership. As a homeowner, you

qualify for major tax benefits when you buy a house, both at the time of purchase and for the duration that you own the home. Homestead exemption is one example; many states exempt all owner-occupied homes (“homesteads”) from a portion of the property tax that would normally accrue over time. Further, homeownership entitles you to certain federal tax deductions, such as claiming your property taxes and mortgage interest paid, offsetting your annual income tax burden. You can also claim any mortgage discount points on the loan; these points are equal to 1% of your mortgage and involve prepaid interest. They are tax deductible and can reduce your total mortgage payment. Renter disadvantage: If you rent your home, you might be able to claim the rent you paid for the year on your income tax, but the tax benefits end there. Renters aren’t eligible for housing-related federal tax credits or deductions. 5. Lower mortgage rates. Currently, in today’s market, interest rates have fallen and are on the lower side, making it easier to purchase and own your own home than it was years ago. Bear in mind that interest rates are variable and rise and fall, so as part of your home-search process and getting approved for a mortgage, keep an eye out for low rates and try to lock that in with a fixed rate. Renter disadvantage: With renting, landlords set the price, which often increase annually. You don’t have the option of locking in a fixed rate for the duration of your mortgage. In fact, in many states, average mortgage monthly payments can be lower than typical rent amounts. 6. Creative freedom. One major advantage to owning your home is that you have creative license to make almost any kinds of changes or improvements that you’d like, provided they don’t

violate codes or bylaws. Change the colors of the walls with fresh paint, finish a basement, add a closet, expand your bathroom, build a deck, renovate your background — you have the freedom to make your home truly yours with homeownership. Renter disadvantage: Renting a home puts many more limitations on what you can do — if anything — to change or improve the look of your home. Structural and even decorative improvement decisions belong to the property owner and you’ll need to obtain special permission to make any changes, even painting. 7. Community and roots. Homeowners generally stay in their homes longer than renters do (many tend to think of homeownership as more permanent and renting as temporary), and are therefore more likely to get to know their neighbors, feel a part of a community, join associations or committees, host get- togethers, and volunteer. Renter disadvantage: Renters are much less likely to do these things, as they often view their situation as temporary.

DISADVANTAGES OF BUYING A HOME

Yes, there are downsides to homeownership — some that buyers aren’t aware of, or don’t think of, and others that can scare people away from making the plunge into homeownership. 1. Maintenance. Perhaps the homeowner’s biggest disadvantage is the renter’s biggest advantage: maintenance. Of course, if you purchase a home, it generally includes homeowner’s insurance, which includes disasters, flooding, and protection against theft. But generally, your everyday maintenance items come out of your pocket as a homeowner.

Maintenance and repair can be as simple as redoing your

baseboards or replacing a window, or as extensive (and expensive) as replacing a plumbing system or furnace. The expense will vary from home to home, and from year to year; however, generally, you can expect to pay about 1% of the value of your home annually toward these expenses. Don’t forget about your property too — basic gardening, lawn care, landscaping, spring and fall cleanup, and snow removal all need to be taken care of by you. Renter advantage: If you rent, you don’t need to worry about any of these maintenance- and repair-related expenses. Admittedly, this is a major advantage over owning a home. These obligations belong to the property owner/landlord, whether an appliance shuts down or your sink is leaking. Also, you won’t have any lawn or grounds care obligations. However, be prepared to wait for something to be fixed. Even if you don’t have to foot the bill, there’s a chance that there’s a waiting list of repairs that need to be made for other tenants first. 2. Upfront and closing costs. Buying a home involves many upfront and closing costs, including earnest money, down payment, home inspection and appraisal, first year’s homeowner’s insurance, property taxes, real estate agent commission, attorney’s fees; the list goes on. Some buyers think only about the purchase price, down payment, and monthly mortgage payments and forget about these other important fees. Renter advantage: Renters don’t need to worry about upfront and closing costs; they just need to go through the application and approval process and be able to pay their monthly rent. 3. Relocation Inflexibility: Once you’ve purchased a home, it becomes trickier (and a lengthier, more complicated process) to sell and move than it is to break a rental lease. You need to prepare your home for showings, remove all your clutter and start packing, find a new place to live while putting your home

on the market for a hopefully quick sale, and deal with potential issues like paying the mortgage while waiting for your home to sell. Renter advantage: Depending on the situation and contract you have with the landlord, moving — whether for work, travel, or family obligations — simply requires giving sufficient notice so you won’t be penalized. If you need to relocate before your lease is up, you also have the option of subletting to another tenant to cover your rent and offset that cost. Selling a home within a short time frame is usually much more complicated, time-consuming, and risky. 4. Potential financial loss. I’ve mentioned before that homeownership builds equity over time; however, equity doesn’t necessarily equal profit. Some homes do depreciate in value over time, putting you at risk of a loss when you sell your home. Renter advantage: As a renter, you don’t need to worry about the housing market and whether home values in your area are fluctuating, remaining stagnant, or decreasing. It’s not your problem, but for a homeowner who’s trying to sell, it is. Now that you have read and understand the main advantages and disadvantages of buying vs. renting a home, you are better equipped to make a decision. There is much to consider when deciding to buy a home. But where to start? I suggest that you start by making a pros and cons list of buying vs. renting, a list that’s unique to your own personal needs and situation. Seeing the advantages and disadvantages, the benefits and risks written down right in front of you can help you to really gauge the situation, see what the best course of action is, and what to do going forward.

Many renters are nervous about the home-buying process, and

because it seems too overwhelming and daunting, they choose to avoid the “risk” and stick with the familiar and keep renting. After all, choosing to purchase a home is a big decision, and a major investment, and likely to be the most significant purchase of your life. However, this doesn’t need to scare you away. All you need is to make sure you’re ready. Switching from renting to homeownership comes with challenges, but also many, many rewards. It’s an exciting and amazing decision, one that you won’t regret, but one that requires significant preparation. If you don’t think you’re quite ready to buy your first home, start by figuring out what you can do to get yourself there. A little preparation goes a long way! There are several steps you can take to get you started on your journey to purchasing a home. • Improve your credit score. • Start saving up for a down payment and closing costs. • Build up your savings account. • Research recent home sales in your area/neighborhood, and see what options are available as well as what you might be able to afford. Note: If you currently own a home, consider upgrades that could net you a positive return on investment when you do decide to sell your home.

STEP 1: IMPROVE YOUR CREDIT SCORE

First, you must improve your credit score if you hope to get a mortgage loan to purchase your home. The higher your credit score rating, the better deals you’ll be able to grab.

With a credit score of “below 660 or 680, you’re either going

to have pay sizable fees or a higher down payment,” says Barry Zigas, director of housing policy for the Consumer Federation of America, as reported on Bankrate.com. A credit rating of 750 and higher will give you the best rates on the market, but 700 and up will still help you find a good deal. Access your credit report to see where you’re at. Settle any outstanding debts. Research what you can to improve your score. Don’t apply for any new credit for a full year before you decide to apply for a mortgage.

STEP 2: SAVE FOR A DOWN PAYMENT (AND CLOSING COSTS)

Once you’ve started working on improving your credit score, you need to start saving for a down payment, as well as closing costs, which some buyers forget about. According to Bankrate.com, you’ll need to save between 3 and 20% of the total purchase price for a down payment. Your credit history and loan terms determine how much you’ll need. Twenty percent is standard, but an FHA (Federal Housing Administration) loan can be as low as 3.5%, with a minimum credit score of 580. Further, Department of Veterans Affairs loans require zero down payment. As for closing costs, according to Bankrate’s latest survey, the national average for closing costs for a $200,000 mortgage is $2,084. Expect to save at least 10% of your mortgage for these fees. Don’t let these numbers get you down. Start saving and do some research, because you can find down payment assistance online, and it’s more readily available for first-time home buyers. If you’re searching for your first home in a buyer’s market, you can also

likely have the seller pay a portion of the closing costs as part of your negotiations.

STEP 3: BUILD UP YOUR SAVINGS ACCOUNT

Don’t forget to build up your regular savings account — not just for a down payment, but for a little “cushion.” This will not only improve your chances of being approved for a loan — lenders like to see that you have money set aside and aren’t just living from paycheck to paycheck — but will also ensure that you can pay your mortgage in case of job loss or major unexpected expense. A savings account can also help with maintenance and repair costs on your home. According to Bankrate.com, “a good rule of thumb is to assume that you’ll spend 2.5 to 3% of your home’s value each year on upkeep and repairs. If you buy a $250,000 home, aim to save $520 to $625 per month.

STEP 4: RESEARCH HOME SALES AND WHAT YOU CAN AFFORD

Do some research into recent home sales in the area in which you’re interested in buying a home. Find the average price, the highest prices, and the lowest prices. Look into how long they’ve been on the market. Determine what you want in a home (e.g., number of bedrooms/bathrooms, a garage, a yard, a basement, etc.) and what you can afford. You can figure out how much you can afford using online calculators that consider many different variables. In general, when it comes to conventional loans, expenses related to your home should never exceed 28% of your gross monthly income, says Susan Tiffany, a retired director of Personal Finance Publications for Adults for CUNA (Credit Union National Association). (source: Bankrate.com).

HOW TO GAIN AN ADVANTAGE:

While there are many benefits to renting a place over buying your own home, the advantages of owning outweigh the advantages of renting. Renting is sometimes the necessary choice, depending on your situation and needs, but it’s generally considered a short- term housing solution. The bottom line is that in the long run, owning your home has more advantages than renting one. It’s in your best interest to take the plunge and begin the home-buying process, as daunting as it may seem at first. I promise it will be worth it; there’s an intangible satisfaction that comes with owning your own home, a sense of accomplishment and independence, and with the right real estate agent at your side, you can be sure you will find the best home for you at a great price. The key is to be prepared, and if you’re not, then figure out what you need to do to get there. Hopefully this chapter helped you to get an idea of the benefits of homeownership and how you need to prepare. Keep on reading to discover more insider secrets to buying a home and making the experience as smooth and successful as possible.

CHAPTER 3 Get an Agent on Your Side

Now that you’ve seen the advantages of owning your own home vs. renting, and you understand the steps you need to take to get to your dream of homeownership, it’s time to appreciate how real estate agents help buyers, and help you gain an advantage when home shopping and buying.

WHY IS THIS IMPORTANT?

The fact is that many buyers question whether using a real estate is really necessary or beneficial, and wonder if the expense (i.e., the commission) is worth it. Yes, it’s true that the do-it-yourself option can technically save you the commission fee, but for the majority of home buyers, who don’t truly understand the ins and outs of real estate, going the DIY route can actually be more expensive in the long run, not to mention making the entire home search and home-buying experience longer, more stressful, and more complicated. A professional real estate agent gives you the ultimate advantage as a buyer. He or she can make all the difference in helping you find the right home, negotiate a fantastic deal that essentially negates the commission fee, and navigate the complicated parts of the home-buying process. Buyers have little risk when working side-by-side with an experienced agent. I recommend hiring an agent — but the right agent. Someone inexperienced, someone who doesn’t seem like they’re on your side but are in it for themselves, or someone who has more experience working with sellers will not meet your needs, and

could cost you in the end. The agent’s commission is a cost, yes, but is well worth it, and in most cases, is paid out of the final sale price rather than out of your own pocket. So yes, hire a real estate agent, but the right agent — someone who’s on your side and will guide you every step of the way toward homeownership and a satisfying and successful home- buying experience. First, let’s get the technical jargon out of the way. Who is a real estate agent and what do they do?

WHO IS A REAL ESTATE AGENT?

The short answer is that a real estate agent is someone who is licensed and certified to list and sell real estate, not limited to homes but including multi-family properties as well as commercial and industrial buildings. It’s also important to note that a real estate agent is not necessarily a Realtor®, who is a recognized member of the National Association of REALTORS® (NAR). So, while all Realtors® are real estate agents, not all agents are Realtors®. The real estate agent who represents a buyer and works on their behalf to help them find and purchase a home is called a buyer’s agent (whereas seller’s agents, or listing agents, help people sell their homes). All “listing agents” represent sellers, but agents who don’t have what’s called buyer-agency agreements with potential buyers are technically working on behalf of the seller, even if they’re showing homes to those potential buyers. They must work to negotiate the best possible price for the seller. Buyer’s agents work on commission, as detailed in their contracts and the listing agreement. When a buyer’s agent brings the buyer along, the listing agent must split the contracted commission

with the buyer’s agent.

ADVANTAGES AND BENEFITS OF USING AN AGENT

Below is a short list of advantages of using a buyer’s agent:

• Education and experience • Neighborhood knowledge • Market conditions knowledge • Price guidance • Acting as buffers • Professional networking • Negotiation skills • Handling paperwork • Answering questions after closing • Developing relationships for future business

While this represents a basic list of the benefits of hiring a professional real estate agent, let’s dig a little deeper into some of the major benefits of retaining the services of an agent.

SAVING MONEY IS NOT LIKELY

Despite what many new buyers assume, skipping out on hiring a real estate agent is no guarantee that you’ll save money by avoiding paying the commission fee. The point of not using the professional services of an experienced real estate agent is usually to save money, but the truth is that do-it-yourself buyers rarely get the deal they’re after without an agent by their side, and end up paying more in the long run. Some buyers even expect, rather than just hope, to save money, and make an offer on a home accordingly. However, unless both the buyer and the seller agree to split the savings, then they can’t both save on the commission.

REAL ESTATE MARKET KNOWLEDGE AND ACCESS

Quite frankly, a real estate agent knows more about the real estate market than you do. You might have some knowledge, and have even done your due diligence with extensive research. However, real estate agents are specifically trained to understand all the ins and outs of the real estate market — it’s literally their specialty. Just like mechanics know more about automobile repair than the average person, and doctors have more medical knowledge than their average patients, real estate agents will know more about the housing market. They even have particular knowledge of local neighborhoods and conditions. An agent will also have better access to the housing market, because that’s the field in which he/she works and because he/she works as a full-time liaison between buyers and sellers. Buyer’s and seller’s agents know how to put good deals together for the benefit of their clients. An agent will also have readily available access to other properties listed by other agents, and can track down homes that meet your criteria, contact the listing agents, and secure appointments for viewing the homes. Navigating all this on your own is much more complicated and difficult, and will also take a lot longer without an experienced agent on your side.

NEGOTIATION EXPERTISE

Even if you’re well known by family, friends, and colleagues as an expert negotiator, when it comes to negotiating for home prices it’s a whole different ball game. This is where the negotiation skills of a real estate agent come in handy. Sometimes, the home search and home-buying process can become emotional and even heated, but a real estate agent knows how to keep the transaction

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