Rules for Buying or Selling a House

Today's market instability has made the prospect of buying or selling a home seem much more frightening. How do you know your house in five years will be worth what you're paying for it? How do you make certain you are selling your home for the best possible price? What if the market changes next month and you lose thousands of dollars?

Calm down. House buying and selling, like any other business transaction, is based more on common sense than anything. Stop panicking and think about the following five simple rules.

1. A house is really worth whatever someone is willing to pay for it. Everything else is a guideline. This is why celebrities can sell their houses for three and four times the going rate for similar houses in similar neighborhoods, and why a home that was the site of a grisly murder takes a hit in value, even though it's just as nice as the homes around it. How can you use this information? By remembering your love or hatred for your home has nothing to do with the buyer's feelings. The house you nurtured for the last twenty years may be just another house to the buyers. And the home that contains all the memories of your hated ex-spouse may be a buyer's dream home.

2. The most important part of buying your home is knowing how happy that perfect house will make you. This is something for the buyer and seller both to remember. Your dream home is the one that suits your personal dreams, not just today or on first glance, but forever. For this reason, even if you find a home you love on first glance, you need to research its past, assess its soundness and real value, and get to know the neighborhood. If you jump into a home purchase without understanding the house's positives and negatives, you're likely to be unhappy in a few years.

The seller can use this rule against the buyer. Home staging - a means to make a mediocre house seem like home - can add thousands of dollars to an offer. The trick is figuring out what your buyer wants in a house emotionally, and then delivering that to them when they come out to see it. It could be as simple as baking cookies just before they get there, or showing them the beautiful wildflower meadow just behind the yard.

3. You can never have too much information about a house before buying - or selling. What do you really know about a house that you've just walked into? Nearly nothing. Tray ceilings may hide extensive termite damage, and that finished basement may be covering up years worth of water damage. Or perhaps the curve on the road out front has led to dozens of car accidents in the front yard. Or maybe the house floods when there's a heavy rain.

Instead of jumping right into a home purchase, make sure you investigate the history of the home, hire a home assessor, and ask all the questions you can think of. If at any point you feel uncomfortable, you should rethink the purchase entirely.

4. Pre-approved mortgages are vital for both buyer and seller. This is nothing but common sense. Who's a seller going to say yes to - the empty-handed guy, or the one who shows up with a promise of a cashier's check? Buyers, go to the bank and get your mortgage pre-approved before you even start looking. This keeps you from broken promises and broken hearts. And sellers, buyers who have taken this step before looking at your house are the ones who are serious about buying.

5. Never trust nobody's word. Unfortunately, many people will say anything to make that house sale. If you take their word for it, you're making a mistake. Even if you know the seller or buyer or real estate broker, even if he's your brother-in-law or your wife's best friend, their word is worth the paper it's written on. Whenever any promise is made, don't trust it until you get it in writing.