When going to buy or sell a home, your first step should be finding an honest and hard-working realtor. You can find a real estate agent by keeping an eye out for advertisements, calling your local real estate broker, or through the internet.

The role of a real estate agent is to represent your best interests in a real estate transaction. They work off of a commission, normally 6% of the sales price of the home. In most cases, that commission is split equally between the realtor representing the buyer and the realtor representing the seller. For a person buying a home, the service of the real estate agent is free, because commission is paid by the seller. The buyer, however, is responsible for most of the closing costs. The closing costs will be explained to you by your realtor and will be on the documents you sign when you go to the title company. Closing costs can also be negotiated on during the contract process.

The real estate agent, through their broker, has access to all of the MLS (Multiple Listing Service) listed homes in your area of interest. If you are a home buyer, the realtor can provide you with information about homes for sale that meet your criteria. They will then bring you to these homes and let you inside to see them. If you are selling a home, the realtor will list your home in the MLS, post a “For Sale” sign in your yard, and hold open houses to attract buyers. Be wary of discount realtors that offer to list your home for a lower commission. Studies show that, in most cases, your home will stay on the market longer and you end up selling it for a lower price than what you intended.

A real estate transaction is a complicated process that involves many steps and is best done with the help of a trained, licensed professional. A realtor can save you the headache of dealing with the other party in the sale, getting together the contract, and submitting all the documents to the title company. So when you are ready to buy or sell a house, contact the local real estate agent.
I had come to know these kind of information through the realtor site which I have recently visited www.realestateinwoodstock.com

This site shows much useful information about the real estate business

The biggest value an advisor brings to the financial planning relationship is knowledge. They can help you fill in the gaps in your understanding and help you figure out what is best for your situation and circumstances. The second biggest value that an advisor provides is discipline. A good advisor will meet with you every 3-6 months to make sure that you are on track, get an update on your financial and personal situation and answer any questions that you have. If you have not made progress, they will nag, educate, and reiterate the importance. (If your “advisor” is not meeting, or asking to meet, with you every six months you do not have an advisor. You have a Broker or agent.)

When I got “right sized�, the second phone call was to my financial advisor. He helped me look at my options and understand how I was going to pay my bills until I got a new job.

Ultimately, it all comes down to value. Any time you hire a professional, you need to ask yourself if you are going to receive value. Is this person going to save you time, money, or both? Are you going to have a better outcome because you hired and worked with this person? Will you have more money? Will you sleep easier? Will you be in a better financial position? If the answer to all of these questions is no, do not hire that person. If one of them is yes, hire them. If you are unsure, start slowly. A good financial advisor will understand. They will work with you to help you feel comfortable and build that trust.

I apologize in advance for the length of this comment, but I really wanted to take a look at your father’s statement that if you can afford to rent, you can afford to own. I disagree with that on 2 fronts.

The first front is on supply and demand. The rental market, and the amount of rent that someone pays is based on the laws of supply and demand. When the real estate market is hot and a lot of people are looking to buy houses, the cost of a house increases. Accordingly, the number of people looking to rent an apartment or duplex decreases. This reduces the demand for apartments and rental homes. This means that if the landlords want to keep or attract renters they will have to keep rent prices level; reduce rent amounts; or add extra amenities like heat, cable, or other things. This means that while rent may be affordable, due to the demand for houses, the cost of a comparable house may be out of budget for the family. Obviously, it is not a straight correlation and there are times when house prices and rent costs increase together, but typically that is because an area is experiencing large population growth or economic expansion. In your typical southeastern Wisconsin community, that has not been the case for some time.

The second front I disagree with your father is from an analytical budget standpoint. Let’s compare the two transactions side by side:

Renting an apartment: Upfront cost: 1 months rent and security deposit. This would be about $1,300 for your average 1,000 square ft 2 bedroom apartment. In a down rental market, it could be less, but that would be average.

Buying a house: Up front cost: Depends on how much you put down, whether or not you qualify for first time home buyer programs, etc. For the purpose of this discussion, let’s assume that we want to keep our monthly mortgage payment the same as our rent payment and our up front costs as low as possible. Let’s assume that we are putting no money down and only have to pay closing costs. Without paying any points on the mortgage, closing costs are going to be around $3,000. There are other upfront costs, like a home inspection, but we’re already at double the up front cost, so let’s move on.

Renting an apartment: On Going Costs – Once you move in, you have to pay your rent, and utilities. In my experience, water and sewer are included in the rent. Also, the heat and electric bills are lower in an apartment than in a house because you get some benefit from your neighbors. For this discussion, let’s say that it’s $650 in rent and $75 / month for utilities. To keep it fair, we also need to add in about $15 / month for renters insurance. Total ongoing cost on a monthly basis: $740

Buying a House: On Going Costs – This gets a little difficult to quantify, but lets make some assumptions. First, since we live in Wisconsin, we’ll assume that property taxes are 2% of property value. Secondly, we’ll credit ourselves back the portion of the mortgage payment that pays off the principle of the mortgage. This is a nice forced savings program. Lastly, we will assume that Homeowners insurance is going to be about $300 per year. With those assumptions in place, our mortgage payment with escrow is going to be about $735. ($581 PI, $153 Tax, $25 HOI) We get an $85 / month credit since that is what goes to pay back the principle of the mortgage in the first year. For utilities, we’ll assume an average of $175 / month. That includes $50 / month for water and sewer (The average bill for a family of four.) Finally, since we’re homeowners we’re responsible for all of the maintenance and upkeep on the house. This is a difficult number to determine, because it is going to depend on the quality of the house when we purchase it. To keep this straightforward, the IRS allows landlords to depreciate their rental property at 3.6% each year. For us, that works out to $270 / month in maintenance costs. So, total ongoing cost on a monthly basis: $1,095 + $85 forced savings = Total out of Budget $1,180.

That’s a difference of $440! A 59% increase over renting! That’s just for the pleasure of owning a $92,000 house. Considering that the median home price in Milwaukee is 216,800 and the median price for all of Wisconsin is $161,800, I’d say you are not living in the average home. Also, if you are looking for a tax break, you’re not going to find it here. Even with the mortgage interest and the property taxes you paid on the house, you still need over $2,700 in federal tax deductions before you exceed the standard deduction.

Conclusion: Owning a home is a lot more than just making the mortgage payment. There’s the maintenance, property taxes and increased bills that come along with it. Most people just compare rent to mortgage payment. That’s when the house turns into a financial prison. I don’t see how you can say that if you can afford to rent that you can afford to buy.

As always, please let me know what you think.

I agree with some of your points, but I think you missed the central theme of my discussion. Whether you buy or rent your home is a lifestyle choice.

Your first reason: peace and quiet is a lifestyle choice. I disagree that it is difficult to find a quiet apartment for under $800 / month in rent. I have lived in a number of apartments that were quiet and they were all under $800 in rent. I have also visited houses that were in noisey neighborhoods, so I don’t think you can say that homeownership gets you piece and quiet. Didn’t Shorewest do a entire comercial about the noisey neighbor that blared yodeling music on his stereo all day and night. I think if you spend as much time finding an apartment that fits your needs as you do finding a house you like that you can find a nice quiet place to rent. Also, if it turns out you’re wrong and the neighbors / neighborhood isn’t what you thought it was, you can quickly, cheaply, and rapidly move. Try to do that with a house you just bought.

I also disagree with your second reason. I think buying a house can be a bad financial decision. I think this is a myth passed down through the generations that no longer applies today. Our Grandparents (the Depression Generation) could only and would only invest in one type of equity. Real Estate. They were taught that the stock market was gambling and only a fool would trust his money to that scam. Also, in their day, investing was expensive, you had to use a full service broker and the comissions would eat up a large portion of your monthly or yearly investment. Furthermore, mutual funds really were not around, so you had to invest in an individual company which exposed you to a lot of volaltility and risk. So, the only way they could get an equity investment was to buy a house. The investment world is a lot different today. I think if you look at the true, fully-loaded cost of home ownership and the real rate of return that people would be shocked. Think of all the expenses in owning a house. Off the top of my head I can think of: the interest on the mortgage, property taxes, home owners insurance, lawn care, snow removal, replacing worn appliances, replacing the roof, replacing the furnace, replacing the water heater, windows, siding, gutters, style updates and remodeling. Not to mention the transaction costs when you go to sell your house. I’m sure that if you rented your home and invested the difference between the rent and the full cost of home ownership that after 30 years, you would have more money renting.

This is usually the place where people mention the tax break that you get for owning your own house. While this is definately a break for the wealthy, I don’t think it is a break for the average home owner. First off, you have to get over the standard deduction of $10,500. If you don’t already have $10,500 in deductions, some of your tax break is going to help you clear that hurdle. Secondly, it’s a tax deduction, not a credit. This means that for every dollar you pay the bank in interest and the county in property tax, the IRS allows you to deduct it out of your income. If you’re in the 25% bracket, this means you get 25 cents. If you are in a lower bracket, you get 15 or 10 cents. I’ll gladly have you pay me a dollar if I only have to give you a quarter. So I don’t think the tax argument is a valid one either.

Your third point is also a lifestlye choice. You want the comfort of owning a place of your own. That’s fine, but back to my original question, is that a choice that should cause you to stop funding all of your other goals, like retirement and kids college, and other fun things?

Let me know if this makes sense to you. I’ll comment on the rest tomorrow.

Great question!

I’m not sure I agree with everything, though…

First to answer your original question, my wife (then girlfriend) and I bought a house for a few reasons:

1. We wanted peace and quiet - not so easily gotten in apartments, until you pass $800/month or so in rent. This is enough to buy a small house in a reasonable neighborhood.

2. The usual financial reasons: No equity in renting, no deductions for interest, etc.

3. We wanted a place of our own.

My father always said that if you can afford to rent, you can afford to own. I would agree with that depending on what your demands are in location. Certainly, renting is easier from a maintenance perspective. I remember saying that I didn’t want to own a house because I didn’t want to mow the lawn. I was being a little stupid - the time I spend on those kinds of chores is a pittance to pay for the freedom and comfort that owning a home brings.

You mention people buying homes too early. I don’t know whether I fall into that category or not, but I suspect not. I think the real problem is probably that people are buying too much home - we all want a really nice, big house in a great neighborhood, but if you have to furnish it by IKEA (Sweedish for “particle board”) what’s the point?

Here’s your answers:

1. Yes. I wanted someone working for me that knew the market and could help me get a good price and recognize an opportunity.
2. Yes, needed to in order to get the opjective advice I wanted.
3. Didn’t have to. I researched it before hand.
4. Researched Agents on the web. Looked for ones with websites. Phoned 5, did face to face interviews with 3. Selected 1 to work with.
5. Needed more space, wanted a place to raise my family.
6. about 18 months before hand.
7. No. Relyed on my agent and mortgage broker. Didn’t feel the need for a straight forward sale like this.
8. Complete unfamiliar with submitting an offer and the closing process. (Still am, that’s why I use an agent!)
9. I used an electrician to upgrade to 200 Amp after purchase.
10. I would recommend depending on what the requestor was looking for.