Step 1 to Purchasing a Home

I wrote up a guide for first time home buyers to guide them through the process of buying a home. We use this in our office for our first-time home-buyer class. There are 10 steps in all. You can find that document on my website, www.charlestonhoLmes.com. It's a very rough outline and the buyer is encouraged to ask questions of his realtor if he is unclear on any of the steps. I thought I would use the Blog to expand a little on the 10 steps.

The first step is to find a Qualified Buyer's Representative. In recent years, most states have changed their laws regarding agency and now allow the buyer to be fully represented by their agent even though the seller pays the commission. That agent is known as a Buyer's Agent. Before this change, a buyer's agent represented the seller and the buyer had no real legal representation during negotiations. Most states realized that this was unfair and we now have full representation for the buyer. All the buyer has to do to get this free representation is sign a document making one agent the exclusive agent for that buyer. This document can certainly have an expiration date on it. There is simply no good reason whatsoever for a buyer not to have his own Buyer's Agent. There is absolutely no downside to having a Buyer's Agent. And it's free service!! The Buyer's Agent gets paid from the seller's proceeds, but has a legal duty to protect the buyer during all negotiations.

So, don't call 15 different listing agents about their listings. Get yourself a Buyer's Agent and let them do all the work for you. They can set up searches in the MLS based on your criteria that will send you email notifications of properties that match your parameters. They can show you all the properties that you want to see. We have access to the entire MLS. They will write the contract for you with all sorts of special clauses designed to protect you more than the standard contract. They will negotiate with the listing agent on your behalf, help you find a lender, set up home inspections, handle all of the paperwork, set up closings, and make sure everything gets done. Remember, they are not trying to sell you a home like a listing agent; they are trying to help you buy your dream home.

Well that's step one of the 10 steps. Now a plug for myself. I have the ABR designation for realtors. This means that I'm an Accredited Buyer's Representative. That designation comes from REBAC, the Real Estate Buyers' Agent Council, a subsidary of the National Association of Realtors.

Current market conditions

Lots of bad press out there right now about how soft the real estate market is. Well, I just read some interesting statistics that support our feeling that there are plenty of buyers out there. In 2002, SC home sales set a new record at just over 43,000 homes sold. Over half of our metropolitan areas showed price gains over the previous year, with the median price at $152,000. At that time, homebuyers were confident that the real estate market was strong and healthy. In 2007, existing home sales are forecast to be close to 58,000, with the median price holding strong at $160,000. Both 2002 and 2007 show strong sales. 2006 was the third best year on record for real estate sales in South Carolina. 2007 will most likely rank as the sixth best year on record for sales.

So, there are plenty of buyers out there. The problem is that there are too many sellers and too many unmotivated sellers with overpriced listings. These simply need to come off the market. Realtors need to refuse to put overpriced listings on the market.

Average Real Estate Investment Return

Everybody knows that real estate investments typically increase in value at a rate of about 7%. But what you need to understand is that is an average. It doesn't increase 7% every year. Lots of times it won't increase at all for 3 years and then it'll go up 28% in one year. So, it went up 28% over 4 years for an average of 7%. You need to buy when it's in one of those slumps where its not going up much and be ready to sell just after one of those surges. Now seems to be one of those slumps where prices are just staying steady. Buy now! And then make sure you position yourself where you can sell when you want to, just after some price surge several years from now.

I Wish I Had Bought When ....

Ever heard people say, 'I wish I had bought when ...?' They look back and reget not having bought when there was an obvious buyer's market. Hindsight is 20/20. Now is one of those times. Same thing with the stock market. You should buy stocks and homes when things seem the worse. You're buying on the dips. Not everyone has the courage to do this. Many people made the mistake a couple of years ago of buying on the high when there was all that euphoria. That's obviously when you want to be a seller. Others think that the price may actually go lower. Let me know when you've figured out how to locate the bottom of the dip. What should sellers do? They should sell if they need to and they are planning on buying something else. They may not get the best deal on what they sell, but they're going to get a great deal on what they buy. You can't have both.