How to get THE home at THE price
Whether you are buying your first home or your fifth, the process
of buying a home can be an emotional, time-consuming venture. Feeling
that, in the end, you made the right decision and got a good deal
can make all the difference.
As with most major decisions, the amount of
work and research you undertake before you start shopping can have
a dramatic effect on how well you do in the end.
#1 Do you really need that backyard tennis court?
Everyone can picture their ideal
home. If you haven’t thoroughly prepared yourself prior to viewing
houses, chances are that you will find what you think is your ideal
home, and will wind up paying too much for it.
It is essential to treat the buying process
in a slightly detached manner. Those who fall in love with houses
usually pay too much.
That’s why it’s recommended that
you develop a list of needs and one of wants. When looking at houses,
make sure that they cover all of your needs – things like adequate
space, a good neighborhood, perhaps a garage – and then have
fun with items on your wants list. Treating the process in a regimented
manner will help you to make a rational, informed decision.
#2 Get pre-approved
Visit your lending institution
prior to shopping. Be sure to get a mortgage commitment in writing.
Being pre-approved gives you a solid price range, and lets your Realtor®
and potential sellers know that you are serious and not just a browser.
#3 Get the right people behind you
Buying a home is a complicated
process, with many people involved. Having the right people on your
side can make a big difference. An experienced, dedicated, and knowledgeable
Realtor® can put a team of advocates, including lenders, lawyers,
home inspectors and movers, on your side immediately.
#4 Communicate
The more you share with your Realtor®,
the better he or she will be able to represent you. Letting your representative
know exactly what you’re looking for, in terms of needs/wants,
price range, and location, can eliminate unnecessary trips to unsuitable
homes and that focus can help ensure that you wind up in the right
home.
#5 Location, location, location
It’s still true. The desirability
and resale value of your home depend on location more than any other
factor. People want a desirable community that includes character,
quality of schools, access to work, major transportation arteries,
recreational facilities, etc.
On your viewing trips, take a careful look
and ask the following questions: How does this home compare to others
in the neighborhood? Are yards fenced? Are there many children playing
in the streets? Are the front and back yards and the exteriors of
the homes properly maintained? The less expensive houses in a better
area tend to appreciate faster than the most expensive houses in a
less desirable area.
Additional factors that affect the property
value of a home include traffic, sounds, smells, zoning bylaws, and
many others. Be objective. Be sure you are completely satisfied with
the neighborhood. If you choose a neighborhood with problems, you
likely won’t get as much as you hoped with it comes time to
sell.
#6 Use your Realtor’s® knowledge
Your Realtor® is trained
in all aspects of real estate, including understanding supply and
demand, economics, and the neighborhoods of the city in which they
practice. A professional Realtor® can do much of the work for
you, by reviewing your needs, reviewing available properties, and
making an informed match. A comprehensive knowledge of the available
homes in your neighborhood is one of your Realtor’s® strongest
assets. With the aid of computerized systems, a Realtor® is notified
within hours when a home becomes available.
#7 Pay attention to red flags
When evaluating a home, be sure
you know the difference between acceptable and unacceptable problems.
Cosmetic items like peeling paint, worn carpeting, or unattractive
wallpaper can be easily remedied, and can be used as negotiation items,
as there will be costs involved in updating the home.
Major problems, however, are clearly red flags.
Look for items such as major foundation cracks, water damage, outdated
electrical systems, and inadequate plumbing. These items could be
too expensive to remedy to make the home a worthwhile investment.
#8 Hire a home inspector
A home inspection is an inexpensive
way to gain peace of mind, and guard your pocket book. A proper inspection
will cover all areas of the house including foundation, electrical,
heating, plumbing, floors, walls, ceilings, attic, roof, siding and
trim, porches, patios, decks, garage and drainage. A professional
inspector can give you an objective view of the property, with a written
report, indicating the present condition and items that will need
repair.
#9 Be cautious with fixer-uppers
Sometimes, a fixer-upper can
be purchased below market value, and once sufficient repairs are made,
can be sold at a significant profit. However, not all fixer-uppers
will bring in the profits you might expect.
Consumers often overestimate their level of
dedication to doing extensive renovation work, and underestimate the
costs associated with such work. A wall that needs to be replaced
can often lead to the discovery of faulty plumbing, electrical, or
other major undertakings. Your Realtor® and home inspector are
your best allies when it comes to cost-benefit analyses.
#10 Consider your future needs
A move can be a major undertaking. Take
a good look at your current lifestyle and consider the future. Will
you need extra space for a home office, a child, or perhaps a child
moving back home? Perhaps it may be easier and less expensive if you
purchase a home that can meet these needs now, rather than moving
up to a larger home a few years down the road.
#11 Proceed quickly
When you’re ready to buy,
act. Good properties sell. This is especially true given the current
state of most real estate markets. However, when you work with a Realtor®,
you have access to the latest technology. As part of the MLS and Agent
Handshake networks, a Realtor® has access to properties within
hours of when they are listed.
Technology works to your advantage. Many Realtors®
now have personalized websites which allow you to sign on as a client,
and receive notification of new listings via email. You save time
and effort, and you can view only those homes that come closest to
meeting your needs.
#12 Clarify relationships
In any real estate transaction,
be very clear about who is working for whom, and what the relationship
represents. Unless otherwise stated, an agent represents the seller
in transactions for the sale of a home. This agent, as part of his
or her fiduciary duty, must ensure that the seller’s (and not
your) position is represented throughout the entire process. Get a
buyer’s agent on your side, or ensure that someone is acting
in your best interests.
#13 Ask for a written CMA
A Comparative Market Analysis
(CMA) is an analysis of comparable homes in a given neighborhood.
It shows you the sale prices of comparable homes in the neighborhood,
along with asking prices of other homes in the area currently on the
market. A Realtor® can request this report for any home and neighborhood.
Ask for this report in writing. With this valuable document, you’ll
have solid, reliable information about how fairly a home is priced
compared to its real market value.
#14 Know the seller
Understanding a seller’s
reasons for moving could work to your advantage during negotiations.
For instance, a seller who has been transferred to another city may
be more motivated to sell than someone who is still shopping for a
new home. A vacant house, or a house that has been on the market for
several months and has been reduced in price, could also provide the
opportunity for lucrative negotiations.
#15 Keep it impersonal
Conversely, information could
be used to your detriment. Information about your mortgage, size of
down payment, move-in deadline, or circumstances for buying could
be used to the seller’s benefit in negotiations. While you want
your Realtor® to know these details, maintain your poker face
and keep your cards hidden with the sellers and their agents.
#16 Measure twice, sign once
While you definitely want to
move quickly once you’ve made the decision to purchase, you
don’t want to cave in to pressure for a quick close. Someone
who is trying to pressure you into buying a home is likely doing so
for a reason. Make sure the reasons for you to buy a home are your
reasons, not theirs.
#17 Exercise your negotiating skills
Even if you prefer not to haggle,
it’s worth it, especially when it’s your home and one
of your biggest investments. Most people expect to haggle over the
price. There is always room for negotiation, and your Realtor®
should be a professional negotiator.
#18 Avoid bidding wars
In some cases, the seller’s
Realtor® may use scare tactics to rush the sale or increase the
price. Falling for this trap could cost you money. If there is another
buyer, or some other reason this pressure is being applied, whoever
wins also loses because they tend to overpay. Let reason be your guide,
not passion.
#19 Get it in writing
Legally, sellers must disclose
all known material defects of a property. Ask for this in writing.
Also be sure to consider the ramifications of these defects. Will
they be costly down the road? Are they “serious” defects?
#20 Be aware of hidden costs
While Realtors® often tempt
first-time buyers with rent/mortgage comparisons, there is more to
a home than simply the mortgage. You will be responsible for other
items including mortgage insurance, appraisal fees, legal fees, inspection
fees, transfer taxes, title insurance, inspections, property tax,
increased bills, etc. Your Realtor® can give you a good idea of
the costs associated with buying a home that are beyond its final
negotiated price.
