Home Buyers Tips
A Step By Step Look at Home Buying
Some real estate laws and customs differ depending on where you live, but there are many home buying steps that are standard, even though they might not be accomplished in the same order in every location. Here are the 10 steps to buying a home:
Step 1 - Get Your Credit/Finances in Order
Your credit reports is a primary factor in determining what interest rate you will receive and how much the banks are going to be willing to loan you toward the purchase of your home. Make sure you check your credit and ensure there are no issues before starting the home buying process. Know your financial history before you apply for a mortgage, as errors on credit reports are common and often require a lot of time to clear up.
Step 2 - Get Familiar with the Mortgage Industry
We can refer you to several lenders who will both explain the process and will be able to offer you a good faith estimate. You should find a lender you are comfortable with and a loan program that fits your needs.
Step 3 - Get Pre-Approved for a Mortgage
Once your credit/finances are in check, apply for a pre-approved mortgage to establish how much house you can afford. It also helps to have this pre-approval when negotiating your contract as sellers tend to favor an offer that is pre-approved.
Step 4 - Determine Your Wants and Needs
Grab a piece of paper and divide it into three columns. If you'll have a co-owner, have that person make a list too, but don't share ideas just yet.
Column 1 - List Must-Have Features:
- If the house must be located in a specific neighborhood or school district.
- If the house must have 3 bedrooms, a 2 car garage, a large kitchen, a view.
- If there must be no restrictions against a home-based business.
- If the home must be one level, with few or no steps.
- List every feature you feel is a must.
Column 2 - List Features You Would Like:
- A pool or a screened patio.
- Whirlpool tubs, walk-in closets.
- A certain type of architecture.
- Preserve lot, lake view or cul-de-sac
- List all features that are important to you--but that you might be flexible about.
Column 3, List Features You Do NOT Want:
- A home located next to a highway or in a congested area.
- Certain types of architecture.
- Homes that need a great deal of work.
- List all features you absolutely cannot accept.
Review your list. If your co-owner made a list, compare them to see if your priorities match. If they don't, you'll need to compromise, revising your lists so that both of you are happy.
Making a list is a good exercise because it forces you to think about your wants and needs. We can almost guarantee your list will change and evolve when you actually begin to look at houses. Even home buyers with an unlimited budget rarely find the "perfect" home.
Step 5 - Select a Qualified Real Estate Agents
Basically, there are many agents, but only Realtors adhere to the professional standards or code of ethics established by the National Association of Realtors.
- Find an agent that you feel comfortable with. Do your communication styles mesh, do they understand your needs?
- Find an agent who has a good website that provides you with ample educational resources and information about the area.
- Find an agent who will offer you prompt professional service.
- Find an agent who is knowledgeable and will help guide you through the real estate process. Ask how long they have been in the business.
- Ask for referrals. Don’t do business because you like the website. Let previous customers tell you about their experience.
Step 6 - Start Searching for a Home
As Realtors, we have many tools at our disposal to help you through the process. We can help you by searching the multiple listing service (MLS) system to find listings that match your desired criteria, providing you with Comparative Market Analysis (CMA) reports and education you about the area.
Hint: You can use this website to search and find any home on the MLS and we can make an appointment to show you any property in the area!
Step 7 - Make an Offer
Here are some tips that can help you get the best deal when it’s time to make an offer on a home. No matter what your strategy is, you should have a good idea of the home's market value before you make an offer.
- Lowballing it: Be realistic, some seller's take a lowball offer as a personal insult and may not be as anxious to deal with you on your next offer. That's fine if low is all you'll go, or if the property is truly overpriced, but it can create problems with future negotiations.
- Being generous: Come in too high and you may not find the seller's low point.
- Helpful Advice from your Agent: A great way we help is to provide you with enough information and advice to assist you in determining the best price to offer. We can run comparables for you and will be involved in offer strategies.
- Asking prices: Advertising gives you a feel for average asking prices, but your focus should be on sales prices. You'll find them recorded in the tax records or on multiple listing recaps of sold properties.
- What about tax values? Tax valuations are not a good measure of a property's market value. Your community might have a general guideline, such as tax value = 80% of market value, but the figures are not usually reliable. Ask your local tax assessor for details about your specific area. Take a look at a home's tax value, but never assume it matches the market value of the property.
Other factors that affect price
- How long has the house been on the market? If only a short time the sellers might not too motivated.
- How does the house compare with others for sale in the same neighborhood? Appraisers are now considering market penetration by looking at how many homes are on the market in the same area.
- Is the house in need of repairs or massive updates? Updating items such as insulated windows, plumbing and electrical systems, kitchens, and baths can be costly.
- How much time is left on the roof?
- What about the neighborhood, do you foresee home values climbing, staying the same, or possibly taking a downturn?
Bottom line
Analyze each home's condition and compare it to others on the market. Your final offer will likely involve a good deal of gut instinct. Is it the house for you? If you've been searching for a home for awhile, you will probably know the answer to that question the minute you walk in the door.
Step 8 - Home Inspections and Other Tests
In our market, inspections take place after an offer is finalized. It's critical to decide which inspections and tests you want to perform.
Talk with your real estate agent or other advisor to find out when inspections should be handled and if additional types of testing are important for your specific area.
Step 9 - Obtain Homeowners or Hazard Insurance
Whether you are buying a condominium or a home, lenders require insurance prior to close. Your agent should be able to refer you to competent insurance agents who can recommend appropriate coverage. In most cases, you will need to pay the full year's premium prior to close.
Step 10 - Closing
At closing the transfer of title will take place and you will sign the final paperwork to purchase your home. You'll need to bring your driver's license and a certified or cashiers check for any funds required at close. Congratulations!!!
1. Don't Make a Major Purchase
If you are depending on a mortgage to move in, don’t make any major purchases until after the closing on the home (fight the urge to get a new car to put in your new driveway). An increase in your debt to income ratio reduces the amount of monthly income available for your mortgage payment. Using cash to purchase the car could also create a problem, since banks consider cash reserves when approving your mortgage. If you must make a major purchase before closing, talk to your loan officer before you do it.
2. Don't Change Jobs Unless It's Necessary
Lenders like to see a consistent job history. They aren't usually as nervous if you change jobs within the same field, but it's better to stay put until the keys to the house are in your hand.
3. Don't Let Your Emotions Take Over
Be realistic. No home is perfect, especially older homes. If the seller refuses to do a small repair, don’t let it kill the deal on a home you truly love, realize It's not unusual for new owners to take care of some repairs themselves. Keep a cool head during the entire home buying process, especially during and after an inspection.
On the other hand, don't fall so much in love with the house that you'll buy it no matter what needs to be done--unless you're absolutely sure you can handle it emotionally and financially. Decide what type of repairs you can realistically tackle, then stick with the decision.
5. Don't Forget to Switch Utilities
That sounds simple, but you'd be surprised how many people forget to apply for utility service at their new home. Call the utility companies as soon as you have a contract. Find out how many days lead time they need to switch the service, then get back with them when you have a firm closing date. You can visit our site for utility company information.
Don't forget to discontinue services at your old home.
6. Line Up Your Hazard Insurance in plenty of time
A no-brainer, right? Acquire hazard insurance as early as possible, as it’s another often-forgotten task that buyers scramble to take care of at the last minute. Florida can be a tricky state and not all companies will write policies and often times their requirements are more stringent.
7. Don't Become Best Friends with the Seller
While it's great to be friendly, don't get into too many long discussions with the sellers, because it could cloud your judgments.
Remember, this is their home. A casual statement about "ripping up that ugly carpet" might be enough to keep the seller from negotiating with you about repairs or other issues that crop up.
8. Don't Panic if the Appraisal Comes in Low
At least not at first. There are some things you (and your agent) can do to correct the problem.
9. Don't Go It Alone
Having a reliable and competent agent means you have an experience set of eyes looking everything over and a shoulder that will make the process less stressful. Its our job to track many of the day to day details that involve the lender, the seller, or the seller's agent.
10. Don't Ignore Lender Requirements
Know what is expected of you and take care of it. For instance, a Certificate of Eligibility is required to move forward on a VA loan. That's something you must handle yourself. Answer lender questions and provide required paperwork as quickly as possible--your closing depends on it.
Advice for 1st Time Home Buyers
Even for experienced home buyers, it can be a confusing process, but can be especially intimidating for the 1st Time Home Buyer, so here are some tips to help guide you through the process
Get Prepped in Home Buying Basics
Before you begin, get educated about the home buying customs where you live. Relatives or friends who live in another state might have some good general advice for you, but chances are the process is very different in their area, so avoid the mistake of relying solely on their advice to make important decisions.
So How Do You Learn the Basics?
Talk to a real estate agent for advice about the typical home buying scenario. This does not mean you have to sign an agreement for the agent to represent you, but it is a good opportunity for you to gain some knowledge off of an expert who deals with these transactions on a continuous basis and allows you to get a feel for me as your potential agent when you are ready to make that decision.
You can also talk to a bank loan officer or mortgage broker, they look at home buying from a different perspective, but can usually give you a basic overview of the process.
Home Buying Questions to Ask
- Will the agent help you compose your offer to purchase a home? If not, who does help?
- If the agent uses fill-in-the-blank forms, ask for a blank sample copy to take home and study.
- What types of disclosures are sellers in your area required to give to buyers? Can the agent give you a sample copy of typical disclosures?
- What types of home inspections are standard in your area? Are there other inspections that the agent recommends?
- How much do the inspections usually cost? Are they regarded as a buyer expense?
- When are inspections done?
- Is a survey required for most transactions? If so, who typically pays for it, the buyer or the seller?
- Does an attorney or title company do a title search to verify that the deed is problem free? What's the average cost for that service?
- Who acts as settlement agent, the person who puts together final paperwork for you to sign? (attorney, title company personnel, real estate broker, other)?
- Other than loan costs, what's the average total cost for other closing fees?
- Taxes, settlement agent fees, etc.
- How long does it usually take to close on a home once an offer is accepted?
That's a good start. After you have the answers to those questions, you'll have a better feeling for the basic customs in your area.
Understanding Your Local Real Estate Market
It's important to study your local real estate market before you seriously look at houses so that you can make educated decisions through out the process.
As your agent, I can get you a report of sold comparables and we can look at what current listings are being priced at to reveal the mindset of sellers in your market.
Start browsing the real estate market in your town now, before you talk to a real estate agent or for sale by owner seller.
- Browse listings on the my website of the entire MLS market
- Pick up real estate for sale books in your area.
- Read real estate ads in the local newspapers.
- Take adventure drives and look for For Sale signs. Note which neighborhoods you like the best.
- Make changes to your Wants & Needs list if necessary.