Home arrow Resources arrow AJC Articles arrow Suggestions for Today’s Homebuyer - 2009-02-15

Your Cart

Show Cart
Your Cart is currently empty.

Login

Suggestions for Today’s Homebuyer - 2009-02-15
Where does home ownership fit in with today's depressing news?

There is no question that we are in a period of unprecedented economic uncertainty. Jobless claims are up and home sales are way down, and it seems harder than ever to borrow for any worthwhile purpose, including buying a house.

So does it still make sense to buy a house?  Here are some thoughts:

* Buying a house today is likely a long term investment.

The days of buying a house this year and selling it next year for a big profit are behind us, and will likely stay that way for a while. So it probably doesn't make sense to buy a house unless you are fairly certain you intend to stay in one place for a few years.

If your employment situation dictates that you may be transferred in a few years, or if you expect a job opportunity to open up elsewhere in the next several years, you may be better off renting than buying a house of your own.

Remember that the principal pay-down on your mortgage in the first five years of ownership is almost nothing, and that we simply can not predict any rate of appreciation for the foreseeable future.

Yes, most economists believe that this current malaise will end, but no, there is no general agreement on when. And there is a real chance that your home will be worth no more then than it is now.

* One of the down sides of real estate is that it tends to have high transaction costs.

By that I mean that there are substantial expenses associated with the purchase and sale of real estate that you may not be able to avoid.

For example, when you buy a house, there are likely fees paid to the real estate agent and to the lender and closing attorney. These fees often run into the thousands of dollars. And even though you may have talked the seller into paying these fees, they are effectively included in the price of the house and can not be recovered.

Likewise, when you sell, today's buyer expects you to pick up the tab on many of the costs associated with the sale. Unless your house has appreciated more than has occurred recently, you may have to bring cash to the table simply to make a sale.

* Renting is not just for financial idiots.

In years past, buying a home was such a no-brainer that renters seemed like your dim-witted cousin who ate white paste in first grade. No so today, as the freedom to end a lease and move where a job calls is smart planning. In addition, because so many homeowners can hardly afford their mortgage payments, many have turned to renting as a way to supplement their income.

So if you shop around, you may very well find yourself in the position of renting a very nice house where you are paying less than the actual cost of ownership. In other words, the owner may actually be subsidizing your rental.

Know that the day may come when renting is once again regarded as a less-than-savvy financial move, but that is not the case today.

* When you buy, consider multiple exit strategies.

In the best of all worlds, the home you buy will serve you well for many decades, allowing for inevitable family changes and giving you joy and satisfaction along the way. But if that isn't the case, and if the home selling market happens to be rotten when you need to sell, consider alternative strategies.

In other words, could you rent the house to cover the payments, if you had to do so?  This is more realistic with lower priced homes than higher priced ones, giving more weight to the argument for entry level homes instead of palatial ones.

* Take advantage of market weaknesses.

The other side of the coin is that today you can take advantage of reduced prices and the lowest interest rates we have seen in a generation. If owning makes sense, then now is certainly the time to buy.

The concept of value always boils down to supply and demand, and right now there is a huge supply of "ugly duckling" houses owned by banks that are under pressure to sell them, sometimes at discounts of 50 percent or more.

If you are willing to spend some time and money on cosmetic improvements, you can save a bundle on purchase price, but this game is not for the weak of heart. You'll need patience, deep pockets, time, and more patience.

That being said, some of the bargains available in today's market are nothing short of remarkable. And current low interest rates will add value for the life of your loan.

* Use professionals to your advantage.

Today is no time to go it alone in the real estate market. A diligent search coupled with experienced professional representation and plenty of patience can yield remarkable bargains.

But it's critically important for you to have a "beginning to end" game plan that includes advice from your agent, your attorney and your lender. Make sure these professionals bring their talent and expertise to bear on your behalf, and you are most likely to come out ahead at the end of the day.

Comments or questions?  Send e-mail to This e-mail address is being protected from spam bots, you need JavaScript enabled to view it    
 
< Prev   Next >

Upcoming Events

John Adams Presents


LANDLORD SURVIVAL TRAINING

with John Adams
Tuesday, February 28th

Being a landlord can be a rewarding experience. It can also be a difficult one if you don't have the knowledge and understanding of what the process requires.

Few schools offer degrees in property management, so most landlords learn "on-the-job" through acquired knowledge and on-the-job experience, essentially re-inventing the wheel. This is an expensive and depressing way to learn anything.

Whether you're a full-time landlord or just getting ready to purchase your first rental property, whether you are a licensed Georgia real estate professional or an accidental landlord, this seminar will help you improve your property's value, increase your cash flow and decrease your expenses, from attracting (and retaining) good tenants to maintaining your property to understanding your rights and obligations under the law.

For more details and to register click HERE

PROPERTY TAX REDUCTION WORKSHOP
with John Adams
Tuesday, March 27th

One of the significant annual expenses faced by any Georgia property owner is ad valorem property tax. Depending on where you live, it can be as high as three percent of the property's fair market value, and it must be paid year after year after year.

As a result, efforts to minimize this expense are not only worthwhile, they are encouraged by Georgia law. The phrase "ad valorem" means that each property is taxed based only on its value, and no one is required to pay a penny more than the minimum the law demands.

At the Property Tax Reduction Workshop, real estate expert John Adams will review the system he has used for over thirty years to reduce valuations and assessments in Georgia counties and municipalities, saving himself literally hundreds of thousands of dollars over the years.

In this 3 hour information packed seminar, John will teach you how to:

1. Understand the legal process of Property Tax Assessment
2. Meet the newly uniform Tax Deadlines
3. File your own Property Tax Return with a realistic valuation
4. Document your PT-50R with facts to support your case
5. Proactively meet with your Appraiser to reach an agreement
6. Protest your Notice of Assessment in an Intelligent manner
7. Give the Assessor an Opportunity to Save Face
8. Appeal to your Board of Equalization, in person or by mail
9. Make Your Case to the BOE
10. Take Your Case to Superior Court if necessary

If you are not doing all these steps now, you are likely costing yourself hundreds or thousands of dollars a year. If you own just one house, you could easily save over a thousand dollars over the next three years. If you own properties valued collectively over a million dollars, you are literally throwing away your profits year after year.

For more details and to register click HERE