The single adjective which might best describe the current home buyer's market is 'volatile'. People who bought homes before the dot com bust, paid dearly, ultimately selling at a price far less than they paid. Early on in the Bush administration, we were apprised of the 'ownership society', where every American was able to realize the American dream. People went in droves to mortgage brokers offering inventive ways to put unqualified buyers into a home of their own.
Now, we're seeing the results, in the form of all the properties up on foreclosure sales. The economy has definitely gone south, with new home construction starts down and properties standing empty all over the nation. Now, the rules of what to look for when buying a house have changed in subtle ways. Let's take a look at what has changed and what remains the same.
If you've got the income and the credit standing to qualify for a mortgage today, you're lucky. The bankers who used subterfuge and exercised less than ethical practices to extend loans to people who have since been foreclosed, are no longer so willing to repeat that movie. The government has bailed them out of their 'toxic assets' to the tune of hundreds of billions of dollars, so now they're going to toe the line when making new loans. This means that you've got to pay extra careful attention to what to look for when buying a house before you sign on the dotted line.
This means looking at the market from a new perspective. Certain elements remain the same. The old mantra of every real estate agent, 'location, location, location', still holds water, but with a twist. There are entire neighborhoods of nice homes which have been wiped out in the foreclosure fiasco. Does this mean you should wipe these neighborhoods off your list of criteria in what to look for when buying a house? Five years ago, the answer would have been an emphatic 'Yes!' Today, the lines have been muddied. The prices of these homes are way down now. You may now find a lovely home at a bargain basement price. Within five years, the value of that home may skyrocket to its pre-foreclosure value.
Other components of what to look for when buying a house which haven't changed include structural soundness, maintenance costs and property taxes. If you've got kids, or intend to sell the home in just a few years once you've realized a nice profit on your investment, accessibility to schools should be a primary consideration.
If the property you're considering buying has 'green features', such as solar heating, this is a definite plus. The eco-friendly home is the wave of the future and such a property is bound to add to your ROI when it comes time to sell.
Another element in the home buyer market which has taken on a new look is the fixer-upper in a great neighborhood. This type of home has always been a winner, provided you're willing and able to bring the home up to the standard of other homes in the neighborhood.
Recent selling prices of other homes in the neighborhood has long served as a negotiating point. Today, when you factor this into what to look for when buying a house, it's somewhat of a double-edged sword. You can definitely use this as a negotiating point when making your offer, but you have no guarantee of making a large profit any time soon.
Perhaps the defining moment of deciding what to look for when buying a house lies in deciding what your objective is for the long term. Don't count on short term returns. Make sure you can hang on to this asset until the home market recovers its footing. Then you stand to have made a good deal.
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