- Find an agent you believe to be super-competent and trustworthy. Get referrals from lenders, friends, other recent home buyers; visit open houses, and call agents who have listings in areas of interest to you. Do your homework. You’re going to be spending a lot of time with your agent. You need to feel comfortable with her and believe you can trust your agent’s advice. If you don’t, you should keep looking.
- Imagine how you want to live, not just where. How will you use your ideal house? Who will live there full-time and what’s most important to each one? Who will visit? How much will you entertain? How well equipped should the kitchen be? Do you want a yard for entertaining or gardening or one with low maintenance landscaping because you travel a lot? Make a list of characteristics your home must have and a list of features you would like it to have.
- Be honest and realistic about how much money you are willing to spend before you start looking at properties. There are good online calculators to help you figure out what your monthly payment will be based on price, amount and terms of your loan, etc. One of them is at http://www.ginniemae.gov under the Affordability Calculator tab. Once you have a good feel for your most comfortable price range, get prequalified for a loan before you even start looking.
- Finally, once you’ve chosen an agent, only look at properties you can afford that have all your must-have features and at least some of the “would like to have” characteristics.
During your home search, understand these five things:
- The buyer’s market is over; it ended in 2011. Inventories of desirable properties are tight and the number of buyers is high. So things sell quickly. That means you can expect to spend asking price or more on desirable properties. Even properties that need work often sell for well over asking if they are priced right and well located.
- No house is perfect. Expect to spend up to $5000 repairing a punch list of minor items you think are important. You have to overlook minor flaws and discern whether any house is the right one for you. Then, have the courage of your convictions!
- Agents are not paid staff. They get paid a commission based on the selling price of the property whether they spend 100 hours with you or 1000. So, be considerate of their time and other obligations. Don’t expect them to show you properties every night after work and all afternoon both days of the weekend unless you’re really under the gun to find a home. Then, be prepared for a forced march! And, please, if you are running late or need to cancel an appointment, let your agent know as soon as possible. Don’t stand any agent up!
- Showing conditions vary, are established by the seller, and must be respected. Vacant properties can be shown virtually any time the agent is available. Occupied properties often have time limitations that agents and prospective buyers must comply with. Do NOT email a list of properties you want to see to your agent and expect to see all those properties at a time convenient to you the next day.
- Conversely, do let your agent know if you are particularly interested in a specific property so your agent can get you in to see that property as quickly as possible. Otherwise, if you submit a long list of properties to see, you might have to wait days for the agent to arrange appointments for occupied homes. In that time, the one you were most interested in could receive an offer and have it accepted before you even get in to see it. Communicate!
When you’ve found the “right” house (not the perfect house) and your offer is accepted:
- Get inspections done. But assume that any home you’re interested in is being sold as is. While you can ask for repairs, the seller is not required to fix anything your inspections reveal to be wrong. So, if you are an FHA buyer, don’t look at “fixers” because the seller may not be willing to make the fixes that FHA requires. Look only at houses in good condition or explore getting an renovation purchase loan with your lender.
- Do not even consider requesting repairs or price reductions for repairs on short sales or bank foreclosures. These homes are generally priced under the market to begin with because the seller can’t make concessions. So only offer what you are willing to pay for the house with defects, because these houses (short sales and foreclosures) often have deferred maintenance.
- No repairs or changes can be made to the property until after you own it. You can’t even run the appliances to see if they work (your inspector can). If the house is changed/damaged by you or your inspector the seller can come after you — the prospective buyer — for the cost of repairs.
- Use your allotted inspection time wisely. Your contingency period (up to 17 days) allows time for inspections, appraisal and loan approval and you have a right of recision without penalty throughout the contingency period. If you change your mind after releasing contingencies, you could face penalties. Fortunately, hidden defects that cause buyers to change their minds usually show up quickly, and we move on.
- Successful buyers move through the contingency period without delay and go on to the final flurry of document signing at the title company. They make moving arrangements in advance. Then, the result we’ve worked so hard for finally occurs: the phone rings and you hear me say, “Congratulations, you now own your new home! How would you like to get you keys?”