Chapter 2: Real Estate Home Buying Basics


Needs and Wants

Before you start looking for a home, figure out what you can realistically afford to pay per month. Check out the market in the area you want to buy. Find out what price houses are going for and what the payments are per month. Remember that you may end up paying a little more per month than someone with a conventional bank loan, so keep that in mind as you figure out what you can afford.

You are going to have to work harder to find a home you can get without a loan. You will have to shop around more. So, concentrate on your needs in housing before your wants. Make a list of the minimum that you will accept in a house. Only write down your essential needs. Do you have to have three bedrooms or can you make do with less?  Do you have to have a two-car garage or will a carport do? Do you have to have a single story home for health reasons?  How close do you have to be to a school?


Make a separate list of the things you want. Wants might include things like a pool or hot tub, a walk-in closet, wooden floors, a deck, or a certain type of architecture. It would be nice if you can find a home with some of your wants, but to begin with, concentrate on finding a home that meets your needs. Often many of these things can be added to a home later.

Also make a third list of things you absolutely do not want in a home, such as: too many stairs to climb, a fixer-upper, certain areas of town you dislike, a location too close to a freeway, or a location too far from the center of town.

You may not be in a position to be too picky. Perhaps you can make do with a smaller home for now, while you establish your credit and get equity in the smaller home. Then you will be in a position to trade that home in for a bigger home.

Re-establishing your financial footing is not as difficult as it used to be, but it is impossible if you attempt to buy more house than makes sense. Be conservative!


Arm Yourself With Knowledge

It is important to learn the business of real estate. The more you know, the better off you will be. I am including a dictionary of common real estate terms and sample contracts in the Appendix of this book.  But don’t stop there. Read books on buying houses. Your local bookstore will probably have many books available on the subject, but if they don’t, your local library should. Follow what is going on in the Real Estate section of your local paper. The Internet has a wealth of free information on the subject as well.

And most importantly, know where you can go to get advice and help.


Location and Condition

It is possible to get a great deal for a fixer-upper home, but this kind of home is not for everyone. If you don’t have money or skills to put into repairs that might end up being costly, it is best to look for a home that doesn't’t need so much work.

You might also consider homes that just need “cosmetic” work. These homes don’t need major repairs. They may look ugly to potential buyers, but a little paint, new carpets or some yard work will fix the place right up.

If you would rather not put any work into a home to start, nice homes in upper-class neighborhoods can be found just as easily, and sometimes easier than fixer-uppers. Investors often leave these alone because they can’t make enough money right away with them to make it worth their while.


A Real Estate Agent or Not?

A Real estate agent would normally be your first stop. Usually they are worth more than the fee they get paid from the sale. The problem is that if you have bad credit and need to do some creative financing, more often than not the real estate agent is not trained to handle that situation. They are trained in methods that make it easy for them to make a commission. A real estate agent is often the first to tell someone with bad credit to wait five years or more until their credit is better before buying.

If you can find a real estate agent who will work with you and is willing to get creative, great!  More than likely, though, you won’t find that person. This is why you need to understand the real estate business.  You will probably find yourself dealing directly with owners.



This has been an excerpt of the book by Alex Dey called Buying a Home When You Have Bad Credit.


Buying a Home When You Have Bad Credit is written by Alexis Dey, Copyright © 2005-2006 Mohave Publishing. All rights reserved. This book is protected by international copyright law. You may not otherwise resell, reproduce, distribute, publicly perform, publicly display, or create derivative works of this material, unless authorized by Mohave Publishing.  http://I-Can-Buy.com