Just the same for a mortgage…it’s not just the monthly payment.

There are definitely great real estate agents out there. My husband has had several real estate agent clients over the years, and there’s more than a handful that we’d use in a heartbeat if we were buying a house.

And since we’ve never bought a home before, we’ll definitely be using an agent when the time is right. We’ll just be very selective.

As several people have pointed out, buyer’s should figure out what they can afford, take the time to decide what they NEED in a home (not just what they want), and, if they use a realtor, to get a referral from a friend or family.

Believe me, I know that there are many “used car salesman” real estate agents out there, but there are also those of us who really want our clients to be happy. Happy clients = long term customers, and long term customers are what keep us going because they refer friends and family to us.

Two last thoughts:
1.DON’T buy a house beyond your means.
2.If you feel comfortable going without an agent, I say “go for it,” especially if you have bought a home before. Before becoming an agent, I did, (and I see now that I made a few mistake because I didn’t do my homework). Take some time, read some books and learn about important items like underground oil tanks, septic systems, home inspections, the closing process, and seller’s property disclosures. Heck, even if you use an agent, you should look into these things. It may take some time up front, but you will be a much happier buyer in the end.

The idea was to help 1st time home buyers but all it did was push prices up.

The assumption today is that most people will never be out of debt: that a mortgage payment consuming half or more of your net income is as natural as the air we breathe. If that’s true, it doesn’t matter how much the house costs, because you’re not planning to pay it off. All you need to know is how much the monthly payment is; the payment is actually rent. In effect, you rent your dwelling from a lender, and you always will.

The only way you can ever hope to own a house outright and someday get out from under the crushing weight of mortgage payments — which, believe me, young’uns, you WON’T be able to afford in retirement! — is to buy a house whose price is within reach. Not whose monthly payments are theoretically within reach.

Like others, I’ve also found there are some great real estate agents and some who do nothing more than you can do yourself. When I look at houses seriously (permanent past tense, maybe??), I give the Realtor a buying price significantly less than I really can afford, because in my experience even the best of them will take you only to houses costing somewhat more than you want to pay.

That said, I wouldn’t think of signing a purchase contract or a mortgage agreement without an experienced Realtor or a contract lawyer at my elbow. These are complicated legal documents that commit you to obligations you need to understand fully before you agree to them.

I think first time buyers should not only look at monthly payments, and the potential for those to go up due to tax increases, HOA fees, etc., but they should also look at the big picture-how much debt are they REALLY taking on?

Your points are right on target!

Take Care

LJ

@Gabby – You make a good point. Buyers can definitely have unrealistic expectations. Unfortunately a lot of first time buyers want the kind of house it took their parents 30 years to afford.

@Braunn – I place most of the blame on the mortgage meltdown on the lenders. They had to have known most of the people with high risk mortgages would end up defaulting.

@Ernesto – Immediate gratification is certainly a problem.

The first house I ever bought (20+ years ago) we had to cough up 20% down so all we could afford was a handyman’s special. After $15K in materials and countless weekends (and vacations) spent working on the place, it was presentable and we sold it, made a profit and bought a better place.
These people who want more in a first home than people used to get in a second or third home kill me. All for no money down.

And then if somehow they can’t afford their perfect first house, let’s lobby congress for a taxpayer bailout.

-Sure this costs more than you wanted to spend, but if we can make the payments work, will you sign today?-

-And don’t worry about the monthly payments, I’ve got a friend in the mortgage business that can work wonders with ‘creative financing’!-

-We’ll have no problem getting this appraised at a value that’ll get you in for no money down! (I know someone…)-

-You’ll easily be able to make these payments, we’ll start you with 3 years interest only…or a 7/1 ARM. You won’t even have to pay anything down!-

@Debbie – any time we have been ‘browsing’ we’ve always had the same experience. We say, we don’t want to spend more than X. They take X as the starting point. Anyone I know personally has described the same thing unless/until they absolutely put their foot down.

I don’t have a lot of sympathy for the ‘businesses’ that got caught in the middle while they were trying to Flip This House. But, I think it’s just wrong that people are finding themselves on the street facing foreclosure and/or bankruptcy because they trusted these Professionals…these Experts. And the banks, themselves, were more than willing to go along with these inflated values and predatory lending practices just to make a buck. And now they want the taxpayers to bail them out!

Around here, you can either be opinionated about what you want, OR cheap–but not both at the same time.

That doesn’t mean you should rush in, as the place I ended up in I enjoy very much, but it does go to show you that just because advice CAN be a gimmick to get you to buy doesn’t mean it actually is, especially for an attractive property at an attractive price. I would hate for folks to suddenly feel their agent is cheating them if they hear that advice.

I like watching those types of shows on HGTV, and I swear, so many houses are way above the buyer’s established budget.

How dare they show them houses they cannot afford!

I guess it means a higher commission for the agent.

Ya just gotta remember that the realtor isn’t paying the mortgage–you are.

She did tell us that we would be able to afford more house if we expanded our search area to a few other town, and that was wise advice for sure!

I think the moral of the story is not to deal with a television show, deal with a realtor that a friend used and had an excellent experience with. Realtors depend on referrals.

Anyway, start with a lower amount, at least 10% lower, maybe 25% low. See what’s available at that price. You might like something. If not, move up.

My agent showed me only things at or above my maximum price. I assumed at the time that it was because I couldn’t afford much. (My house cost only 50% of the median price at the time!) But it might be true for most people.

Remember that everything (heat, repairs, etc.) costs more with a bigger house.

I was really glad I had only bought a 679 square foot house – it was plenty for a single person to handle.

But for what it’s worth, I would have ignored the third house as well. I’m not interested in doing $30k in upgrades / repairs to a home… not only do you set yourself up for going massively overbudget.. but you’ll have to be there at the home while the repairs are being done. If you have full-time job ( which I’m assuming that this woman does ), that could be quite tricky. Time off work is expensive, and adds even more to the cost of the work.

Me? I’ll take a house in top-notch condition, even if that means I have to settle for a smaller place.

Here is another thing – it’s good to have an agent (although I don’t really like the current “paid buyer’s agent” thing), but one shouldn’t ignore properties sold by owner, so browsing local ads is useful. Sometimes real estate agents do it themselves, then they bring customers to the property sold by owner without telling their clients and charge the owner 3%. As a result the owner isn’t likely to go down much, at least if she isn’t desperate. I encountered this situation twice – once the agent tried to show me the property sold by owner (that I’d visited before) and once the agent contacted me when I was selling by owner. This was at the time of a hot seller’s market in early 2000s, so I immediately asked the agent what it would cost me. She told me – 3%, so I replied that any offer her clients give me should be at least 3% higher than anything I receive on my own. Ended up selling on my own – the agent failed to explain to her client that this was a seller’s market and they could only bid up, not down as there were bidding wars at the time with offers at and above asking price. Now it is different, but it is still worthwhile not to limit oneself to just an agent. Even if it is an agent paid by buyer who isn’t charging the seller, I’d still look on my own as well just in case.

Back to the price. In addition to how much one can afford, there is also how much one is willing to spend. A cheaper place allows one to have more spending money for other things. Different people have different priorities, and it is absolutelly wrong to try to convince someone to spend more than what one is willing to spend.

“I know this is a thing that varies by region, but you could potentially get a much too large house for a single woman for $200k here!”
Here is Westchester, NY 200K will get you a one bedroom co-op (177K – last ad I saw). You’ll have some money left, but 200k wouldn’t be enough for a two bedroom co-op; certainly not enough for a one bedroom condo. The median house price last year was around 640K, surprisingly up from 630K a year ago. I do think the prices will come down, though, because this is just ridiculous. Not that it affects me, but for the first time buyers it is tough.

@Ron – I think you’re absolutely right that she represents what’s gone wrong with the lending process. When it’s all about the immediate buck, there will be long term ramifications. You have to look at the big picture.

or go rent in the projects

After the first couple of episodes, I couldn’t stand it anymore. People looking at homes without even knowing the prices. The agent pushing them into a hurried decision because “this one won’t be available for long”. Not to mention the complete farce of only looking at 3 to 4 homes before you buy.

The agent on the show is a good example of why good people make bad decisions when it comes to real estate. In my opinion, the best thing you can do when buying your first home is research for yourself and only trust those who would really have your best interest at heart; family, friends, etc…

Does that “expert” get a cut as an agent? She acts as though she does. I’ve only glanced at the show once or twice and was floored at her brashness toward the “big number.”

I my opinion, SHE represents what’s gone wrong with the sub-prime lending crisis we’re experiencing.

My realtor told me that I would need to change my price range or change the neighborhoods that I was interested in before he would step outside those ‘boxes’. I’m not a hug fan of paying realtor fees now that I know what I’m doing and know that 90% of the info. a realtor gives you is already available, but I still recommend good realtors to first time buyers.