1. Get your finances in order and get pre-qualified for a mortgage first! Review your credit report and be sure you have money to for a down payment. Would not be a bad idea to have enough to cover some of your closing costs as well as cash in hand. While I always put into Buyer offers to have the seller pay closing costs, on new homes for example I don’t see builders in certain areas of the market paying all closing costs for buyers right now. This changes with demand, but be prepared! Depending on what loan type you seek, you could have need of a 3.5%-5% down payment at a minimum and closing costs are generally going to be 3% of loan amount as a good roundabout average. Talk to a lender and get prequalified for a mortgage as I say. It is more complicated today than simply having a good credit score. There are factors such as your Debt to Income ratios, verifying that income, etc..that factor into your ability to obtain a mortgage. Sorting these out upfront will save you the heartache later of falling in love with a house you can’t afford.
2. Research before you look. Decide what features you most want to have in a home, what neighborhoods you prefer, and how much you’d be willing to spend each month for housing. Today so much can be done prior to “hitting the streets” looking at houses in person! I have worked with Buyers who told me they were almost “sold” on a home based on what they could see online. They also weeded out certain homes based on online photos. This can help keep from wasting time by not looking at a bunch of homes that would have no interest based on your criteria. Once you find a few that you really are excited about, go see them in person and notice all the details!
3. Be realistic. It’s OK to be picky about what you want, after all this is the largest investment most people ever make, but don’t be unrealistic with your expectations. There’s no such thing as a perfect home. Use your list of priorities as a guide to evaluate each property.
4. Make sure there are no “deal killer” contingencies in your way. In a low inventoried market like we find ourselves in right now, most sellers are not going to accept a contingency for you to sell a home prior to closing. Builders on new homes certainly don’t allow such a contingency so if you have a home that needs to sell, put it on the market and get it marketed prior to getting too serious with a new home search! Believe it or not, it isn’t so immediate to be able to move a home and get it sold. For example while my average days on market on a listing last year was 130 days, I had some that sold in as little as a week, but there were a few that took 5 months from marketing to close based on location and condition. My message is that while your home may be picture perfect and might sell in a week, most sellers and their listing agents are going to assume the worst. If you have an offer on a house and there are multiple buyers or offers on the same property, they will take the ready buyer who has fewer contingencies and move on.
5. Don’t ask too many people for opinions. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion, but be ready to make the final decision on your own. After all it is going to be your home!
6. Decide your moving timeline. When is your lease up and can you get out of it early? Are you relocating to an area? Are you looking into new homes that require several months to complete? All of these factors will help you determine when you should move.
7. Think long term and think about resale. Looking for a starter or first home with plans to move up in a few years after kids or some job promotion, or do you hope to stay in this home for a longer period of time? Is this the “forever home?” This decision may dictate what type of home you’ll buy as well as the type of mortgage terms that will best suit you.
8. Insist on a home warranty and don’t forget the inspection! Negotiate a home warranty from the seller to cover defects for one year. This provides peace of mind on your purchase. I have seen HVAC units that quit working after only 5 years, but I have also seen them last 20! This takes the “what if” away. If you are strapped to come up with a minimum down payment, coming up with repairs on a home over 10 years old can hurt! Remember what that warranty covers though. If the roof is 20 years old, no warranty will replace that! It is on you. This is why a good home inspection is so crucial!
9. Get help from a REALTOR®. Hire a real estate professional who specializes in buyer representation. Unlike a listing agent, whose sole duty is to watch after the seller’s best interests, a buyer’s agent is working only for you. Buyer’s agents are usually paid out of the seller’s commission payment made to the listing broker. Costs you nothing to have someone looking out for you! __________________________________________________________________________________________________________
Just had a funny story told to me by an agent passing through the real estate office. I heard her (a listing agent in this case) exclaim "it's not worth the extra money!" It seems, as I stopped her for more information, that she is listing a property and working both with the buyer and seller. The buyer signed a "customer acknowledgement" form. This means that the agent can be an "order taker" but is not responsible to do anything more for the buyer! She cannot advise the buyer. Only write up and do what the buyer instructs her to do. Well within the process, and after having gone under contract, the buyer now feels "cheated" and feels that the agent did not represent her correctly. Says she should have been instructed by the agent to have asked for the seller to pay closing costs within their offer! She too was not happy that the agent (who again is listing the house and represents the seller as a client of hers) did not encourage her to get a certain inspection done during due diligence.
This is precisely my point! The listing agent has no responsibility to instruct the buyer on how to make the offer. Had no responsibility to encourage her to ask for the seller to pay the closing costs because once again she represents the seller! Would be like me selling "my" car and telling the buyer to make "me" pay for new tires as part of the transaction! Why would she do that? She wouldn't. The listing agent does not represent you as a buyer and even this listing agent was grumbling about how much is was "not worth" working both sides. Get you own representation!
For more information about the home buying process please contact me! I would love to be of assistance!
