Tom's Top 10 Smart Things to Do When Buying a Home

Real estate guru Tom Adkins, "Cost of Freedom" regular and real estate specialist with RE/MAX Property Center of Paramus, New Jersey, details the top 10 smart things to do when buying a home:

No. 10: Find an Agent Who Is Mean

First, you want a "buyer's agent." And you want someone who really knows their stuff. If possible, at least a few years in the business. And you want someone who is heartless, who will tell you a home is a dog or a good deal… and why.

When you meet an agent, ask them to tell you their philosophy for buying. They should ALWAYS ask what you are looking for. Do not be afraid if they suggest something different. A bigger, more expensive house is often a good suggestion, not a plot to make money.

No. 9: Drive by Everything

Ask your agent to print out everything in your price range. Then, make a map and drive by everything. First, you will see everything. That will give you a great feel for the market. Second, you can narrow down the list very quickly.

Remember, you can’t say "yes" from the outside, but you can say "no." Drive-bys will tell you if the Clampetts live next door, or the kids are racing mini-bikes and go-karts on the lawn, or if the home backs up to a shopping center or a sewer plant.

Remember, looking is cheap. Buying is expensive. But buying the wrong house is VERY expensive.

No. 8: Look Slightly Above and Slightly Below Your Price Range

It’s always a good idea to see as much as possible. A lower-priced home may be just as good as what you are looking at. Then again, a higher-priced home may just what you need and well worth it. But see them.

No. 7: Look Ahead of the Curve

Always try to buy in an area that is "hot" or about to become "hot." That’s where the best appreciation is. If you buy in neighborhoods that are currently hot, that’s not a bad second choice.

And of course, think twice about areas that have already had their best days.

No. 6: Buy Newer if Possible

New homes have modern designs and features that older homes don’t have. They appreciate faster and cost less to maintain.

Older homes have their charm, of course, but be prepared to pay the price of higher maintenance and utility bills.

No. 5: Get to Know Financing Extremely Well

Buying a home is actually easy. Financing is hard. Financing is probably 90 percent of the buying process, so learn it well. Understand the advantages and disadvantages of each type of mortgage. And don’t be afraid to ask.

It’s also important to understand that loan officers don’t always know all their products or how they work. They are often glorified order-takers. And of course, everyone becomes an expert when you ask them advice on spending your money.

Like anything else in life, always learn for yourself.

No. 4: Drive the Work Routes in Rush Hour BEFORE You Even
Look at the Houses

Know the neighborhoods ahead of time. And don’t forget, some places are worth an extra half an hour drive.

No. 3: Get a Good Home Inspector

Some home inspectors are wussies. Others try to be a big hero and write up nonsense that just scares the buyer and irritates a seller. And often, that’s how deals fall apart.

You want someone why is good but accurate.

No. 2: Use an Interest-Only Mortgage

Paying off principal is foolish. Put that money to work in your retirement funds. Remember, principal isn’t deductible. So if you are paying down a mortgage at 5.5 percent, you typically get a 28 percent tax break plus matching funds plus stock appreciation in a 401k.

Of course, you can also use that money to buy a bigger, better house, which beats the daylights out of almost any stock investment out there. And you’ll get a tax break on interest, as well. Never pay principal.

No. 1: Buy Your Second Home First

ALWAYS buy your second home first. If you buy too small, the bigger house just gets more expensive when you buy it five years later. This is by far the greatest mistake homebuyers make.

It’s far better to stretch into a larger home that you keep for 30 years. When you retire and move to a Florida condo, you will have hundreds of thousands of dollars extra… maybe millions.

And a freebie:

ALWAYS Buy Where the Schools Are Good

It's the first question everyone asks. Hoses in good school districts almost always appreciate faster, hold their value better, and are well worth the money.