Saturday, October 15, 2011 / by Justin Hoffmann
Buyers are looking for extraordinary deals and sellers still want top dollar. The decision of whether to buy or, on the flip side, when to sell is met with equal concern from both buyers and sellers.
In a difficult market there are things that both buyers and sellers should consider. Let's start with some basic things to keep an eye on.
Keep an eye on your credit. This is important for anyone to do whether or not you're intending to make a major purchase. When there are rocky times, many scams take place. Things like fake landlords scoping out a vacant or foreclosed property, renting the place out to an unsuspecting tenant and taking their cash. Sounds crazy, but it's happened.
Many errors have been exposed in the lending practices of mortgage providers. Loans were being given to just about anyone regardless of qualifications. Today, as I've written many times before, that's simply not the case now.
Having your credit profile in good condition will be vital when it comes time to get that mortgage loan.
For sellers, should you need to refinance before you sell, excellent credit is now part of the more stringent qualifications.
Keep an eye on your neighborhood. I'm not talking about the trite neighborhood gossip. I want you to be concerned with the homes that are going into foreclosures. Knowing in advance what is happening to the neighborhood allows you to stay on top of how your home may be impacted.
For instance, when a home is foreclosed on in a neighborhood, the values of the homes in that area can go down by about 1%. While you're not able to prevent the home next door from going into foreclosure, knowing about it before you list your home for sale is helpful to you.
How do you find out? You can look for certain signs such as owners allowing their properties to deteriorate. However, that's not always a sign of foreclosure. So, you can also check websites such as Foreclosurenet.net and Realtytrack.com.
Also, develop a good relationship with an expert real estate agent in the area. Agents can be a wealth of information and often have insights into your neighborhood that you might not have known about for days or months to come.
Keep an eye on your money. This is just plain good sense all the time. But here, what I'm talking about is watching how much money you put into a property. Whether you're on the seller or buyer side, you want to be careful not to over-invest in your property.
I've written a lot about the importance of keeping a home in good condition when you're listing it for sale. However, in this market, you should focus on maintaining your home and doing necessary improvements but, if you're planning to sell, don't go hog wild. Usually the rule is don't spend more than 20% of your home's value on improving it.
That means you can do necessary and simple upkeep to make sure that it's the most presentable when you list but you may not want to add a swimming pool, if for instance, your future in the home is uncertain. There's a hard line between improvements you do for your living comfort and what you should do to make your home sell for more–not all remodels are appealing to buyers.
For buyers, keep an eye on your money by not allowing yourself to lose sight of your goal. If you want to own a home, save. Cut back on those coffee and pastry runs. Instead brew it at home. That can save you more than $1,000 over the course of a year. Then when you find your dream home, you'll be financially ready.
Keep an eye on the inventory. Both buyers and sellers need to do this. However, buyers, in particular, should watch the shifting inventory. Buying now could mean the best deal ever. Many people are afraid to take action and jump into the housing market. That can work to the buyer's advantage. If you're watching the market, paying attention to the inventory, working with a knowledgable agent, and recognizing that now is, indeed, a good time to act, you could find an incredible deal.
If that happens you want to make sure you're in the perfect position to seize the opportunity. If you've followed my advice in this column by keeping an eye on your credit, the neighborhood, your money, and the inventory–you'll be prepared to jump into the housing market when the opportunity strikes.
by Phoebe Chongchua