Buying a house -
Set Realistic GoaLs
Before we begin, let's establish your objectives.
Your objective is to buy a house that you want at the lowest possible price.
Stop listening to the scammers who
claim you
can buy for nothing and get the house for nothing! What kind of seller would be
so stupid to sell you a house for nothing and how many of them will you actually
run into. Even if you end up finding one, your Real Estate Agent would buy it before
you do! In fact, with all these Real Estate Scams out there,
If you bought a house
at fair market value, then you have done very well.
To clear the air, in Canada, the no money down home
did use to exist, but not anymore. Some banks and lenders were willing to lend
you the 5% down payment so that you don't have to pay a dime out of your own pockets to purchase
a home. However, given the current financial
situation and the tighter lending restrictions, there are
no bank
or lenders who would do that that in Canada or the United States.
The buying home for half price did use to exist as well. At one point,
foreclosures (or called "Power of Sales", which is just a marketing gimmick) in Canada would allow foreclosed homes to be sold at rock bottom prices.
The new law, which has been in placed for decadess now require foreclosed homes to be sold
at the highest possible price or else the agents could be
sued. There have been many people buying foreclosed homes believing they got a good deal.
The general rule is that house prices double every ten years. And so far, that
has been the trend. Because of that, people think a house is an investment.
The truth is, the cost to maintain your house offsets the increasing market value of your
house.
Over a period of ten years you will pay around 1% in property tax each
year, around 1% in house maintenance, 3% in mortgage interest . Plus, there is
also mortgage insurance, land transfer fee, cost for buying and selling the
home. In the end, the average buyer makes about $10 000 if
the buyer were to buy a $200 000 house and sell it for $400 000 in ten years.
And we didn't even take into consideration tornadoes, fire, floods and mortgage
bankruptcies where they will end up losing money. Is the time really worth this
effort?
Fact is, your house is a liablility, unless if you are actually doing something
to profit from it like renting it out or fixing it up yourself.
The dark side is there has been many people who lost money buying real
estate. These people unknowingly bought houses that were overpriced (probably
because they were told housing prices will always go up), paid higher than
normal mortgage interest rates or something unexpected had happened to their home.
Thankfully for you, you are reading these articles, hopefully, before you bought
your first home.
When you buy a house, don't buy believing it will always go up in the long
run. Buy it because you have done your homework and you have statistical
evidence that you have been
offered the best price for the house.
If there exist ever an industry with more sneaky sales tactics and money motivated
people, it has got to be the Real Estate industry. As a buyer, you could be dishing
out $350 000 and everyone wants a piece. The Real Estate Agents want a piece. The
lenders want a piece. The lawyers want a piece and the sellers want piece. No wonder
there are so many scams in this industry. In fact so many scams that yif you don't
think you will run into one, then it is probably because you have been scammed
by one!
Your objective as a buyer or anything in
life is to get trustworthy people on your team.
If you Real
Estate Agent claims he knows everything and can get you houses at dirt cheap prices,
then he is lying. If he could do that, why wouldn't he just buy it for himself.
Don't bother looking for those who possess "Power of Sale" or sneaky ways of getting homes for half the market price. They don't exist in Canada! If a Real Estate Agent
could do that for you, then the Real Estate wouldn't be a Real Estate Agent. He
would become a home buyer!
And don't even listen to the Real Estate Agents who claim they are so rich that
they are only working because they want to help new inexperience buyers
just like you. Run
when you hear that! If they really wanted to help, they can volunteer for other
things and work for free. Try to negotiate the commission and see how
they react. They'll claim it is impossible or against the law ro reduce the
commision.
If you have any questions or concerns about these articles or you would like to comment
on them, please post them.
Sep. 2, 2011
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