Wednesday, January 17, 2007


TOP 5 MYTHS FOR FIRST-TIME BUYERS


1. Prices have exploded so we should wait until they come down next year to buy.

Fact: Prices for closed sales rose 5.0% in 2006. They rose 3.0% in 2005.
Prices have appreciated in Centre County but not at the rate of certain "hot" markets across
the country. Our market over the past 30 years has averaged about 1% appreciation per
year. If you wait until next year hoping prices will fall you will be disappointed. Prices may
level off or drop a bit this year and next but any savings you may realize in waiting will be
offset by the increasing cost of mortgage money as rates are certain to be higher in 2008.
The important point to remember is that higher rates next year will negate any savings realized by price fallback.

Fact: The differences in a 30 year 200K mortgage comparing the current rate of 6% versus a potential rate in 2008 of 7.75% is $234 a month and $84,139 over the life of the loan. (P&I only). Will you save 84k on a $200k home by waiting until next year? NOT!

2. The market in Centre County real estate is slow so we can get a great deal from a seller.

Fact: Days on market or the average time it takes to sell a home was up 18.4% in 2006.

It did take longer to sell homes in 2006 but the market hardly slammed into a brick wall.
The market in Centre County could be described today as it could years ago; nice and steady and not too heady. It will take longer to sell a home in 2007 but the homes will sell. You may get a great deal from a seller but you may simply pay a fair price for a home that meets all of your search criteria and you can't live without.

3. I should contact the listing agent

Fact: Seller agency law in PA. states that the listing agent owes the fiduciary responsibility to the seller to get them the best price and overall deal. That will be at the expense and best interest of the BUYER.

Many buyers think they should call the listing agent of the property they want to preview. Buyers agents work with buyers to get them the best possible deal in the transaction. They owe the fiducuary responsibility to the buyer and not the seller. If you work with the listing agent on a transaction they will not have your best interests in mind as they are legally bound to the seller. Buyer agency was intended to negate the old adage; "let the buyer beware." When you call the listing agent you are by default renewing the "old adage."

Don't put yourself in that position by dealing with the listing agent.

4. As a buyer I need to pay a fee to my buyers agent before searching for homes.

Fact: Sellers brokers pay the fee for both sellers agents and buyers agents.

Only pay a fee to a buyers agent if they will entertain you by performing in a Mardi Gras costume while singing the Macarena and drinking green beer on St. Patricks Day morning. Otherwise, buyers agents work on your behalf and are paid at closing via funds provided through the selling broker.

5. Can we just go look at houses today?

Fact: The law requires agents in Pennsylvania to have signed buyer agency agreements in place prior to previewing homes.

The answer to the question is possibly. You are required to sign the PA Disclosure and buyers agency agreement. If you are serious about buying you should have your buyers agent get you prequlaified with a mortgage professional. Many sellers request 24 hours notice to view their homes. So, yes, you can go look at a few homes today if:

A. You have signed the required paperwork as requested by the state of Pennsylvania.
B. You have prequalified with a mortgage professional.
C. The sellers agree to a short notice showing.

If you need answers to other buyers myths or help buying or selling a home call me. I will give you the facts and the truth.

2 comments:

gerry said...

Quite an informative post I must say. Thanks a lot. I am sure it's gonna be of great help to me. Do drop by my blog too for some real good fun.

workhard said...

LOved your 4 th point!!!!!!LOL


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