RENTING VERSUS BUYING

The disadvantages of renting are significant. If you have any opportunity to purchase a home or condominium, it almost always makes sense to do so.

The largest disadvantage of renting is the loss of value. Assume you rent a residence for $1,000 a month and you live in the residence for two years. You will have paid a total of $24,000 in rent, a pure expenditure. The $24,000 is simply gone and you will have nothing to show for it.

 

Rent payments are closely aligned with a landlord's mortgage payment. Using the above example, lets assume your $1,000 rent exactly equals the mortgage payment. For two years, you have indirectly paid the landlord's mortgage, helping them build equity in the house by paying down the loan. In addition, the landlord has benefited from the appreciation of the property.  Do you like your landlord enough to buy him/her a home?

 

By appreciation, I simply mean the amount of increase in the value of the house. If the rental appreciated $20,000 in two years, the landlord has received a windfall. They may have seen a gain of $24,000 in appreciation and payments lowering the mortgage. As a renter, you have made this all possible. The landlord no doubt would like to thank you.

 

Now, what would have happened if you had purchased a similar home with similar financial figures? You would have seen an increase in YOUR wealth of $24,000, not the landlord's wealth.

 

USING A REALTOR

Using a real estate broker is a very good idea. All the details involved in home buying, particularly the financial ones, can be mind-boggling. A good real estate professional can guide you through the entire process and make the experience much easier. A real estate broker will be well-acquainted with the home buying process and when it's time to make an offer on a home, the broker can point out ways to structure your deal to save you money and protect your interests. He or she will explain the advantages and disadvantages of different types of mortgages, guide you through the paperwork, and hold your hand and answer last-minute questions when you sign the final papers at closing.

 

SHOULD I CALL REALTORS ABOUT THE LISTINGS THEY ARE SELLING?

No, chose one realtor to work with and have that realtor call the listing broker for information on your behalf.  A broker who is experienced will not spend their time on you or your property search when you are having another broker search for you as well.  You will not be taken seriously, as Realtors do not get paid, no matter how much effort they exert, until they close a sale for you.  Chris and Kim Knox will immediately ask you if you are working with any other brokers when you ask them to go to work for you.     

 

HOW MUCH DOES IT COST TO HAVE CHRIS AND KIM KNOX REPRESENT ME?

Chris and Kim Knox are productive and experienced full time brokers.  You may wonder how you can afford to pay them along with the closing costs you will have with your purchase.  You pay nothing!  That is right, nothing.  Chris and Kim Knox get paid by the Seller when they find you a home that you buy.   They do not charge you consultation fees, fees for showing you homes, or fees for searching for a home for you.  They will get you to the right lender for your situation, give you advice, show you the value of the home you are buying, and close your sale in an organized and professional manner. 

 

FOR SALE BY OWNER’S

If you do decide to "go it on your own," your choices will obviously be very limited. The only homes that you can buy without any Agent assistance are those that are "For Sale By Owner" (FSBO)-- a small percentage of the market. These are home owners that have decided not to use an Agent in the sale of their house. It may be because they think they are saving money by not paying a commission, or it may be because there was NO Realtor that would take their house listing at the high price they demanded. Many Real Estate analysts have found that the selling prices of FSBO homes are higher than those listed by Agents on the market. The smart FSBO’s  recognize they will still need to pay for the buyer’s representation and that they are only saving money on their own representation. 

The next mistake that many buyers make, when they find that their choices are so limited by only dealing with homes for sale by owners, is to jump into the "listed" market by checking advertisements and calling Listing Agents directly or visiting Open Houses. There is not a dime to be saved with this strategy. 

 

Benefits of buying a home 

There are tax benefits, financial benefits, stability, and pride.  Buying a home is a commitment

Do You Know What You Want?
Are you looking for a home in the city?  A three bedroom, 2 bathroom home with a large yard?  Do you need to be in a particular school district?  First-time homebuyers and repeat buyers need to ask why you want to buy and what is important to you?  Do you have a purchasing timeframe?  How long do you intend on staying at this purchase?  Is Buying an option or a requirement? Does your spouse have the same goals?

Whatever your answers, the more you know about what you want and what, the better you can effectively define your goals.  It is worthwhile to look at the questions above and to then discuss them in detail when meeting with Chris and Kim Knox.  Ultimately, a realtors advice depends on your own situation and financial goals. 

Do You Have The Money?
Homes and financing are closely intertwined. (Financing is the difference between the purchase price and the down payment, commonly referred to as debt or the mortgage.) The good news is that over the years new and innovative loan programs have evolved which require a 5 percent down payment or less. In fact, a number of programs now allow purchasers to buy real estate with nothing down.

In addition to a down payment, purchasers also need cash for closing costs (the final costs associated with closing the loan). Several newly emerging loan programs not only allow the purchase of a home with no money down, but also underwrite closing costs.

Not everyone, however, elects to purchase with little or no money down. Less money down means higher monthly mortgage payments, so most homebuyers choose to buy with some cash up front.

As to closing costs, in markets where buyers have leverage, it may be possible to negotiate an offer for a home that requires the owner to pay some or all of your settlement expenses. Talk to Chris and Kim Knox for details.

ARE YOU READY?

When Chris and Kim Knox find the right house at the right price, are you going to change your mind?  You need to be committed to your dreams and financial goals.