1. Real Estate Principles, 11th Edition
By Charles F. Floyd
and Marcus T. Allen

2. Home Purchase Decisions
Chapter 15
Home Purchase Decisions

3. Rent or Buy Decisions
See Table 15.1 The Mallorys’ Homeownership Decision
Tax consequences of rent versus mortgage payments
Alternative investments
Inflation and deflation of home prices

4. Rent or Buy Decisions, cont.
Impact of mortgage interest rates
See Table 15.2 Mortgage Loan Repayment Schedule
See Table 15.3 Impact of Interest Rates on a 30-year loan
Period of ownership
Generally the longer the period of ownership the greater return on the investment
See Table 15.4 The Mallorys’ Rent-versus-Buy Analysis – Ten Year Ownership Period

5. Rent or Buy Decisions: Some Conclusions
Economic decision depends on assumptions made
Decision might rest on non-economic decisions as well

6. How Much House Can You Afford?
Calculate income
See Table 15.5 The Mallorys’ Estimated Monthly Income
Calculate payments and apply qualifying ratios
Calculate expenses
See Table 15.6 The Mallorys’ Monthly Payments
See Close-Up “Prequalified vs. Preapproved”

7. Choosing a Property Choosing an area
Property taxes and quality of public services
Recreational facilities
Quality of school system
Crime statistics
Overall quality of the community

8. Choosing a Property, cont.
Evaluating the individual home
Attic
Walls, ceilings and floors
Roof
Basement or crawl space
Electrical system
Mechanical systems
Heating and cooling systems
Water supply and waste disposal
See Case Study “The House That Came Off the Mountain”

9. Making and Closing the Deal
Real estate agents
Negotiating the price
Dealing with the lender
Closing attorneys and escrow agents

10. Selling the Home Preparing the house for sale Setting the asking price
Choosing a real estate agent
The sale