10 Steps to Buying a Home E-Guide
Purchasing a home is one of the most important investments you will make during your lifetime, and one that will likely impact you financially for many years to come. It is import-ant to educate yourself on the home buying process which will help you to make the best investment possible. For first time buyers, or even the most seasoned buyers, the process of purchasing a home can be both confusing and daunting, but with the assistance of a knowledgeable real estate professional, it is certainly manageable. Here are some steps that can help make the buying process simpler and less stressful. For the sake of explanation, we have illustrated the process based on an eight-week timeline.
Avenue Realty Home Buying Tips
Buying a home involves a large financial commitment; in fact, for the vast majority of the population, it’s the largest purchase they will ever make. Because of this, you want to make sure you are paying a fair price. A way to ensure you do that is to be able to spot signs that a house is overpriced.
DAYS ON MARKET
If a home sits on the market for much longer than the average of other homes, it may be overpriced. For example, if the average days on market for homes in the same price range is 60 days, and this house is still on the market after for months, it’s a good sign the house might be overpriced. This is likely to be true especially if the house seems to be in good condition and has no other issues that would prevent it from selling. If a house is getting showings but no offers or no showings at all, those are further signs the house is overpriced.
Of course, most neighborhoods have varied housing stock, and you can’t always make an apples-to-apples comparison, but a home that is priced considerably higher than the other homes in the area, especially ones that are of similar sizes and have similar features, may be overpriced.
When Realtors recommend a sale price, they use “comparables” — houses of a similar size, with similar features in a similar neighborhood. If a house is priced significantly higher than what a Realtor can find for sale that’s comparable, it’s likely the home is priced too high.
If buyers have made offers on a home but those offers are considerably below asking price, it’s a good indication the home is overpriced.
PRICE HIGHER THAN ASSESSED VALUE
Though the tax valuation of a home often has little relation to market price, a house priced considerably higher than its tax assessment could be overpriced. This is especially true if nothing has been done to improve the home since its last assessment and if the assessments of other homes in the neighborhood have not gone up.
If a house is priced to try to recoup the cost of pricey options such as a designer kitchen or pimped-out basement, it might be overpriced. Just because such options are in a home, it doesn’t mean it’s worth more money. It depends on the market and the neighborhood. For instance, a high-end kitchen in a starter home is out of place and won’t command a much higher price.
If most Realtors think the house is overpriced, then it probably is. Any good Realtor is going to advise his or clients to shy away from a house he thinks is priced too high.
Buying a house? Title insurance is an important, often overlooked, part of the home-buying process. It is true that title insurance can be costly. However, this is a situation where an ounce of prevention is truly worth a pound (or more) of cure. A title insurance policy can cost a few hundred dollars, but, if there turns out to be a problem, correcting it on your own could cost tens of thousands of dollars. Unlike other types of insurance policy, this is a one-time fee, rather than a monthly or annual expense.
What is title insurance? Essentially, it is a policy that guarantees that there are no problems with the title to the property you are buying. Before issuing the policy, the title company will go to the county recorder’s office, pull all of the property records for the property you are buying, and verify that the person selling the property to you is the true owner. This is not as simple as pulling a copy of the current deed. The title company will often go back decades, to ensure that there will not be any problems with your sale. They will verify whether there are any liens on the property, easements, or other claims that could interfere with your ownership. If they find a problem, they will resolve it for you prior to the closing. If they do not find any issues, or after the issues are resolved, the insurance company issues a policy. The policy guarantees that there are no problems with the title, and that the new owner can take title to the property at the closing, free and clear. The policy protects the homeowner from any mistakes that may have been made in the title search, and any problems that may arise after the fact.
A title insurance policy protects against a number of problems that could arise down the road. Common examples are a will that was never probated, meaning that an heir may step forward to claim an interest in the property. There could be a mistake in a deed or information that was omitted. It is possible that the title examiner made a mistake, or that a deed was placed incorrectly due to a clerical error. A lien could be filed after the title search is complete, before the closing. It is even possible that a problem could arise due to fraud or forgery. With title insurance, you are protected from all of these possibilities.
With a title insurance policy, the insurance company will do whatever is necessary to perfect your title. That could involve negotiating with third parties, filing documents, or hiring lawyers to litigate on your behalf. If the title company cannot perfect your title after guaranteeing it, they will pay your damages. For that reason, buying title insurance for your new home is one of the most important investments that you can make. It’s worth the money to be able to go to sleep in your new home, knowing that your rights as the new owner are protected.
There are some people who, when looking for a home to purchase, only consider the price of the home in their decision making process. In truth, there are many other factors that are going to have an effect on the actual price that you pay. The largest factor, beyond the asking price of the home, is which lender you are using to finance your home loan.
The most important thing for you to do is to get a great interest rate. However, you also need to find a lender that is going to act fast and lock you into this low rate as quickly as possible. The interest rates change very quickly and, if your loan officer does not lock the rate it, it could easily cost you thousands of dollars.
Before you even think to apply for a loan, you need to do some research on your own to determine what the current interest rates are so that you can make a better decision in choosing a lender. Also, do not be afraid to ask for a better rate especially if your current credit score is considered good.
You also have to consider the various fees that will be applied to your loan. One lender may have higher fees than another and, while it may not make the monthly payment go up too much, in the long run the fees can add up and you could spend way more than you expected to.
Along with the interest rate and response time of the loan officer in locking in the rate, you also need to find a lender that can close on the loan quickly. Many sellers do not want to wait a long time for the close of the sale. They need to sell quickly, and it is up to you to make that happen by choosing the right lender.
The best way to find the home you want is to get preapproved for the loan before you even start looking at houses. The lender is going to let you know how much money you can borrow, which will help you narrow down your search. You do need to understand, though, that just because they tell you that you can borrow a certain amount does not mean you have to borrow that much. Only borrow what you really think you can afford.
The best way to start your search for lenders is with your real estate agent, if you have already been working with one. They will have access to a wide variety of different lenders and can get you pointed in the right direction. You may also wish to ask the people you know which lender they have gone through and ask for feedback about them.
Choosing your lender should be a task that is taken as seriously as choosing your new home. The fact is that each lender will have its own advantages and disadvantages, and you will have to make the decision based on what is going to affect the actual cost of your home.
You want the perfect home that will suit your desire for the ideal location, quality, and most importantly budget. For most people, buying a home is the most expensive purchase they will make. You will want the home you select to have minimum problems. Making sure you get a home inspection before the closing can help ensure the quality of the home. Everyone desires a location that meets certain needs such as being in a good school district, near family or close to work. Price is the top consideration. Purchase a home that will allow you to have cash left over for other commitments and entertainment.
Finding the right home can take a lot of time, patience and perseverance. Unfortunately, most people do not have the time or even the inclination to go out and look for it themselves. This is why most people engage the services of a real estate agent. Even better, this would be a good time to seek the help of a buyer’s agent. A buyer’s agent offers a slightly different twist from a regular real estate agent. Rather than having the option to represent both a seller and a buyer in a real estate transaction, the buyer’s agent only represents the buyer.
Buyer’s agents will honor your requests and seek the types of properties you are looking for. They will work with you by referring you to the lenders and helping you obtain proper preapproval loan letters. Buyer’s agents are invaluable sources for doing all the legwork for you, including making appointments and taking you to see properties which are listed for sale.
Buyer’s agents work on commission but they still expect compensation if the buyer opts out of the buying arrangement. They will insist on a contractual agreement. The agreement spells out the expectations of both the agent and the buyer. If the agent fails to deliver within a specified timeframe the buyer is free to seek another agent or renew the contract.
Seeking a buyer’s agent can be as easy as getting a referral from others who have used the agent’s services or using the Internet to conduct your search. Narrow your search to three agents you feel have a grasp for the type of housing you desire. Ask each agent specific questions to guide you in your search for the representation you desire. Most importantly make sure you and the agent have a rapport and understand one another. This is important since you will be signing an agreement.
Although the best intentions can unravel there are safeguards you can ask the buyer’s agent to implement in the event things don’t work out. Your agent will negotiate the best terms for you when you are buying your home but before that can happen, for your own comfort and peace of mind, it is best for you to come to an initial agreement with the agent.
Negotiate the terms you are comfortable with. Most agent’s buyers will ask for a 90-day commitment from you but you can request shorter contracts. If you feel you might want to seek the services of another agent during your contract ask for a non-exclusive agreement. This will compensate the initial agent but free you to work with another agent. Before making a final contract decision you can request a house hunting date with the agent to get a feel for the agent’s work habits before signing anything.
Melissa is an outstanding real estate agent and a joy to work with. She took the time to understand our needs in a new home, worked tirelessly running down leads, and has stayed upbeat and positive during a difficult search. We not only consider her as our real estate agent, but a friend. Our experience has been so positive that we absolutely plan on working with Melissa in the future.— Phil D.
It was truly a pleasure to work with Amy. Not only is she knowledgeable and responsive, but she is patient and takes the time to explain the process of selling a home and makes you feel comfortable with what can be a very complicated process. Amy truly made the process easy for us and sold our property in a week.— David P.
Stasia was very professional and friendly during our home buying experience. She helped us find houses to look at that met our requirements and was able to fill us in on information that we were not familiar with as first time home buyers.— Aaron Hale