21 Tips for buying your first (or next) home.
#1) Hire a buyer's agent, more importantly, the right buyer's agent:
I understand that as an agent, this will seem to be a self-serving tip. The reality is that the right buyer's agent will make the process smoother, help you get the right home, and lessen the overall frustration in the process. Not to mention, they will protect your interests and limit your risk as much as possible.
#harshtruth- The listing agent (including new construction agents) only works for the seller. They have to be ethical, but it is really no different than going to a car lot to buy a car. The listing agent works for the seller the same way that a car salesman works for the dealership.
#2) Get pre-qualified well before you decide to move:
There are a lot of things that go into qualifying for a mortgage. #1) Credit score, #2) ability to pay (debt to income ratio), #3) stability of employment, #4) Previous collections, #5) Bankruptcies, #6) Previous foreclosures, #7) Unpaid taxes.
Many people assume that they can get a mortgage, who cannot at this time. Conversely, many assume that they can't get a mortgage and are able to.
The reality is that until you talk with a mortgage professional, you don't really know if you qualify or what you qualify for. The pre-approval process is usually less than 20 minutes and you know exactly what you qualify for and what the approximate payments will be.
If you talk to a loan officer about 90 days prior to starting the process, that gives you time to sort out any credit issues.
#harshtuth- Any agent who is willing to show you property without being pre-approved is not successful enough to be smarter with their time. Think about it: The one limitation on a real estate agent's income is their time. Why would they spend 3 hours with someone who may or may not be able to buy if they had other clients to work with who were pre-approved?
#3)Consider ALL of the expenses of owning a home:
The house payment is only one aspect of the costs of owning a home. You have to look at taxes, insurance, (though taxes and insurance may be included in the house payment via escrow account), HOA fees, utilities, maintenance and repairs. You should budget for these additional expenses, as there is no landlord to call when you have something break.
#harshtruth- Regardless of the condition of the home when you buy it, there will be things that break unexpectedly and need to be maintained. If you can't afford to pay the payment AND the maintenance, then you should not buy the home.
#4) Don’t look at homes out of your price range.
If you are looking at houses, you may think this is a good time to go see how the other half lives. Try to resist that temptation. If you look at homes that are above your price range, it will make the homes in your price range seem less attractive. You should be excited about buying a home. You should not feel as if you are settling for what you can afford.
#harshtruth- If you can't afford it, you are wasting your time and your real estate agents time. Time is an agent's greatest resource.
#5) Prioritize and then compromise.
Regardless of the price range, you will likely have to compromise on what you want. In almost every price range, buyers have to make compromises. The key is to sit down and figure out what you want, and the order of importance.
There are hundreds of criteria that can be applied to a home. The key is to pick out the criteria that matter to you most. That way, you can make sure that you don't react emotionally to a home that doesn't fit your needs.
The quicker you understand what is most important to you, the happier you will be and the smoother the selection process will go.
#harshtruth- You will compromise SOMETHING. The key is to make sure the compromise is well thought out.
#6) Don't buy a life's work.
Be honest with yourself when you are looking at a “fixer upper.” First, how much of a discount are you getting? Second, what are the costs associated with the repairs needed? Third, do you intend to do the work, or hire someone?
Many times, buyers pay near market value for a home that needs considerable work. Often, by the time the cost of the materials is factored in, the cost for the one needing work is the same as a well maintained home in the same subdivision. And, that isn't including the cost of labor in many cases.
If you are planning to do the work yourself, you may think that this does not apply. But, doing the work yourself takes you away from other things with your time. Just be honest about how much you really want to work on the house, and how much time you have to devote to the home.
It will often cost much more in the short term to renovate a property as opposed to buying a home that doesn't need any work.
#Harshtruth- Renovations often cost more and take longer to complete that you expect.
#7) Loan originators/mortgage companies are integral in the real estate transaction.
Don't base your decision on what mortgage company to deal with solely on interest rate. Look around for referrals from other people that you trust and who they used. Remember, contracts have deadlines and if you have an unreliable lender, it could cost you thousands of dollars and the opportunity to buy the home.
Certainly know the interest rate and I would even advise on getting two quotes. But, make sure you are comparing apples to apples in terms of fees. Also, make sure you are dealing with reputable companies that have a solid reputation on staying on top of the mortgage process and getting deals closed on times.
#harshtruth- There are times that I advise my seller's not to take an offers solely because of who the buyer wants to use as the lender.
#8) Location, location, location.
We've all heard this before, but it is absolutely true. Location is the single most important thing in the value of a home. It is also one of the most important things in terms of the enjoyment you will get out of the home. Don't underestimate the importance of how long your commute is, how far it is from other friends and family, how far it is from shopping, what the schools are like, etc. Remember, you are buying a lifestyle, not just a home.
#harshtruth- you can change a lot of things about a home, but not it's location.
#9) Give the home a physical.
No matter how pretty or new a home is, you should get it inspected. An inspection in our area is typically between $350-$500 depending on the size of the home. The inspector's only job is to let you know if there are any things wrong with the property. This expense can save you thousands, if not tens of thousands in the long run.
#harshtrut- Seller is not required to do any repairs in the state of Georgia. There is nothing requiring the Seller to fix any items that the buyer requests. Even still, the inspection is worthwhile as the buyer can make an informed decision on whether to proceed.
#10) Plan on marrying the home, not dating it.
Regardless of how long you think you will be in the home, make sure it is something you can live with and in for a long time. Timing the market is nearly impossible. Many thought that they were buying in a great time in 2009 only to see the market drop for three more years.
People in 2012, thought that they were going to wait a little longer to get even better deals, and the market shot up like it bounced off a trampoline.
Heck, I had one buyer in 2013 who swore there was all this 'shadow' inventory that was going to push prices down again.
Things change all the time. For the last three years we have been expecting interest rate increases. They haven't come.
Even if you only plan on being the home for two or three years, make sure it is a home you like and enjoy and that you could stay there for the next 10 years if need be.
You could have a financial setback, or a change in the family, a change in your health, a job loss, or any number of other life events that could lead to you staying in the home longer than initially planned for.
#harshtruth- While homes appreciate over time, like all markets, the value of your home will fluctuate.
#11) Stalk the neighborhood.
As Realtors, we are not supposed to give you our opinion on anything about the neighborhood. We aren't supposed to comment on the crime rate, the quality of the school district, the age of the children in the subdivision, religious or racial demographics.
Those regulations are put in place to ensure that real estate agents don't adversely affect the market in any neighborhoods. Those regulations mean that you bear the responsibility for finding out what the neighborhood you are considering is truly like.
You should drive the neighborhood at different times and on different days. You should make the commute from the neighborhood a couple of times during due diligence. You should check out the schools on greatschools.org and schooldigger.com. Moreover, you should go to the schools and ask for a tour.
And, you should check websites like mylocalcrime.com and neighborhood scout to see what the crime rates are in an area.
#harshtruth- The Realtor is very limited in what they can legally tell you about a neighborhood.
#12) Even if you don't have kids, pay attention to the schools.
School performance can have a significant impact on a homes value, and it's marketability. Homes in poor school districts are the first to be affected by recessions, and homes in the best school districts hold their value better in a bad housing market.
#harshtruth- You get more home in a poor school district, so it is tempting to do so if you don't have kids. Just remember that the person you sell it to will also get a better deal.
#13) A low offer is not typically the best course of action
An offers should only be low, if the comparable sales indicate the home is overpriced. Otherwise, offending the seller will most likely lead to a higher price, or the seller refusing to counter at all.
It can also lead to discord throughout the entire transaction. Remember, price is only one of the many factors that must be negotiated. And, many things can come up during a transaction. There are times when either side could benefit from an understanding other party.
The buyer may need to ask for repairs. The buyer may need an extension due to the lender. The buyer may want to put a storage pod on the property before closing.
Obviously, these are not reasons to overpay for a home, but they are things to consider when making that opening bid. You may be setting the tone for the rest of the negotiations.
#harshtruth- A buyer that the seller sees as unreasonable will get less cooperation and consideration throughout the entire process.