Home homebuyer feb03

homebuyer feb03

February, 2003 Newsletter

+++++++++++ February 1, 2003 +++++++++++++++++++

Introduction: Resale and New Home Sales Stay on Strong Pace
Mortgage Rate Update: 30-Year Rates Stay Sub 6%
This Month’s Tip: Foregoing a Home Inspection

Introduction: Sales Stay on Strong Pace

Welcome to the February edition of the Home Buyer’s
Newsletter. Sales of both existing and new homes
stayed on a strong pace in both December and for
the full year of 2002.

Sales of existing single-family homes rose strongly in
December while 2002 easily set a new annual record,
according to the National Association of Realtors®.

There were a total of 5,563,000 existing-home sales
in 2002, up 5.0 percent from the previous record of
5,296,000 in 2001. NAR began tracking the sales series
in 1968. Existing-home sales increased 5.2 percent
in December to a seasonally adjusted annual rate of
5.86 million units from an upwardly revised level of
5.57 million units in November.

Last month’s sales activity was 12.7 percent higher
than the 5.20-million unit level in December 2001 and
was the third-strongest monthly sales pace on record.

As for new homes, sales of new one-family houses in
December 2002 were at a seasonally adjusted annual
rate of 1,082,000, according to estimates released
by the U.S. Census Bureau and the U.S. Department
of Housing and Urban Development. This is 3.5 (±12.1%)
above the revised November rate of 1,045,000 and is
10.5 (±14.0%) above the December 2001
estimate of 979,000.

Mortgage Rate Update: 30-Year Rates Stay Sub 6%

30-year fixed-rate mortgages remained below 6.00% for
the entire month of January, according to mortgage
lender Freddie Mac. For the period ending January 30,
30-year fixed-rate mortgages averaged 5.90% while 15-year
fixed rate mortgages averaged 5.28%. These rates are
near the multi-decade lows that were seen at the end
of the month of December.

For current average mortgage rates, see:Mortgage Rates
For more information on mortgages, visit the Mortgage
Section at:
Mortgage Information


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This Month’s Tip: Foregoing a Home Inspection

Nearly every week we receive an email from a prospective
home buyer with a question that runs along the lines
of “We are in contract negotiations with a seller who
not only wants more than the listing price (there is
another buyer we are in competition with) but wants
us to forego any inspections of the property. Is this
a wise idea?”

In virtually every case the answer is a resounding
“No!” Not only is it NOT a wise idea, it probably is a
fairly stupid idea. The only exception to this would
be if it could be absolutely proven that the house is
so ridiculously underpriced (extremely rare in this
scenario) that any and all potential defects could be
absorbed without exceeding the property’s market

Example: A home is listed for $125,000 in a
neighborhood where virtually the same type of home
has been selling for $160,000 to $175,000. In this
example, if the seller insists on a buyer foregoing
a whole house inspection it may make sense. If
there are problems with the house–even major problems–
they probably can be absorbed by the savings in the
purchase price. If the entire heating system needs
replaced at a cost of $8000, a new roof is needed for
$9000 and there are other repairs needed for a cost
of $5000, the total exposure of $147,000 (the $125,000
selling price plus the $22,000 in repairs) puts it well
within the value range of the neighborhood ($160,000
to $175,000).

This situation, however, is extremely rare. The normal
scenario is this same house with a selling price of
$185,000–above the neighborhood average. Add the
$22,000 in needed repairs and you have a total
investment of $207,000 in a neighborhood where homes
sell for $30,000 – $40,000 less. Not exactly a smart
economic decision.

There simply is too large of an exposure without the
protection of an inspection. For some background on
what a whole house inspection entails as well as what
to look for in a home inspector, see the Home
Inspection section on the site:
Professional Home Inspections

When a buyer is willing to forego a home inspection,
not only are they exposing themselves to a
potential major financial expense, they are putting
themselves in the worst possible negotiation position.
By caving in to a seller’s demand to give up what is a
most important right–the ability to have a home
inspected by a professional–the buyer has sent a clear
message that they will do ANYTHING to have the
home. This is usually the time when a seller will
tighten the screws on any other negotiable items,
including price and other considerations. A seller
could well take the position that a buyer who would
give in on inspections could likely be strong-armed
into other concessions not advantageous to the

Summing Up

Unless you are certain that your purchase price
will be considerably below market value, foregoing
a whole house inspection is almost never a good idea.
Buying a pig in a poke is rarely a good policy. When
a large amount of money–and emotion–is involved,
as in the purchase of a home, it makes even less
sense. Be wise and protect both your interests and
your pocketbook!

Yes, buying a home is a wonderful experience. Yes,
home ownership can truly be an exceptional joy in
one’s life. But don’t let your common sense be
swept away by the excitement of the buying
process. Purchasing the RIGHT home at the
RIGHT price with the added peace of mind that
a home inspection brings, can be one of the best
times of your life.

Unsure of how to go about purchasing your new home?
Check out The Home Buyer’s Checklist

Many of our visitors have said that one of the most valuable
aspects of the Home Buyer’s Information Center is the
Buying Checklist, where they can make sure that all
the bases have been touched. You can find the checklist
here:Home Buyer’s Checklist

As always, if you have suggestions for improving the
site, or topics you would like to see addressed in
this newsletter (or, if you have used the Home Buyer’s
Information Center to successfully purchase a home),
drop us a quick line here: Email Us
or access our feedback page at:
Home Buyers Information Center Feedback

A special thanks to all those who have written to let us know
that they have found the Home Buyer’s Information Center a
helpful resource in their buying process.
Have a great month and good luck in your home buying process!

The Team at the Home Buyer’s Information Center