1. You should Pre-Qualify

   To establish parameters on what kind or which home to consider purchasing, it is essential to find your upper limit of qualification so you know all of your options! It is important to note that different lenders have different programs, and you may be able to qualify for thousands of dollars more or less with one than with another. It is extremely important to know the differences among different lenders and how those differences can impact you.

2. View Real Estate as a Serious Investment

   Most buyers tend to make value judgments from an emotional point of view. Often these judgments have little, if any, impact on the actual value (or re-sale value) of the property. That is, items that are cosmetic create great emotional response, both positive and negative, and can either enhance a bad floor plan and make it look worthy of purchase or make a potential buyer overlook a good floor plan that could easily be changed to maximum re-sale-ability for a few dollars. It is extremely helpful to have representation that analyzes your potential purchase/investment from a logical, professional approach.

3. Understand the Importance of Location

   The old adage says the three most important things to understand in real estate are location, location, location. Every city, town or rural location has a somewhat different rate of appreciation: even within the same city, different areas appreciate better or worse than others. If you would like for your next purchase to be a good investment as well as a good home, you should consult a professional for information regarding the different lifestyles available and how those lifestyles affect re-sale-ability and appreciation of your intended purchase. Many buyers would make more money on their investments if they knew all of their options before they considered purchasing.

4. Understand the Importance of Floor Plans

   Unfortunately, many buyers think that all floor plans must be good because the builder was a professional, and he built them that way. It is essential for buyers to realize that different floor plans have highly different rates of acceptance by the public for highly different reasons. Understand that these differences are critical to the return rate of your home as an investment! If location is #1, 2, 3 in order of importance, then floor plan is certainly #4, 5, 6! If your Realtor® or consultant does not tell you about these important differences, you may want to consider finding one who will.

5. Understand the Tax Ramifications Involved

   Too many buyers hold themselves back from larger payments, not understanding the after-tax consequences of their action, or try to scale down, not understanding the consequences capital gains will have on their proceeds from their last sale. It is extremely important to understand these consequences prior to taking any action to sell or purchase. Often buyers could increase the return on their home investment by purchasing a home in a slightly higher bracket than they are considering!

6. Understand "Re-Sale-Ability"

   A rather new adage in real estate is, "The money you make or the money you lose in real estate happens the day you purchase, not the day you sell!" Most buyers never consider how the home they are considering will resell on the market in the future. Buyers purchase homes every day that, for example, back up to busy roads, not understanding or being advised that this is a critical mistake for their re-sale-ability and allowing thousands of dollars to be lost in future return on their real estate investment.

7. Understand Functional Obsolescence

   Many buyers are unaware of the impact of functional obsolescence on re-sale. Appraisers use this term to denote devaluation of value in the subject property due to age and change of lifestyle from decade to decade. This continuing drop in value is seen as a main loss of appreciation in older homes, as well as poorly planned newer homes. Once these homes reach the greater degrees of functional obsolescence, their value will drop to the value of rental property and stay at that level indefinitely.

8. Don't Think That This Home is Your Last Purchase

   Most buyers think of their intended home purchase as the only one they will make for the next 10-20 years. National statistics tell us that the average homeowner will move every 4-5 years. Salary increases, promotions, cost-of-living increases, job losses, relocation, and even disability and death in the family can and will change the desirability to stay in a certain "I love this house and lifestyle forever" mode to "I wish I could sell this house yesterday!" This phenomenon has been an experience that too many buyers can relate to. Many times buyers purchase a lifestyle that turns out to be far less desirable than they envisioned. Had they considered the re-sale-ability of their home prior to making the decision to purchase and consulted a professional Buyers Agent, they may have made different choices!

9. Don't Purchase the "Upper End" Home in the Neighborhood

   This common mistake made by buyers can and usually does lead to significant loss of rate of return on real estate as an investment. There are only rare instances where appreciation is not adversely affected by such a purchase! If you do not understand the term "predominant value" and how it will impact the re-sale-ability of your intended purchase, you should consult a professional Buyers Agent who will explain these ramifications to you.

10. Have a Professional Inspection

    As a buyer, you should fully understand that once you have closed on the purchase of your next home, you basically own it in an "as is" condition. There may be defects in the home that would only be uncovered through a professional inspection. You will own those defects! A superior Buyers Agent will make sure that your offer is contingent on the satisfactory outcome of a professional inspection loyal to your interests. There are also home warranty programs that can be paid for by the buyer or seller to further protect your interests.

11. Understand the "Art" of Negotiation

    Buyers tend to make offers on homes from an uneducated and emotional point of reference. This mistake can cost buyers thousands of dollars! Understanding that sellers have very sensitive emotions involved and finding out enough information about the seller's circumstances to suggest an effective "Purchase Strategy" may be a top Buyers Agent's most valuable skill! To make sure you are getting the best deal possible, make sure you have a well-grounded purchase strategy that makes a win-win situation for all the parties involved.

12. Understand lenders, programs and locks

    Too many buyers, having signed an earnest money agreement, think that the job is done because they may be pre-qualified and the lender will take over. It is vitally important to understand that a lender does not act as a fiduciary for a buyer. This means that a lender has no obligation to insure that the program that you have chosen is the best program for you! Hence buyers lose thousands of dollars over the term of the loan as well as hundreds of dollars in garbage fees simply because no one knew how to shop lenders and programs for the benefit of the buyer.

    Loan locks are the devices used in the mortgage business to hold an interest rate at today's value, or "float" the interest rate into the future, toward closing (hoping for an improvement in the interest rate). A professional Buyers Agent offering fiduciary services will advise you and help you with this important buyer dilemma as well as help sort out the best lender, rate and program to benefit you, the buyer.

13. Understand Buyer Representation

    Because Buyer Representation is fairly new to the real estate industry, buyers generally do not understand the differences between being a "customer" or a "client" and "fiduciary representation." Client status is preferable to Customer status; however, only Fiduciary Buyer Representation will allow a Buyers Agent to compare and evaluate the different options that you may be unaware of and how those options may negatively or positively impact the costs of purchase as well as the future profitability of the intended purchase upon resale.

    Unfortunately, due to a recent change in Agency law made by the Idaho State Legislature, as of July 1, 1996, Fiduciary Buyer Representation is no longer a standard service offered by Idaho real estate agents, as it was prior to July 1, 1996. It is important that you understand that Fiduciary Buyer Representation is allowed to be practiced by any Idaho real estate agent that desires to offer this value-added service; however, at this time very few agents are offering this option! Because of the extreme value of this service, you are advised to interview until you find a qualified Buyers Agent with enough experience to provide this service!

Should you need more information or help finding fiduciary representation in any locality, please feel free to contact Dale for personal assistance.