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      The Recovery & Affordability: Riding The Wave with Reduced Risk

      Many have deemed 2013 the year that they will finally make the move - both literally and figuratively. The past summer selling season was a clear indication of this trend: more people bought property this year than any other year in the past seven years; proof that the housing has indeed come roaring back. And now that the seasons have changed, you're probably wondering how real is the demand for new homes and investment properties?

      To really answer that question, we really should understand the current state of things; in particular, the trends that surround the market right now - home prices are rising at levels not seen since 2004, building permits for small scale developments are getting ok'd almost every other day of the week, with bigger ones every two weeks since February, and finally add to that the fact that foreclosures have significantly dropped. All these three combined, makes the argument that the housing recovery is pretty much in full swing.

      The only concern with how fast the real estate market is recovering is really the affordability to buy property. With home prices escalating at historic levels and pace, not a lot of moderate-income individuals and families can keep up since their income is not moving at the same pace. And in a market as tight as Boston, it's essential to keep in mind how you can still purchase without sacrificing the price and quality of the property you ought to buy. Though the city is trying its best to keep housing available to all via developing more units for sale and approving projects on the pipeline, there's still a relatively short window of sellers and buyers balancing off, it's important to know how you can best navigate the real estate market without getting lost along the way.

      Here are some tips on how you can ride the real estate wave with minimal risk, given income levels don't catch up with median home prices' steady increases:

      1. Stay Calm and don't spend more than you can really afford. The renewed frenzy in the real estate market can drive you to think to "strike while the iron is hot". Don't let it just yet. Assess your finances. Even though there is urgency to buy and the hype is real, make sure you can afford it, otherwise it will just slip off your hands. There are plus and minuses to buying now. Take into consideration your personal situation first. In the long run, you can still afford to buy once things have staved off - you might just have to let go of certain things on your dream home wish list (like "all brand new kitchen appliances"). However, if you are in an excellent financial position, get to it - there's no better time to take sellers for what they're worth.

      2. Make Your Best Offer Remaining calm is essential, but also be realistic. When you're bidding on a property with multiple offers, you need your offer to stand out. Be bold with it, usually the best buyer in a bidding war is the one who lost the last bidding war on a previous property - that transaction usually teaches the buyer a painful lesson in bidding and timing. Though the danger of overpaying is there, if you feel that it's the right investment for you, then the risk is tempered and reduced. This is especially true in a rising market like Boston's - wherein three to five years time, you really won't care about that extra $5,000 that you put in to get your bid through.

      3. Check Your Credit Before setting foot in your broker's office or an open house, check your credit reports. AnnualCreditReport.com offers one free report annually from each of the three credit-reporting companies. If you see anything that doesn't appear correct or needs updating, a good time to make those changes is before you're in the process.

      Consider buying your credit score as well. With your score in hand, you're in a position to negotiate. You can say to the lender that you're looking for a 30-year-fixed mortgage, you have a Fico score of 760, and that you can put 20% down. Then turn the conversation into what sort of interest rates and closing costs the seller can offer you. It's a powerful bargaining tool, so keep your report handy with you when you go with your broker to showings.

      4. Account for your Assets In a competitive market such as Boston's, buyers who have a lender's pre-approval in hand when putting in offers at homes works as a deal insurance. Your pre-approval speaks highly of your financial position. Along side this, be prepared for a stringent underwriting process. Lenders want to see a consistent income stream. And a gift or funds transfer must be well documented, in part to ensure you're receiving a true gift, rather than an unspecified "phantom" loan. Another benefit to bringing a pre-approval is that it sets a price limit on your home shopping. There's no sense falling in love with a place you can't afford to buy because you can't get approved for the loan. If you're offering cash however, all of this is not needed. Remember that cash will always be king and will trump any other offer on the table.

      5. Bring a bulging downpayment If at all possible, be prepared to offer more than 20% downpayment to the table. This will not only make your offer shine against the rest, but it will also give you a particular place in the buyer's mind. Remember, it's always the case that the more they get upfront, the better. Anything that helps the downpayment side of the transaction is a persuasive tool for the seller - it reduces the possibility that there will be a bank problem .

      6. Be nice If you're competing for a house with other buyers, stand out by making life a little easier for the seller. For example, be flexible about the closing date. All things being equal--the seller is getting the same dollar amount from you or the next person--but the buyers would just give the seller the flexibility of the settlement date that he prefers, maybe the seller is going to say, 'Money's not everything,

      7. Finally, find a good agent An experienced real-estate agent may alert you to homes before they come on the market. Plus, if your agent is respected, that can help you stand out with the seller's agent. Realtors tend to have a great network, and it definitely helps that you're with one that knows mostly everyone in the business to help you secure that sale.