Buying a house and tips to find the one you want

March 10, 2019

Do you want to live in the city? the country? on a lake? oceanfront? in the mountains?

Wherever you choose, there are important decisions to be made. Ask yourself what you want before you start so that you can narrow down your legwork. That does not mean you can't consider other options during your search and oftentimes what you want changes as you see what is out there. 

• Pick the location. Consider weather. commute. schools. neighborhood. what stores are available? what kind of people live there? are there any rules (CC & Rs) that you absolutely can not abide by?

• What is your budget? You may go to a lender to get a pre-qualification letter, but I have found that they maximize your purchasing power and stretch your budget a bit past comfort level for me. However, if you have no idea what you afford, it is a good starting point. Buying a house is not like buying a car, there are a lot of moving parts and extras that you have to consider. 

• Are there any local realtors that have free informational sessions to explain the process? When I was in the market to buy my first house, my local Century 21 had monthly free conferences for people wanting to buy a house. I learned that I really didn't know much before then.

• Vocabulary to know: listing. fee simple vs. leasehold. FSBO. selling price vs. purchase price. offer. counter offer. mortgage. interest. paying points. PITI (Principle-interest-taxes-insurance). title. equity. construction loan. lender. realtor vs. broker.

• Once you have decided on location and budget, you can start your search...I use search engines such as google, Zillow, Realtor.com, and Trulia to get started. Magazines are great also, but many times they can't keep current enough if the market is moving fast. You may also want to visit a realtor's office to sit down and go over options, but I like to do that last. My time is valuable as is yours, so do some research first. drive around and see some of the listings.

• How do you access the property? are there easements? how close are your neighbors? I look at what types of cars are parked nearby (are there a bunch of junk cars? trucks? work vehicles? or high end cars?) I visit the neighborhood I am interested in during the morning, afternoon, and at night (some places can really change at night!) Are neighboring houses in good repair? Is it quiet? Are there kids playing? Do the people you see look like people you could get along with?

• So far, you are just considering the outside areas of these houses. When you think you may have a few you might like to see, now is the time you will need a realtor to get you inside. Ask your friends for a referral or visit a realtor's office that you think you might want to work with. They are all generally eager to help because you are a potential client. They make their money from commissions. Talk to them and make sure you feel comfortable with them. If not, I would go meet someone else because after all, you may potentially be spending time with them and you want to know that they are going to be working with you and not just for their paycheck. Once you choose a realtor and you have worked together, I consider it bad form to switch so try to decide early on.

• Talk to your realtor and show them what you have found and which houses you would like to visit. I have found that realtors are very helpful and are always trying to suggest additional listings that you may be interested in. Communicate what is important to you in a house. Make sure they understand your budget and stick to it. Some listings that are outside your budget can become within reach with a lower offer. You may offer less than what the seller is asking. I usually stay within 10-15% of asking price, but you may want to offer more or less depending on the market. (ex: if listings are selling real fast and you really want it, you may want to offer asking price or even more vs. if a listing has been on the market for a really long time, needs lots of repair, or there's some other aspect that makes it less desirable, consider offering less) 

• By doing some of the legwork before involving a realtor, you are not wasting your time visiting places you would not choose. When the realtor gives me additional listings, I visit those places without them as well. I only have the realtor come with me when I am truly interested and want to see the inside. 

• When you find the property you want, you will know. If you are not 110% sure, think about it before moving forward. Buying a house is a big decision!

• Making an offer. You may have a lender or your realtor can help you find one. You will have to have your finances in order. You should have a steady job to prove that you are good for the loan or have the funds to pay for it outright. Your realtor will help you with writing the offer. Generally, you will need to put up a good-faith deposit and state your offering price and how you intend to pay. The deposit should be refundable to you should they not accept the offer or if the deal does not go through. (Make sure 'refundable to buyer' is noted, I had an experience where the broker checked the wrong box and it stated that the deposit was to go to the seller. When the deal fell through, the seller expected to keep my $5,000 deposit!)

• Seller may accept, decline, or counter-offer within the agreed upon time period, usually a few days to a week. Many times, a seller will accept with a counter offer meeting you halfway between asking and offering price (you may want to consider this in your original offer). Additional terms may be listed such as closing at a future date. Now it is up to you if you want to accept.

• Once a contract is agreed upon, you are in escrow. This could be 3 weeks to over a month. An appraisal will be done to ensure it as the value of the sale. If appraisal comes in low, the bank may not lend you more than it has been appraised for and you have the opportunity to offer less than agreed upon sale amount. This is the time during which you may want to do a house inspection to ensure things are in working order, what needs repair, etc. Title search ensures the seller is the true seller and has the right to sell it, the property does not have any outstanding liens, or other legalities. Check property lines so you know what part of it is going to be yours. Your lender will be verifying your finances to ensure you can afford it.

• closing date. Congratulations! you are now the owner. you may do a final walk through and receive your keys...I always change the locks first thing!March 10, 2019