By Geoff Williams and Annalisa Burgos, FrontDoor.com | Published: 10/07/2009
THE NEIGHBORHOODS AND AREAS FOR YOU
Many first-time buyers tend to be young professionals or young families who want convenient access to arts, culture, good food, shopping, nightlife and recreational activities. For this reason, pedestrian-friendly neighborhoods are great for those starting out, in revitalized downtown areas or up-and-coming communities with history and character.
If you're a first-time buyer on a budget, you may need to make some compromises when it comes to your first place. You may not be able to afford your ideal neighborhood or dream home, but you can get as close as you can to them. Buy a fixer-upper in the best neighborhood in the city, or buy new construction in an up-and-coming part of town. Just be mindful that your purchase price reflects the home's market value.
Look at the price of your house and the comparables, advises Gregor Watson, managing partner at McKinley Capital Partners, in Oakland, Calif. Research the neighborhood and school districts. For instance, if you buy a house that's inexpensive but surrounded by pricey McMansions, your property tax might be much higher than you would think.
Or if you're going to live in the nicest house in a transition area, that, too, could adversely affect how much your house is worth -- which may not matter to you if you plan to live in the place for years to come and see it as a place to live and not an investment.
If you're focused on buying a foreclosure, take Watson's advice: "Once you think you know the area and smell a good deal, don't waste your time trying to buy an REO home or a short sale. You can't compete with all the cash buyers. The best way to find a deal is to partner with a broker or a group of investors that are buying direct from banks or on the courthouse steps."
Whatever you're looking for, work with a real estate professional that specializes in it, whether it be urban homes downtown, small houses or green living. There are even reputable real estate agencies and government programs that focus on selling houses to people with poor credit histories. Some real estate companies, like Performance Realty, Inc., in Indianapolis, offer programs specifically designed for first-home buyers.
As you search for financing and the right house, "stay patient," Watson says. "Yes, the government is handing out money through first-time buyer tax incentives, and, yes, interest rates are low. But do your homework and really get to know the areas you want to live in and look for."
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