If you follow me on Twitter, you probably know that I am starting Pharmacy School in June in Phoenix, Arizona (actually Glendale, a suburb of the Phoenix). The process of moving out has led me to purchasing a foreclosed house 3 miles from my school. I am currently in escrow and the house will be mine on May 25th.

The process of searching for homes, interacting with real estate agents on both sides, and the entire process has allowed me to gain valuable experience that I can share with you.

1. Don’t Limit Your Options, Stay Flexible about What you want.

When I started house hunting, I had limited myself to a small radius around the university. When I told real estate agents to find me a house, I told them I wanted a 3 bedroom, 2 bathroom house over 1,500 square feet and a lot over 7,000. The semi-experienced real estate agent found a few houses that fit my requirements, but none in my price range or condition.

It was not until I accidentally saw a 2 bedroom 2 bathroom house during one of my house visits that I considered the possibility of getting a larger 2 bedroom house. The next day, my agent found another 5 or 6 houses that fit my description. The last one we saw was the house I purchased- a gorgeous 2 bed 2 bathroom larger than most 3 bedrooms and in better condition than anything I had seen before.

I probably wouldn’t have found a house if I had kept my conditions limited. My agent, who probably isn’t that great, never gave me the idea to decrease my requirements and consider other options.

2. The Banks might be huge corporations, but they will negotiate with you.

The house I purchased was a foreclosure- which a lot of homes nowadays are. There are tens of thousands of foreclosures per bank and its a buyers market- if you have the cash. If you’re buying one of these bank owned properties, you will be dealing directly with the bank’s agents. They might try to coerce you into buying the house for the listed house and above, saying things like, “We are getting lots of offers on this house” or “The bank never budges on its price.”

Always remember that these agents make commission from selling you the house and the more you pay, the more cash they get. Banks are always negotiable. If the house your buying is listed at $200,000, make an offer for $175,000. If they think your offer is reasonable, they will counteroffer, something like $192,000. You can either accept (save $8k) or try to budge the price further.

An honest agent will tell you how much is a reasonable price, so your initial offer doesn’t get refused.

3. Do your OWN research, check Redfin, Trulia, Movoto, Zillow.

The last thing you want to do is overpay, buy the wrong house, or buy a house in a deteriorating neighborhood.

The Internet is full of tons of resources that can help you make your own decisions. Check price trends in the neighborhood your buying your house, similar sales, price per square foot, online appraisals, and anything else you can find.

Don’t let real estate agents trick you into overpaying or quickly closing a deal. Make an informed decision by comparing your findings with their words.

4. Ask for a Preliminary Title Report

All real estate agencies have access to preliminary title reports for any house on the market. These title reports have lien information regarding your house. If you aren’t given one, make sure you find another house or another agent.

If your property has a lien against it, you might be caught with your pockets empty. A lot of houses have mechanic liens- which means the previous owner didn’t pay the mechanic for work done on the house. Mechanic liens are a type of senior liens that don’t get removed with the change of ownership (bank loans do).

Guess who has to pay in this case? You. If you want a clean title.

5. Hire your own inspector, don’t rely on an inspector referred by your real estate agent.

This might not be that obvious, considering that your real estate agent might know the best inspectors, but finding an inspector on your own is not that hard.

An inspector referred by your agent might have some kind of partnership going on with the agency. This means they could overlook some house flaws in order to sell the house to you. The agent will pay off the inspector or give them more commission/leads with the condition that they try to make the property seem better than it is.

You might be buying a great house- but be certain that’s what it is before you spend all your money.

These are a few of the things I learned in my recent home buying experience. Have you recently bought a house? Do you have any experience you want to share?

Join the discussion! Comment below.

Buying a house means that you might be risking years and years of hard earned money and possibly putting yourself into debt that could take decades to pay off. There are lots of factors to take into consideration before you make your purchase in order to ensure you have a pleasant experience and come out financially healthy.

The rules are different if you are buying a house as an investment property than if you’re buying to live in it. In this article I will share some of the important things to consider about the property in question before you sign the contract and change your financial future.

1. How much was the home last sold for- Was it sold before the recession? I’ve noticed that nowadays, most houses at their 2001- 2002 price levels. If the house you are looking to purchase has not been reduced substantially (25 – 30%) from its 2005 – 2006 levels, you could be overpaying.

2. Identify the conservative estimates on the home value – Fortunately, you don’t have to hire an appraiser to do this. Zillow and eAppraisal are great websites which take into tons of factors to give you a price range. Don’t look at their estimate, but rather the lowest value possible in order to stay on the safe side.

3. How much are you paying for square foot of living space? The price per square foot is one of the most important factors you must consider when purchasing a house. You can easily find the average price per sq. foot in the same zip code or for similar houses in the area on Redfin and Trulia. Always aim to be on the lower end, especially if there is work to do on the house.

4. Are you buying a flipper? A “flipper” is a home purchased by an investment company or an individual with the sole purpose of making a profit on it. These houses are purchased as a foreclosure or a short sale, slightly renovated, and sold for a much higher price. Flippers are easy to identify – they almost always have fresh paint and new carpets, two of the cheapest ways to breath cosmetic life into a house. Also common in flippers are large mirrors, painted counter tops, painted doors. Remember, investment companies try to make the house look as new as possible while spending the least amount of money. Stay away from these because you don’t really know whats on the inside.

5. Leaky roof? Squeaky floors? Be sure to hire someone to check for mold. – You can always place an offer on a house without knowing the mold situation as almost all contracts allow you to rescind offers if it fails an inspection. Mold is a problem that can cause you to go under on your house and even presents itself as a health problem. Be sure to hire a sound environmental inspector to detect mold.

6. Sure, the house looked nice during the day – but have you checked the neighborhood at night? When buying a house, check the area during the day and during the night time. Sometimes, gangs and criminals tend to walk around at night. Also, do people walk around the house? Is it lit with street lights? Are their gang signs tagged on the walls of houses, markets, or street signs?

7. Is the plumbing in good shape? There are a few ways to run a quick check on the plumbing before submitting an offer. Go to one of the bathrooms and turn on the shower water, the faucet, and flush the toilet. See if the water drains properly. If not, you could have a problem at your hands.

8. Does the house have “curb appeal?” Although not a financial term, curb appeal describes the attractiveness of the house in terms of how people who might buy it from you later see it. Some houses are stunning on the inside, but look horrible from the outside – so much that they might be looked over for a less stellar house thats more attractive. If you’re buying real estate, its good to check how other people perceive it.

9. How much money do you have to spend out of pocket to bring your house to your standards? Besides the down payment, there are closing costs for a loan, furniture, renovation (paints, carpets, counters) and other small out of pocket expenses. Make sure you keep this in mind when putting down any sort of money.

10. Are you buying a corner house or a house in a busy street? Corner houses are priced much lower than houses in the middle of the street because they are often victims of car lights being shone into the house and more traffic. The same applies for houses in the middle of a busy street. Make sure when buying a house, you aim to be as far from the street traffic as possible.

Last year, I gave you the best and worst housing markets for the 2009 year, with the average percent fall (and very rarely, gain) in selling prices.

This year, real estate prices seem to follow no pattern. In some areas, they are recovering from their 2008 price lows and in other areas, foreclosures keep piling up. Investors have it tough… speculators are everywhere, pointing to positive signs in the economy one day and then predicting doomsday the next.

We like real hard facts at SmarterSpend.com… so let’s go over some of the best and worst housing markets of this coming year, and predict what will happen to them in the long run.

Let’s hear the good news first.

Best Housing Markets of 2010

1) Pittsburgh, Pennsylvania

Growth rate: 2.67%
Foreclosure Rate: Under 1%
Affordability (Median House price vs Median Salary): Very High
Tidbits: Pittsburgh was hit adversely by a manufacturing slump before the current crisis. This helped it avoid the current recession. The city is being revitalized with service jobs and is a great place for investors.
Prediction: Pittsburgh will remain stable, but I don’t see any possibility of double digit growth because of  a low economic base.

2) Louisville, Kentucky
Growth rate: 1.05%
Foreclosure Rate: 1.15%
Affordability (Median House price vs Median Salary): Very High
Tidbits: The city never had any growth in prices to begin with and was not severely affected by a fall in prices.
Prediction: Louisville will slowly become a large urban center, but not until there is some easing of the lending policies and business can thrive. Look for steady growth in the future, around 5%.

3) Houston, Texas
Growth rate: 11%
Foreclosure Rate: Under 4.5%
Affordability (Median House price vs Median Salary): High
Tidbits: Houston had a foreclosure panic in 2008, but quickly recovered due to job creation in the energy sector, which allowed median home prices to remain stable.
Predictions: I believe Houston has the best chance of double digit growth for any city in America. It has a booming metropolitan area, fueled by net population migration from other cities and lots of job creation.

Worst Housing Markets of 2010

1) Las Vegas, Nevada
Growth rate: -33%
Foreclosure Rate: 12% (Five times the national Average)
Affordability (Median House price vs Median Salary): Average
Tidbits: Las Vegas is the prime example of housing bust. In fact, according to Forbes, the average mortgage on a house in Vegas is greater than how much an average house is worth.
Predictions: I feel like  a turnaround will eventually happen for one reason: There is so much investment value and money at stake in Vegas. I just can’t imagine Vegas losing in the long run.

2) Phoenix, Arizona

Growth rate: -25.9%
Foreclosure Rate: 12.5% (Five times the national Average)
Affordability (Median House price vs Median Salary): Average
Tidbits: In Phoenix the fallout from the financial crisis is deflating home prices rapidly due to the overabundance of homes in the city. Phoenix has been suffering through the housing depression in one of the worst crashes in the nation and has one of the highest foreclosure rate in the country.
Predictions: Phoenix will need a lot to recover and it will take almost a decade for home prices to be at their pre-2008 respectable levels. It seems that the worst is over, but there are so many homes for sale, its unbelievable. Again, this can only be achieved by allowing residents of Phoenix access to loans on a wider level.

3) Detroit, Michigan
Growth rate: -21.66% (average house price is $6,500.. yes… SIX thousand)
Foreclosure Rate: 6.6% (Five times the national Average, Delinquencies at 18%)
Affordability (Median House price vs Median Salary): For people that have a job, a home is virtually free.
Tidbits: Detroit’s median house price was close to $100,000 before the recession and the real estate bubble burst. It has been speculated that Detroit was actually what caused the recession. Although investors are buying houses by the dozen, will there be a Detroit as we know it in the future?
Predictions: I feel like Detroit needs government intervention to survive. What does this mean? The Fed’s should put up some companies and jobs there. If there is no job creation in the near future, this could mean an end to the city as an American metropolitan giant.

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How do the rest of you feel about the current real estate market? Will it turn around in 2010? What are the hottest cities to buy a house in? Join the discussion.

Best Areas: Montana, South Dakota, and Missouri, states which really didn’t participate in America’s subprime mortgage blunder, all registered positive growth in the last quarter (Montana leading with an exrapolated annual increase of 3.1%)

Worst Areas: It’s no one surprise that Detroit is the worst area to buy a house right now. With the future of thousands of workers on thin ice and the largest employers in the city teetering on the brink of an economic tsunami, it would be foolish to buy a house here. The Inland Empire, Central Valley, and Southern California round out the top list due to a frenzy of foreclosures and artificial inflation. Houses in my area (Los Angeles) that were about 300,000 in 2003 skyrocketed to near 700,000 before the crisis and are now hovering around the 460,000 mark. Las Vegas and Phoenix also crashed after a decade of steadily increasing home values.