Informed buyers are smart buyers
Buying a home is a major investment. Don’t go into it blindly. Educate yourself about the home-buying process. An informed buyer is a smart buyer and when hundreds of thousands of dollars are at stake, being market-smart translates into dollars saved. Here are some things to consider before you make that offer.
Where To Start
Make certain you’re able to buy before spending countless hours house shopping. Find a mortgage professional and get preapproved for your loan. Always ask for the latest market rate and compare rates with several lenders. Rates are competitive. So are mortgage (lender’s) fees.
Once you have decided on a mortgage broker, ask how much out-of-pocket money you will need, including your down payment. Your loan officer will prepare a ‘good faith estimate’ that will itemize these expenses for you.
Before you begin shopping, you need to know the type of loan you’ll be receiving as this can affect the seller’s closing costs, thereby directly affecting your offer. FHA and VA loans cost the seller more in seller’s closing costs than does a conventional loan and this can directly affect your bargaining power.
If you’re cash short, find out if your loan will allow for seller’s contribution to your closing costs. Be sure to have the amount you receive from the seller written into your offer.
Know What You’re Looking For
Decide what size home will fit your needs and your budget. Check out neighborhoods you like and compare the prices with what you can afford.
If schools are a factor, call the school board for verification. Some neighborhood schools have a capped enrollment and students may be bused to other areas.
Get A Comparative Market Analysis (CMA)
You’ll want to track how many homes have sold, how many are currently on the market, the average length of time a home stays on the market, and how many homes are currently under contract in the neighborhood.
Check the location; some are hot; some are not. Examine the market analysis of the neighborhood in which you’re buying. Know the neighborhood and its trends before you make an offer.
You’ll also want to know how many rentals versus homeowners are in the neighborhood. A larger proportion of rentals can affect the price and the resale of the property.
Know The Condition of The Property
Have the home inspected. Use state licensed inspectors to evaluate the property’s condition. Many latent defects are hidden from the untrained eye. Be prepared to negotiate the cost of repairs with the seller.
Get estimates. If you plan on any renovations or if the house needs updating, take contractors to the property and get estimates before making the offer.
Use A Realtor
Get a Realtor. It doesn’t cost you anything. The fees are paid by the seller, but you should sign a Buyer’s Representation Agreement to insure that the Realtor is working for you. Without it, the Realtor will have a fiduciary responsibility to the seller. A buyer’s Representation Agreement reassigns his fiduciary duties to the buyer.
Use common sense and take your time. Above all, don’t be afraid to ask questions of licensed professionals in the Real Estate Industry. They are there to help you.