Less is more

If you're new to investing or real estate and don't know first thing about interest rates, here's a good tip: higher interest rate, more expensive it's going to be. High interest rates mean you will have to pay back more on money you borrow. Another good rule of thumb is that affordability increases if you use an adjustable rate mortgage (it's easier to qualify this way). Of course, there will be a wide range of prices that you can choose from, depending on what kind of financing you choose.

Not even Fed knows for sure

1. Get "Pre-Approved" - Not "Pre-Qualified!"

Do you want to get best property you can for least amount of money? Then make sure you are in strongest negotiating position possible. Price is only one element in negotiations, and not necessarily most important one. Often other terms, such as strength of buyer or length of escrow, are critical to a seller. In years past, I always recommended that buyers get "pre-qualified" by a lender. This means that you spend a few minutes on phone with a lender who asks you a few questions. Based on answers, lender pronounces you "pre-qualified" and issues a certificate that you can show to a seller. Sellers are aware that such certificates are WORTHLESS, and here's why! None of information has been verified!

Many times unknown problems can come to surface! Some of problems I've seen include recorded judgments, alimony payments due, glitches on credit report due to any number of reasons both accurately and inaccurately, down payments that have not been in clients' bank account long enough, etc.

So way to make strongest offer today is to get "pre-approved". This happens AFTER all information has been checked and verified. You are actually APPROVED for loan and only loose end is appraisal on property. This process takes anywhere from a few days to a few weeks depending on your situation. It's VERY POWERFUL and a weapon I recommend all my clients have in their negotiating arsenal.

2. Sell Your Property First, Then Buy House

If you have a house to sell, sell it before selecting a house to buy! Contingency sales aren't nearly as strong as one that comes in with a ready, willing and able buyer. Consider this scenario: You've found perfect house - now you have to go make an offer to seller. You want seller to reduce price and wait until you sell your house. The seller figures that this is a risky deal, since he might pass up a buyer who DOESN'T have to sell a house while he's waiting for you. So he says OK, he'll do contingency but it has to be a full price offer! You have now paid more for house than you could have because of contingency, and you have to sell your existing house in a hurry! Otherwise you lose house! So to sell quickly you might take an offer that's lower than if you had more time. The bottom line is that buying before selling might cost you THOUSANDS of dollars.

If you're concerned that there is not a house on market for you, then go on a window-shopping trip. You can identify possible houses and locations without falling in love with a specific house. If you feel confident after that then put your house on market.