Real-estate handbook fails to inform

Long-time real estate author Andrew James McLean’s latest book “The Home Buyer’s Advisor” is not up to the standards of his previous books. This new book goes through the motions of explaining home-purchase fundamentals, but it is out of touch with the realities of today’s home-sales marketplace.

For example, McLean begins with the home-buyer basics of saving for a down payment by cutting down on expenses and using credit wisely. That’s fine. But meanwhile, as U.S. homes appreciate in market value more than 5 percent annually on average, most prospective home buyers can’t save as fast as houses and condos go up in price.

Purchase Bob Bruss reports online.

McLean completely neglects to explain the advantages of no- and low-down-payment mortgages so the home buyer can purchase as soon as possible. When he gets to discussing mortgages, McLean goes off on a tangent attempting to explain “service points.”

Then he switches to “discount points.” He writes, “Discount points are different from service points, in that they are used to equalize varying loan rates, and are most often paid by the seller in a real estate transaction. For instance, both the FHA and VA set the maximum permissible interest rate that can be charged on their loans.” That hasn’t been true for many years because Federal Housing Administration and Veterans Administration home loan rates depend on market rates.

When explaining home-loan choices, McLean says conventional loans other than VA and FHA require down payments of at least 5 to 20 percent. The author is apparently unaware of today’s 100 percent and even 103 percent home loans for buyers with good credit. Worse yet, the author’s examples use interest rates of 8 and 9 percent. Where has he been for the last five years in today’s low interest rate environment of 4, 5 and 6 percent home loans?

Other than the book’s mortgage section, which leaves much to be desired, the balance of this home-buying book can be summarized as standard boilerplate considerations. Nothing very innovative is a good summary.

The sections about buying foreclosures and HUD or VA repossessions are superficial and non-specific. There are a few examples from the author’s experiences, but nothing very helpful to home buyers or even investors, primarily due to lack of details.

The book’s best chapter is about negotiating home purchases. Unfortunately, it is too short and incomplete with hardly enough insight to aid a novice home buyer.

To show how out of touch with today’s market the author is, in the section called “refinance your mortgage if rates fall,” he writes, “The refinanced rate of interest must be at least two points below the original rate.” That’s old outdated mortgage refinance information. Today, refinancing can pay for homeowners who cut their interest rate by as little as one-half percent.

Although this book is supposedly about buying a home, somehow McLean deviates into discussing buying fixer-upper properties to rent or sell. “When you demonstrate cleanliness in your units, you’ll achieve three positive things: You’ll attract a better grade of tenant, earn a higher rental rate, and display to your tenants the measure of cleanliness you expect.” That’s true. But what does that fact have to do with buying a personal residence?

By the end of the book, the prime topic has somehow switched from home buying to investing in real estate and even to property management. When he discusses how to advertise vacant rentals, McLean suggests newspaper ads such as “Vacancy, 1-bedroom, Adults only.” That’s illegal discrimination against families, again showing how out of touch the author is.

Later, he even writes, “For instance, single adults prefer to live in a building with other singles. Likewise, families with children usually prefer to live in buildings that cater to families, and older adults prefer to live where they’re not annoyed by barking dogs and children at play. Therefore, set certain standards if you own a multiunit building, and don’t try to mix the elderly with the young, or singles with families.” An investor who follows that bad advice is illegally discriminating against renters based on familial status.

Chapter topics include “Why Buying a Home is a Great Investment”; “Basic Guidelines for Successful Home Buying”; “The Mortgage Alternatives”; “Which House is Right for You?” “The Resale House”; “Other Home Choices”; “Selecting Your Real Estate Team”; “Key Guidelines to Making a Superior Investment”; “Appraisal–How to Determine Value”; “How to Buy Foreclosures”; “How to Negotiate a Winning Deal”; “The Closing and Escrow”; “Profitable Holding Strategies”; “Property Management”; “Selling Your Property”; and “Pay Less Tax.”

This very disappointing book by a long-time realty author provides uneven home-buying advice that evolves into information for realty investors. The book cover says the book is “a handbook for first-time buyers and second-home investors.” But the contents don’t deliver the promise. On my scale of one to 10, this inadequate home-buying book rates a disappointing five.

“The Home Buyer’s Advisor,” by Andrew James McLean (John Wiley and Sons, Hoboken, NJ), 2004, $19.95, 266 pages; Available in stock or by special order at local bookstores, public libraries and www.amazon.com.