One murky area, or lack of clarity I experience often with owner-occupant buyers is this; they tell me they want a deal, and insist that if they can’t get a deal, they won’t buy. After viewing numerous discounted properties, none of which they like (keep in mind that discounted properties are discounted for a reason), they ask me to show them houses that qualify according to their other criteria but that are not discounted. As a result I show them nicer houses and inevitably they end up paying full price for home they fall in love with. What they failed to realize in advance was that getting the ideal house was much more important to them than paying a discounted price. The best scenario would be to get both, but if push comes to shove, what takes priority?

Take your Time

Every day new listings become available. If you can’t find what you want in a particular area today, it might become available tomorrow. Don’t rush into one of the biggest purchases you will ever make.

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As a seller you want to receive the highest possible price for your property, as a buyer you want to pay as little as possible. The art of negotiating is to create an outcome that both seller and buyer find acceptable. Many books have been written on the subject, highlighting various techniques and approaches to negotiating, but no matter how you proceed, proper preparation is always the key. Here, I highlight a couple of points applicable to the home buyer in an effort to improve his or her negotiation success.

Educate Yourself as much as Possible in Advance

In order to see a deal you have to be educated enough to recognize it. Study the location you are interested in and take note of the overall market trend and conditions.

Organize your Priorities

In order to effectively ask for what you want you have to clearly know what you want. This might seem simple but you’d be surprised how few people have this clarity when they set out to buy. Understand that in most cases, price is not the only important issue.

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The homeownership rate fell to 66.9 percent in the second quarter, down from 67.1 percent in the first quarter, according to the U.S. Census Bureau. This was the lowest level since 1999. The homeownership rate reached a record high of 69.2 percent in the second and fourth quarters of 2004.

Rising foreclosures are driving the decline. A record 4.6 percent of U.S. mortgages were in foreclosure in the first three months of 2010, the Mortgage Bankers Association reported in May.

Source: Bloomberg, Kathleen M. Howley (07/27/2010)

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Paying off an underwater mortgage and buying a better home could be the best tactic in this troubled market. “If you are trading up, what better time than when interest rates are at record lows and the cost of the trade-up is much less than it used to be?” says Christopher J. Mayer, a Columbia Business School economist.

With 15-year fixed-rate mortgages at about 4.5 percent, it also makes sense to pay off the mortgage and keep the house. “At this point,” says Jay Brinkmann, chief economist of the Mortgage Bankers Association in Washington, D.C., “if they don’t have anything else that is bringing a tremendous return, then they are buying themselves an annuity by paying their house off sooner than they needed to.”

Source: The Wall Street Journal, M.P. McQueen (07/24/2010)

Buying Process
Let’s assume we have identified your dream home and your offer has been accepted. Keep in mind that every real estate transaction is unique and comes with its own challenges – there will always be variables and unpredicted issues to solve. Nevertheless, here are several major steps you will have to walk through. The order may vary:

• Negotiate and execute purchase contract
• Deliver earnest money deposit and contract into title company and open escrow
• Schedule termite and home inspection (make sure all utilities are on)
• Check with your insurance broker for hazard insurance
• Read seller’s disclosures form (SPDS) if provided
• Obtain and read a copy of CC&R’s from title company if applicable
• Send termite and home inspection to seller and negotiate request for repairs, if any
• Obtain a copy of the appraisal from the lender and confirm loan status
• Schedule final walk-through
• Check and sign pre-audit (HUD 1) from title company
• Get cashier’s check (or wire funds) to take to closing
• Sign loan documents with title company
• Call and turn on utilities under your name
• Get keys

Congratulations

You now own your individual piece of the world. Buying a house is always an emotional experience but it does not have to be a stressful one. The more prepared and the better you understand the process, the easier and more exciting it will be.

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Now that you know what you can spend and you have determined what you want to spend, you can start looking for a location where houses sell within your target price range. A good thing to do is to physically drive around and get intimately familiar with your areas of interest.

Also, if you did not already do so, you need to fine-tune and familiarize yourself with the details. Ask yourself: How many square feet? How many bedrooms and baths? Do I want a garage, a pool and spa? What about the backyard? Where do I want my kids to go to school? Once you have your wish list, organize it in order of priority. Now you are ready to hit the road and locate a prospect.

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With the scheduled closing deadline for the home buyer tax credits, existing-home sales slowed in June but remained at relatively elevated levels, according to the National Association of REALTORS®.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, fell 5.1 percent to a seasonally adjusted annual rate of 5.37 million units in June from 5.66 million in May, but are 9.8 percent higher than the 4.89 million-unit pace in June 2009.

Lawrence Yun, NAR chief economist, said the market shows uncharacteristic yet understandable swings as buyers responded to the tax credits. “June home sales still reflect a tax credit impact with some sales not closed due to delays, which will show up in the next two months,” he said. “Broadly speaking, sales closed after the home buyer tax credit will be significantly lower compared to the credit-induced spring surge. Only when jobs are created at a sufficient pace will home sales return to sustainable healthy levels.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.74 percent in June from 4.89 percent in May; the rate was 5.42 percent in June 2009.

The national median existing-home price for all housing types was $183,700 in June, which is 1.0 percent higher than a year ago. Distressed homes were at 32 percent of sales last month, compared with 31 percent in May; it was also 31 percent in June 2009.

NAR President Vicki Cox Golder said softer home sales expected this summer don’t tell the whole story. “Despite these market swings, total annual home sales are rising above 2009 and we’re looking for overall gains again this year as well as in 2011,” she said. “Conditions have become more balanced in much of the country, which is good for both buyers and sellers. However, consumers find it even more challenging to navigate the transaction process, especially for distressed properties, which only underscores the value REALTORS® bring to buyers and sellers in this market.”

A parallel NAR practitioner survey shows first-time buyers purchased 43 percent of homes in June, down from 46 percent in May. Investors accounted for 13 percent of sales in June, little changed from 14 percent in May; the remaining purchases were by repeat buyers. All-cash sales were at 24 percent in June compared with 25 percent in May.

Total housing inventory at the end of June rose 2.5 percent to 3.99 million existing homes available for sale, which represents an 8.9-month supply at the current sales pace, up from an 8.3-month supply in May.

“The supply of homes on the market is higher than we’d like to see. But home prices are still holding their ground because prices had already overcorrected in many local markets,” Yun said. Raw unsold inventory remains 12.7 percent below the record of 4.58 million in July 2008.

Single-family home sales fell 5.6 percent to a seasonally adjusted annual rate of 4.70 million in June from a level of 4.98 million in May, but are 8.5 percent above the 4.33 million pace in June 2009. The median existing single-family home price was $184,200 in June, up 1.3 percent from a year ago.

Single-family median existing-home prices were higher in 10 out of 19 metropolitan statistical areas reported in June in comparison with June 2009. In addition, existing single-family home sales rose in 12 of the 19 areas from a year ago while two were unchanged.

Existing condominium and co-op sales slipped 1.5 percent to a seasonally adjusted annual rate of 670,000 in June from 680,000 in May, but are 20.5 percent higher than the 556,000-unit pace in June 2009. The median existing condo price was $180,100 in June, which is 1.4 percent below a year ago.

Regionally, existing-home sales in the Northeast rose 7.9 percent to an annual level of 960,000 in June and are 17.1 percent above June 2009. The median price in the Northeast was $244,300, down 1.2 percent from a year ago.

Existing-home sales in the Midwest dropped 7.5 percent in June to a pace of 1.23 million but are 11.8 percent higher than a year ago. The median price in the Midwest was $155,900, down 0.1 percent from June 2009.

In the South, existing-home sales fell 6.5 percent to an annual level of 2.01 million in June but are 11.0 percent above June 2009. The median price in the South was $163,600, unchanged from a year ago.

Existing-home sales in the West dropped 9.3 percent to an annual pace of 1.17 million in June but are 0.9 percent higher than a year ago. The median price in the West was $221,800, up 1.5 percent from June 2009.

Source: NAR