Ten Tips for Buying a Home

April 17, 2013

Greetings everyone, this article is long overdue! I promised Matt would return after the Ten Tips for Selling Your Home post from last year to discuss the opposite side of a real estate transaction, purchasing a home. Matt is an experienced real estate broker and appraiser and as a bonus, I’ve also included tips from Dino, a long time real estate agent in the Bay Area. Together these guys have almost four decades of experience in representing buyers and sellers in the real estate market so they’re smart, savvy, and full of helpful information. Today they’re sharing ten tips for buying a home:

“In the home purchasing market, being a buyer is different than being a seller. A buyer wants to find the best home for the best price, the seller on the other hand wants the most money for it. Buyers should be prepared for many twists and turns in their quest to purchase a home. Know that there are many different real estate markets and laws across the country, so these tips are meant to be helpful guidelines.

1) Find the Right Agent.  Look for someone with experience in the area, someone who is easy to reach and responds to phone calls or emails, and one you have an easy time talking to about your wants and needs. Ask them how many times they have represented a buyer since it’s a good idea to find an agent who has worked with many buyers. Learn how much experience they have and ask them if they have the time to find you a home. You’d be surprised how some agents are stretched too thin and as a result won’t go the extra mile.

If an agent has ten or more active escrows, that person may not necessarily be right for you. It’s possible they’re more concerned about closing deals and getting commissions and may not have the time to be your best advocate. Most importantly, find an agent who has the time to serve your needs.

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You might also look at agents that work on a team. These days, clients are often better served by having more than one person do it all. Ask whether the agent works with a team of assistants – it doesn’t cost extra, and you may get better attention to your needs. As a buyer, you want to be treated as though you are important, so the one of the most important things to know is how many clients they have at that time and whether they may have colleagues to assist in your search for a home.

2) Learn the Market.  When you getting ready to buy a home, take the time to learn the market on your own. This research can take six months, but if you are in a hurry, it can be done in a few weeks. Ask your agent for every listing in your price range in your neighborhood. Be specific, learn as much as you can about where you want to live and figure out how much you can afford.

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You can also search many of the listings online for free without burdening your agent. Redfin is an excellent site and give its readers access to all the current listings on the market. There are also other sites to review, Zillow, Realtor, Trulia, to name a few. Some of these sites work with agents who will rebate part of their fee if you work directly with them, but expect that you may get what you pay for. An agent hired for a full fee may give greater attention and work harder for their client.

Part of learning the market is seeing many homes and judging their quality, condition, location, size, and amenities. Many factors can play a role in you decision: schools districts, crime rates, appreciation rates, and proximity to services. Learning the market includes viewing as many homes as you can to educate yourself on what styles you prefer, and also to learn about value.

If you trust that your agent knows what you’re looking for, have them preview homes for you, that’s their job. After they see the property, they can contact you right away and schedule a time for you to see the home.

Technology is a huge part of the arsenal of today’s tech-savvy agents. You often see them driving around searching homes using iPads and mobile phones. Now you can easily and efficiently research the home’s facts online and without the paper flyers from the past. Agents who use this technology have access to real-time data and can provide you with the quickest service to help get you the home you want.

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3) Finding the Perfect Home.  Once you have learned the market and you’re ready to consider making an offer, narrow your selections to five to ten homes. The first rule of thumb is “if you don’t love it, don’t buy it.” But there are some exceptions. At the present time that you’re ready to buy, there may not be a “perfect” home in your price range, or your agent may be showing you a bank owned or short sale property. Often these homes are in need of some or much repair, so they can be sold under market and can be a good buy if you’re willing to make cosmetic repairs or do some remodeling.

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Remember a good buy can be a stepping stone to your next home, which may be one down the road that ends up being the “perfect” home. Try not to be deterred by things like the color of the carpet or a dated bathroom, these things can be changed with a few home improvement projects or by hiring professionals to help.

4) Making the Offer. An informed buyer should have a good idea of what the home they are about to buy is worth. Offering price depends on many factors, supply, demand, and timing to name a few. Together with your agent, offer the price you think it is worth, less 1 to 5 percent in a stable market. Why should you offer less than the home is worth? Because more often than not you are going to get a counter offer so leave some room for negotiation. If it is a buyer’s market and the home has been sitting on the market for several months, offer what you think it’s worth less 10 percent. The only exception is when the listing price is fair and there are other buyers competing heavily for that house. That’s a seller’s market, and then you offer full price.

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Know that there are other terms in an offer besides price to consider, the move out date, any problems with the home, and the negotiations that settle who will pay for them.  Remember that some details or costs of repairs can be left for future negotiations beyond the initial offer.  More on that next.

5) Maximize Your Knowledge.  Once your offer is accepted, you are now in escrow. The escrow period is when you will have a time to review disclosures and to get inspections of the property you are buying. It is also during this time you must learn everything you can about the specific home you are buying: whether the home is located in a flood or earthquake zone; if parts of the home were constructed without permits; whether there are easements with responsibilities; whether the homeowners association is involved in litigation and has a proper budget for repairs; the list goes on. Don’t forget to research the home’s school district, even if you don’t have kids this is very, very important factor in a home’s value.

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Once you learn more about the property you are required to remove what are called “contingencies” meaning you approve or disapprove of certain disclosures and inspections.  Its really important to realize that you also have the right to renegotiate the agreement for items that were unknown to you, even if the original contract agreement was “as-is.” (Your agent should know the state law for real estate contractual negotiations like these).

Let’s say during an inspection it turns out the roof needs replacement and it will cost $10,000 to do it. You can then ask the seller to pay for all of half of this cost. The seller can always say no and not pay for a thing but then he or she risks that you will walk away from the deal. Just because you negotiated the price in the beginning and your offer was accepted does not necessarily mean that negotiations are over.

6) Obtaining a Loan. In addition to a good real estate agent, find a good loan agent to work with that has a variety of loan products available and ones that best fit your needs. The current market that is rebounding in many areas, so well prepared or “approved” buyers (those with loan approval up to a certain amount) have a distinct advantage. Many buyers make an offer but have not been preapproved with a lender and that can be a serious disadvantage. It’s best to be prepared and have your paperwork in order with a financial institution who will be loaning you part of the money to purchase a home.

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Ask your real estate agent who she or he recommends as a loan agent, or get referrals from anyone you can. Work with your lender and real estate agent together to schedule the funding of your loan and the signing of loan papers at the end of escrow. Make sure your lender is easy to communicate with and promptly gives you a “truth in lending” disclosure.

7) Moving In and Out.  Plan at least one and preferably two weeks to move. Some people can do it in a weekend, but it’s better to take time so you can lay out your new home as you wish and make sure the power and internet and cable companies can get you up and running. Also you may want to have a moving sale to pare down and start fresh in your new home, so a weekend in between moving dates is a smart choice.

8) Minimize Stress.  We’ve seen it so we know this to be true: moving is one of the most stressful time in peoples lives, and if affects individuals more than they bargain for. When you have a “closing date” mark it on the calendar, take time off work, round up some friends or movers and cleaners to help you transition from one home to another, and spend as much time as you can afford doing it so you’re not in a panic or over anxious.

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9) Enjoy the Process.  As hard as it may sound especially to the novice, take the time to learn all you can and enjoy the process.  It’s an educational and interesting experience and ultimately satisfying becoming a homeowner. Learn the terms of art (from buying to construction), learn how your home works, what your responsibilities are as a property owner (taxes, etc.) and when the dust settles you will look back with a great sense of satisfaction.

10) Make your New House a Home.  In all likelihood (unless you’re buying a brand new home) you’ve just moved into a home where strangers have made all the paint and surface choices, and there’s a good chance you want to change a lot of it to suit your style. A few coats of paint works wonders so that’s a good place to start. Next turn to more permanent changes like flooring, carpet, or tile. Over time, you’ll transition that new house into a place you call home. And maybe you’ll want to blog about that remodeling journey too, like Kate.”

Thank you so much Matt and Dino for sharing your words of wisdom and experience today. If you’re looking for an agent in the Bay Area (north of San Francisco) contact Dino Wilson here.

If you have any additional tips or advice to offer on buying a home, feel free to share them in the comments!

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22 Responses to “Ten Tips for Buying a Home”

  1. OMG, I just did a post about this recently, with my own “10 Things You MUST Know Before Buying a House”! When we moved into our 1973 house, we did all the things you mentioned, about finding a goo agent and what-not, but no one told us about all the OTHER things we should have done. If you don’t mind, here’s the link to the other things you have to check into so you don’t make a collossal mistake:

    http://www.thriftdiving.com/2013/02/10-questions-to-ask-before-buying-a-house.html

    Serena
    Thrift Diving

  2. Wow, what an incredibly helpful post! We’re looking to move to the Portland area from Brisbane, and this is just amazing advice. We’ve been looking at zillow, so hearing about the other sites are great. Any tips on how to find the right agent when you don’t know anyone in the area?

  3. Colette says:

    Hire an independent inspector to inspect the home. It’s worth spending a few hundred extra dollars before you buy as opposed to spending thousands later on a problem that the realtor’s inspector did not pick up.

  4. Having moved recently into a home 1/2 the size of our previous one, this article hit home (no pun intended). We had less than ten days to pack AND find a place to live so yes, it was quite stressful to say the least.

    This article had great tips that we will be sure to use when the time comes for us to buy once again. Thanks!

  5. Danette says:

    We have moved several times. For our last move, we used a buyer’s agent, who works for the buyers only. I highly recommend doing this! Because she had no commission to gain, she was able to give us critical info where appropriate, and ask the selling agent questions we would not have thought about, which enabled us to make a much better buying decision. I hope we don’t have to move again for a long time, but if we do, we will definitely use a buyer’s agent again!

  6. Good tips. I can’t agree more with number 1 – I’ve heard some horror stories over the years from people who have been let down by their agents.

  7. Ashley says:

    We’ve never done the home buying thing the right way. For our current house, we looked at it once and then made an offer without getting a home inspection. It ended up being far more work than we anticipated, and three years later we’re still living in a construction zone (at least we have an end in sight since we’re selling!).

    We’ve since bought another house. We took a walk through it once, and then agreed to buy it. Thankfully we know the people who live there now and the work they’ve done to keep it in amazing shape. But….we don’t know when we get to move in. So, that’s weird.

    I sometimes wish we had of gone a more traditional route! We’ve never done an open house or looked at other listings. It was always either these houses or nothing!

  8. Karin says:

    A long time reader of CG, I was a little worried about this post since I just sold my home on the West Coast and bought an East Coast home all within 3 weeks. But I am so happy to see that I did almost everything this article suggests. Having done a lot of research beforehand, made the house hunt a lot easier.One thing we did was to find the nicest house we could afford that has the most potential in the best school district. We have a young family so that was our priority. Our new neighborhood has a great family-friendly feel and the new house has great bones and a lot of potential. Hopefully, it will all work out! Thanks for the great article!

  9. CentsationalGirl says:

    Hi Kat, are you moving from Australia to the US? For a long distance move, Matt says you may wish to rent for a small period of time to familiarize yourself with the market and the local agents. If you’re committed to buying before you move long distance, he says to ask your employer to recommend some agents in the area to assist you.

  10. Steph. says:

    Paint the interior before you move in. If you can afford to replace flooring too, do that AND paint before you move in! It’s much easier!!!!

  11. We used an agent that had helped almost everyone in my husband’s office, so she was adamant on finding us the perfect home. We didn’t pay anything for her service though.

    Some of my tips: If work has to be done on the house, demand it be done before closing. The sellers said they’d buy us a new evaporative cooler, but they wanted to use their person and they could only come after closing. Well, we ended up having to pay an extra 1k for it. Grr!

    If you have a house in mind, drive by it at all times of the day like morning, noon and night. We chose our house because the neighborhood was quiet at night. We didn’t, however, stop by in the afternoon. We live near a middle school, so our street gets a bit busy with people waiting for the kids to get out of school. Nothing too terrible, but if that’s a problem for someone then they may want to pass.

    Don’t be afraid to ask the neighbors about the house and neighborhood. We didn’t do it, but we are fortunate that our neighbors were friendly. It’s also good to find out how many houses on your street are rentals. The reason? You may or may not want to live in an area where people are constantly moving and out.

    Check out everyone’s yards on your street and in your hood. See how people are keeping up with their own homes. You don’t want to be in an area where people are neglectful. It can bring down your home value.

  12. meg says:

    Thank you for posting htese tips – very helpful!
    We are starting the home buying process soon. Will keep these in mind. :)

  13. CentsationalGirl says:

    Those are EXCELLENT points Nessa about driving the neighborhood at different hours and examining how neighbors care for their yards and homes!

  14. Jonathan says:

    How long does it take to move through escrow typically? For example, if an employer is paying for moving costs but needs you to begin in 60 days, how realistic is it to be able to move in on time? Any suggestions if the perfect house will sell, but not be ready until a few weeks to a month after you need to start work?

  15. Lacy Meeker says:

    So cool! I am not in the least bit looking to buy a house, but the information is good to have even now! Thank you!

  16. Rachel says:

    Hey Kate- feel like I’m butting in, but I was a Realtor for six years and I just wanted to point out some of the terms are a little different in other parts of the country. For example after an offer is accepted in Oklahoma we say we’re “under contract,” and the word escrow refers to a certain account set aside for homeowners insurance and taxes. Also, agents in Oklahoma City won’t usually show properties to buyers unless they are already pre approved with a lender. Lastly there is never a fee for buyers to use a Realtor here.

    All of the information was very helpful, I just wanted to point these things out since sometimes buyers were HGTV watchers and thought we didn’t know what we were doing as agents, when really it was just the fact that terms and processes varied a little.

  17. CentsationalGirl says:

    You’re not butting in at all Rachel, we all value your examples of different terminology, thank you for sharing! I know it other parts of the country attorneys handle real estate contracts, not realtors. That’s so interesting that buyers in your state don’t pay a fee to a realtor, how does that work? Seller pays?

  18. CentsationalGirl says:

    Escrows vary in length, it’s all negotiable, but 60 days is a good time period, it can be 30 or even up to 120.

  19. Mark Davis says:

    It’s not only about learning the market, but learning about knowing the neighborhood as well. I always suggest that you spend one or two days walking around outside and getting to know what people are doing and what’s around you.
    Look and see if you see kids walking around or adults jogging, what you see outside will greatly impact your moving experience.

  20. Rachel says:

    Thanks Kate! In Oklahoma sellers alway pay Realtors. When the listing agent negotiates their commission half of that goes to the buyer’s Realtor, whoever that may be. So for example if the property is listed for a 6% commission on the sales price 3% is offered to the buyers Realtor. If the listing Realtor works for both the seller and buyer they get the entire 6%.

    Offers are usually written with a closing date in 30 days and usually the property does close 30 days from the time an offer is accepted. A 45 day out closing date is not appealing to sellers here. Also the loan funds at the time of closing. After the buyers sign all of the paperwork the seller walks away with their check. I know in some states it can take weeks for the loan to actually fund.

  21. Barbara says:

    1.) Use – but do not abuse – your agent. Do your homework ahead of time and you should be able to find the house you want in less than 10 viewings.
    2.) Most people buy in the spring. Try to picture the property in other seasons, especially if you will be living in snow country. For example, on-street parking can look fine in May, and not so nice in January.
    3.) ALWAYS look at the house TWICE before putting in an offer. Trust me, there will be things you did not notice the first time, and this is an important decision.
    4.) Your list of “must haves” should have things like number of bedrooms (that’s hard to change) but not the material the kitchen counters are made of, which can be changed.
    5.) Just accept the fact that everything in the process is going to cost more than you thought it would. Leave a healthy margin for error in your home-buying budget. There will always be some surprise expenses. Always.

  22. CentsationalGirl says:

    Fantastic tips Barbara, thank you!!

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