After the Housing Crisis
By Ilyce Glink

Housing Market Crisis (William Brown)

Much has changed in the world of real estate over the past 18 months.

There are new tax credits, tax deductions, and tax laws relating to short sales and foreclosures. There are new rules relating to appraisals, mortgages and home equity loans. And there are new entities to oversee and manage the crisis.

Despite these changes, some key parts of the home buying process haven't changed at all.

Here is my list of four things that have remained constant through the tumult:

1. Real estate agents are still a good deal for home buyers

While the Internet provides a load of great information about homes, school districts, neighborhoods, shopping, local public amenities and services, restaurants, bars and even the nearest Starbucks, for many homebuyers it hasn't replaced the knowledge and experience a great real estate agent brings to the table.

It's extremely valuable to have someone in the process who really understands what you have to do to close on a house purchase, who can walk you through the seller's legal disclosures, and who can provide you with context about the homes in a particular neighborhood because the agent has watched various houses go on and off the market for years.

I don't think a home buyer should ever abdicate his or her responsibility to investigate a piece of property. But having a great real estate agent talk about why the sellers are divorcing, or a problem the prior owner had with a septic system, or issues surrounding the new development going up next door can help you make a smarter offer or be a better negotiator.

All of this experience is even more important if you're buying new construction. An agent who regularly works with a developer or has watched the developer put up several houses or subdivisions can tell you whether buyers are happy with the properties they have purchased, or what kind of upgrades, freebies or discounts the builder has had to give away to get properties sold.

Best of all, the fee to pay your buyer's agent comes out of the commission paid to the listing agent. In many cases, if the buyer has no real estate agent to represent him, the listing agent still receives the full commission. Finding a smart, highly qualified real estate agent to assist you in your purchase is a savvy move that will never go out of style.

2. You'll get the best loan if you shop around

Whether you're buying a toaster or a car, you'll always get a better deal if you shop around. Using the Internet to hunt down the least expensive price on a particular toaster or car model might take just a few minutes, and your efforts will leave you with more cash in your pocket.

What I don't understand is why many home buyers don't do their homework and shop around for their financing. Financing a house is likely to be the most expensive thing you do. If you take out a $200,000 loan, with a 30-year fixed rate mortgage for 5.5 percent, you'll pay $1,135.58 per month, plus taxes and insurance. The interest alone will run you nearly $209,000 over the life of the loan.

With those kinds of numbers, it pays to shop around. Every little bit you save can translate into tremendous savings down the line. Shave a quarter point off the interest rate of your loan and you'll save more than $10,000 in interest over the life of the loan.

When shopping for a mortgage, you'll want to talk with at least three or four different types of lenders, all of whom should come with glowing recommendations from friends, neighbors, colleagues or family members who have used them in the past three to six months. Try to find a big national lender (like Bank of America, Citibank or Wells Fargo), a locally owned bank that keeps a fair amount of its loans in its portfolio, a Federal Home Loan Bank, a mortgage broker and a credit union (if you belong to one or can join one).

Make sure you understand what type of loan you want, and then ask the lender to provide you with an explicit breakdown of the costs so you know exactly what you're getting into. And remember, getting preapproved for your loan is better than getting prequalified.

3. Home prices may rise or fall, but maintaining a home isn't cheap

All houses, both new ones and old ones, require maintenance. Buyers sometimes think that if they buy a brand new house, they'll have fewer maintenance headaches. That may not be true. If the property has construction defects, life could be one big long headache.

But even a new house that doesn't have a construction defect requires maintenance. You'll need to mow the lawn, make sure caulk stays in good shape, and blacktop the driveway every year or so. You'll have to service the air conditioning and heating system, change air conditioning filters, water filters, clear out the gutters at least once or twice a year, and maintain septic systems. And with a new or old house, you'll need to regularly check to make sure you're not developing a moisture or pest infiltration problem.

One of the biggest mistakes home buyers make is not thinking about the costs of maintaining a particular house before making an offer. Having a professional home inspection is essential, but that generally won't happen until after your offer is accepted. Instead, you've got to train yourself to look for red flags that could be a sign of something more expensive. And don't forget to add up the costs of just the general maintenance. The best thing you can do for your house is to maintain it in perfect condition.

4. The cliche is true: It's still all about location

Prices may rise and fall because of housing bubbles or an employer move into or out of a particular neighborhood. But in a great location, prices will rise faster when times are good and fall more slowly when times are bad. As real estate agents like to say, it's "location, location, location."

What makes a neighborhood great? You'll want to be in a top school district, even if you don't have or plan to have children. You'll want a community that is well run, is maintained well, is easily accessible to important highways or public transportation lines. You'll want to choose a neighborhood where the owners take care of their homes and land, where there are lots of recreational opportunities, shopping, services, restaurants and other amenities. You'll also want a community that's safe.

There's nothing you can't change about a house, except its location. So be sure you get to know it before you make your offer.

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As the historic real estate bust continues to gut home prices throughout the country, property owners everywhere are scrambling to attract buyers. For some home sellers, that might mean chipping in for closing costs; others might try to sweeten the deal by handing out perks, like a free parking spot. But for many homeowners, the most efficient way to sell a home in a depressed market is to simply drop the listing price.

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Reverse Mortgages Don't Allow You to Borrow 100 Percent of Home Value
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A reverse mortgage allows homeowners over the age of 62 to tap into their home equity. You can either take the money in a lump sum, as a line of credit (which it sounds like your husband opted to do), monthly payments, or a combination of all three.

Ask the Real Estate Lawyer - June 21, 2009
By Ilyce Glink and Samuel J. Tamkin

Ask the Real Estate Lawyer - June 14, 2009
By Ilyce Glink and Samuel J. Tamkin

Get a Job and Then Buy a House, Not Vice Versa
By Ilyce Glink

The fact that you're moving without a job is problematic if you intend to buy a house. If you quit your job and then try to close on a house, you may not be able to at the last moment. That would be a disaster for you and the sellers

Ilyce R. Glink's latest ebooks are "Save Your House From Foreclosure" and "The Clutter Collector: How to Get Rid of Clutter Everywhere In Your House," which are available at her Web site, www.thinkglink.com. If you have questions, you can call her radio show toll-free (800-972-8255) any Sunday, from 11 am-1 pm EST. You can also write to Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022

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