Tag Archive for buying your first home

09 Jul 2013
Real Estate

King County Home Prices Up 12.5% YOY!

Are King County home prices still on the rise?  Yes, King County home prices are up 12.5% year over year.  We posted a similar blog back in Jan of this year which reflected a 20% YOY increase.  So these recent numbers are not quite as dramatic, but we’re still definitely in a quickly ascending housing market.  Especially in the first time home buyer demographic.

Why are prices rising so quickly?  The recent Seattle Times article stated several reasons including drastically low but rising interest rates, along with super low levels of inventory.  Another reason cited was a moderate level of 5% unemployment due to large companies in the area hiring such as Google, Amazon and Microsoft.

Are prices going to keep rising at this pace?  It’s hard to say for sure, but prices may start to taper off towards a more historical rate of around 5% per year.  One of the other reasons not directly mentioned in the article is that affordability, especially as it relates to rent, is still very attractive.  Once you take into consideration the tax benefits involved in owning it’s actually about the same monthly expense to own a home as it is to rent.  As long as this equation holds true, prices and the housing market will stay strong.

Is it even still worth buying if you’re a first time home buyer?  Because of the previously mentioned affordability factor, owning a home still makes a lot of sense for many first time homebuyers.  Even as prices rise and interest rates rise and the affordability of homes moves away from rent, it will still make sense for many first time home buyers.  Even if it costs a couple hundred dollars more a month to own than rent, the mortgage payment still stays fixed for 30 years until it goes away.  Rent on the other hand will always be there, and will continue to increase in the long run.

Don’t make the biggest financial decision of your life without getting educated!  Buying your first home may not be for everyone, it really just depends on your personal situation.  If you’d like to get more information on the home buying process in general, please go to our Calendar/Reservations page and sign up for one of our FREE First Time Home Buyer workshops

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02 Jul 2013
Real Estate

What the Listing Agent Won’t Tell You

Is it ok to use the listing agent when buying a house?  No!  More and more often we’re seeing first time home buyers contacting listing agents through sign calls, internet postings, etc, to view homes and write offers.  The listing agent has a fiduciary responsibility to the SELLER, and no matter how hard they may try there will always be a conflict of interest when practicing dual agency.

What’s dual agency?  Dual agency is when a real estate agent represents both sides of a transaction.  Many agents like to do this because they get paid twice, but it is not in the best interest of either client.  First time home buyers need an agent on their side that will represent them solely and fully.

How much does it cost to hire an agent?  In the state of Washington both listing and buyer side commissions are paid by the seller, so the buyer pays NOTHING for their representation.

So why would first time home buyers choose to NOT have their own agent?  There is no reason first time home buyers shouldn’t have their own agent representing their best interest.  Some people feel like real estate agents are just salesmen.  It is true that some agents are salesmen, but there are many out there that are educated professionals and advocate for their clients.  You may just have to interview a few to find the write one.

Don’t make the biggest financial decision of your life without getting educated!  If you would like to find out more about how to interview real estate agents, or the home buying process in general please go to our Calendar/Reservations page and sign up for one of our FREE First Time Home Buyer workshops.

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09 Apr 2013
Real Estate

Should First Time Home Buyers Use Zillow to Value Properties?

Should first time home buyers use Zillow to value properties?  Absolutely not!  Zillow is an imperfect system that was created with the intent to attract home buyers and sellers, so that Zillow could sell add space to Realtors.

But Zillow uses comparable properties to come to their valuations, right?  No.  Zillow simply searches for properties in the near vicinity that have sold recently with the same number of bedrooms and baths.  These characteristics alone don’t justify using a property as a comparable.

So if a home has the same number of bedrooms, why isn’t it a comparable?  There are many answers to this question.  One example is Zillow calling a 3 bedroom home WITHOUT a view, a comparable for a 3 bedroom home WITH a view!  Everyone knows that a view can be very valuable, but unfortunately Zillow nor any other automated valuation system has come up with a way to evaluate something like a view.

But I’m a first time home buyer and can’t afford a view anyways!  This may be true, but it still doesn’t make Zillow a good evaluating tool.  Another example is Zillow trying to use a 2 bedroom home on a major arterial as a comparable for a 2 bedroom on a quiet street in a residential neighborhood.  The lack of traffic makes the home on a quiet street more valuable in the eyes of buyers, but Zillow also hasn’t found a way to take this into consideration either.

What else makes Zillow an imperfect system?  We could go on about this subject for hours.  The end answer is that you should align yourself with a knowledgeable Realtor that knows the area and is familiar with values in the area you’re interested in.  And if you’re already working with an agent that uses Zillow themselves in an attempt to value a property, then it’s time to find a new agent!

Don’t make the biggest financial decision of your life without getting educated first!  If you’d like to find out more about evaluating properties or the home buying process in general, please go to our Calendar/Reservations page and sign up for one of our FREE First Time Home Buyer/Down Payment Assistance workshops.

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23 Sep 2011
Real Estate

Price vs. Value.

Many first time home buyers these days are looking for great deals, and rightly should be.  Depending on the market you are dealing with, you may be able to pay less for a house than it is actually worth.  However, the most common mistake first time home buyers make, is judging a great deal based on price as opposed to value.  What I mean by this, is often buyers make statements like, “If I can’t buy a house for 80 cents on the dollar, then I would never buy it”.  If your desire is to get a great deal, then to pay 80% or less than fair market value may be a good strategy.  However, for this to be valid, you want to compare the price your paying to the value NOT the asking price.

For instance, if your strategy is to offer 80% of the asking price when presenting an offer, this is how it could potentially play out.  Lets say you find a house you like that is listed for $300,000.  Based on the fact that its been on the market and needs some repairs, you employ your 80% tactic and offer $240,000.  And guess what, the seller accepts! Hurray, you just paid 80 cents on the dollar!!!…But wait, what if based on similar properties that have recently sold in the area, the property is only worth $220,000?!?!  You just potentially paid $20,000 more than you should have to purchase it at fair market value.  Furthermore, you may have paid $64,000 more than you should have under your 80% rule.

On the other hand, what if you offered $240,000 for this property but were beat out by another buyer offering full price?  On the surface you might say, “What a joker.  They actually paid full price in this market??”  But what if the property was actually underpriced by about 20% and the appraisal came back at $350,000?  Would the buyer really have made a poor financial decision by offering full price? Of course not.  Under this scenario they still would have purchased the property for 80% of fair market value.

In this market, there are still plenty of overpriced homes on the market.  That being said, we have really started to see a transition of underpriced homes as well.  This may be because of homeowners getting more realistic about what it takes to sell in this market, paired with more bank owned properties where the asset manager just wants to get the property off the banks books and therefore prices it accordingly.  It is true, that at the end of the day a house is only worth what someone is willing to pay for it.  But whatever the situation, it will probably fair better for you to consider the price your paying in comparison to market value as opposed to asking price.  If you would like more information about buying a home in this current market, please go to our Calendar page and register for one of our FREE seminars.

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12 Aug 2011
Mortgage

Do I Need a Down Payment to Buy My First Home?

I just read an article on CNN Money called “Secrets to getting a mortgage with so-so credit”. It had some interesting information about different lending parameters with major institutions like Fannie Mae, Freddie Mac and FHA. One of the guidelines listed in the article for Fannie and Freddie is a 20% down payment. I was a little confused by this, as from my experience you can generally secure one of these conventional type of loans with as little as 5% down. The article may have meant that “to secure the best interest rate” a borrower must put 20% down, which is true. The article goes on to say that if a borrower cannot afford this size of down payment, that FHA may be a better option with only a minimum down payment of 3.5%. Also, FHA allows for a much lower credit score than conventional loans without penalizing the borrower with a higher interest rate. Now may be a great time to buy your first home, but in this economy many families may struggle with the ability to save up a minimum down payment of 3.5%. If you’re interested in buying your first home, but even a 3.5% down payment seems out of your reach, there are also great down payment assistance programs offered by the Washington State Housing Finance Commission. First time home buyers (who haven’t owned a home in the last 3 years) may be eligible for up to $45,000 in down payment assistance from the state. You may be able to own your first home for little to no money down. If you would like to find out more about these down payment assistance programs, please go to our Calendar/Reservations page and register for one of our FREE First Time Home Buyer seminars.

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