Join “WTFAIB?” author Kris Croom as he has a Conversation with Sean Love, a Licensed Realtor based in the DMV.
Kris: So many of us are misinformed about “how” difficult it is to become a homeowner…Can you give us the formula you’ve created to get into a home with your monthly rent?
Kris: Can you briefly describe what qualifications one needs to become a homeowner?
Sean: Put simply, a 600+ credit score, income to meet the monthly payment of the home you’re buying (a lender will determine this), and uninterrupted work history over the last 2 years, and you can very likely qualify for a home. There are more specifics to this, but this will cover 80% or more of people looking to buy.
Kris: Facebook realtors with no license have been telling everyone that this is not the time to buy. Can you confirm or deny their theories?
Sean: Lol, gotta give it up to them. The people with the most time on their hands to make content are not the ones doing the business. I know TONS of real estate agents who spend all day making content. That’s it. They legitimately have no clients they are working with. How do I know? Real estate sales are 98% public knowledge, and anyone with the know-how and access can see what they are producing. Anyone can see my stats, and I can see anyones. I say this not to hate on anybody’s game plan but to say that those advertising the most are often not the ones actually producing. Buying a house or property in the RIGHT area is, more often than not, the most competent play for most people to make. If you buy a home in a great area where people actually want to live (not a place that’s ‘cheap’ or undesirable), you’ll put yourself on a path towards 1 of 2 outcomes:
- You will have a ton of equity when the time comes to sell it and make money OR
- You will own a great rental property that pays you monthly to own it. Sometimes both. Don’t let people with no experience, no clients, and probably no properties tell you why you shouldn’t own.
Kris: How many properties should one see before making an offer? What are the dos and don’ts when deciding on purchasing a property?
Sean: Generally speaking, you should explore enough properties to give you an idea of the overall market. If the area you’re buying in is all townhomes, seeing 3-4 different styles will probably do it. If you’re buying in an area with different sets of condos, townhomes, and single-family homes, it may be more. It should be enough to give you a sense of what’s out there without wasting too much time. You see enough homes, and they all start to look the same after a while.
Kris: What are the most critical resources buyers should be using? Why?
Sean: Zillow or MLS access. MLS data is much more reliable than what’s available to consumers via different internet sites. Find a great agent and ask them to set you up on a search. You can generally customize what you’re looking for to a much higher degree, and most consumers never give this thought.
Kris: How can buyers ensure they’re not overpaying for their property?
Sean: Have an agent run comps for you. Check recent sales. Make sure those recent sales are comparing apples to apples. An example is a three-bedroom, two-bath townhouse with one car garage to another. Not a three bed two bath townhouse with one car garage to a five bed four bath single family home. You want as many factors the same as possible to give you an idea of what it should sell for. Also, take the market into consideration. If it is a hot market, expect prices to go up. We’ve been and will likely stay in a hot seller’s market here in the DMV for the next several years
Kris: Can you break down the formula that makes up your monthly mortgage?
Sean: Yes, there are 4 factors: 1. Your principal (the money you borrowed), 2.Your interest (the cost to borrow that money), 3. Your taxes (determined by local and state laws), and 4. Your insurance (varies from property to property and state to state but averages around $1200 – $1500 / year for most)
Kris: What are the benefits of home ownership vs. renting?
Sean: Convenience and cost. Homeownership is not convenient. It would be best if you were prepared to hold that property for several years before selling. Sometimes it’s not the case, but more often than not, the breakeven point (the point at which it makes more sense to buy vs. rent) is roughly 2 – 3 years. It’s convenient to rent, but it adds up. When I sit down with people who have rented for 10 years, that cost is usually between $250,000 to $400,000 they’ve spent on renting. That could be money in their pocket, but they never took the time or risk to buy.
Kris: What are inspections? Which inspections do you recommend?
Sean: Inspections are the process of checking the home out and making sure it is in the shape that you visually see it in. Sometimes inspections reveal significant items not readily visible to a normal eye. This could be things like water issues, foundation problems, pests, and others. It’s essential to verify this and make sure you’re not buying a headache. The cost of inspecting a home is roughly $600 in our area. The cost of problems not found by skipping an inspection is usually thousands if not tens of thousands of dollars. I ask my clients if they would rather lose the $600 on an inspection that found significant problems or BUY the problems of the $500,000 home to save the $600. They usually say let’s find a different one. You can possibly negotiate with the sellers, too, for major issues. REMEMBER that they also have a vested interest in getting the property sold. Don’t be afraid to take on some problems if the sellers are willing to play ball. Lastly, I recommend any / all you can afford, though a general home inspection will give you 90%+ of what you need to know about a home. That inspector will also recommend any others you may want.
Connect with Sean Love
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