While the housing market is down for the year, there are still homes for sale that are being offered at competitive prices. Interest rates are still at all-time lows too! Making your dollar stretch farther. If you’re in the market for a new home, now just may be the perfect time to make your purchase! Before making any decisions, consider these ten important things that you should know before purchasing.
1. Understand the responsibilities that go with homeownership
If you’re a veteran of the home buying game, you already know this well. This primarily applies to first-time home-owners. Purchasing a new home is not always a straight path. There are many factors that come into play and much to be considered. Research is utterly important and plays a major role in the purchase of a new home. Once the research has been done and you have a better understanding of the process, it is strongly recommended that you speak with a Realtor. Complicated issues often arise when you own your home and the smartest most successful buyers are often those who have a thorough understanding of all that goes into purchasing and owning a home, as well as knowing your rights as a buyer.
2. Before you begin looking, speak with a mortgage person and get pre-approved for a loan.
The pre-approval process is a more thorough qualification than the pre-qualification. A pre-qualification simply tells a Realtor that you are serious about purchasing a new home. It’s not a very detailed process. A pre-approval tells all parties involved that you are financially ready to purchase a new home and you know how much you can afford to borrow. In a seller’s market, often times this is a requirement so as to not waste anyone’s time. You will be confident that you are financially fit to make such a purchase and so will the seller. This process means that the bank or mortgage lender will be granted access to all your finances – your assets as well as your liabilities and debt, if any. This process will also inform you as to what financing options are available to you in today’s market.
3. Location, location, location
We’ve all heard this saying and for good reason. Know where you want to be. Think about your lifestyle now as well as what you think it could be in 5 or 10 years. Will you need to commute to a large city nearby? Do you have school aged kids or are you considering children? Do you want to live in a neighborhood or in the center of town? Would you prefer a smaller home in a more expensive town or a larger home a bit farther away? What things are most important and what things are negotiable for you?
These are all important factors that you should take into consideration. If you are new to an area you may want to think about renting for 6 months or a year in order to familiarize yourself with the area. Take the time to really get to know your surroundings. You won’t regret it.
4. Photos can be deceiving
There seems to be trend lately where photographs are touched up, lighting is adjusted and even virtual changes are added to marketing materials. Often times fish eye lenses are used that distort the size of rooms and counters. Stagers and stylists are brought in to make a home look more inviting. On the flip side, depending on the agent, they may have taken their own phone pictures that just don’t do the home justice. If you are unable to physically view a property yourself, at least hire as realtor who will do a virtual live tour with you of the property, answering all of your questions and showing all of the house.
Enlist your agent to show you homes that meet your criteria as well as those that may be similar. Often agents will have suggestions that you might not ordinarily have chosen but now might be worth considering. Public open houses are another wonderful resource to be taken advantage of. If you attend an open house, it’s important to let the host know that you are already working with an agent.
5. Know your needs and wants
Once you’ve narrowed down where you want to live, you then need to figure out what it is that you have to have in your home. Do you want a newer home with all the amenities or an older historical one that you can work on and renovate over the years? Do you want a large yard for children and pets, or would you prefer something requiring less maintenance so you won’t have to go out and spend your summer weekends mowing?
Do you want a porch or a fireplace? How many bathrooms must you have? Do you have young children? Is the house child-friendly? Do you like to entertain? Does the house have a good flow and a guest room? Make a list of all your Must-Haves. Then take a breath, because most likely unless you are building a custom home, you won’t find all of your desires in one home. As you look at your potential homes you can start to prioritize which of these Must-Haves are truly necessary and which ones you can do without. Be open to suggestions from your Realtor.
6. Sometimes you should look past the pink paint
I highly recommend that all of my sellers do some staging and preparation before listing their homes for sale, but it’s not always the case that they follow my advice. While looking at homes, look past the seller’s decor, these things can be easily changed. Look at the structure, the layout and flow of the home. Does it work for your needs? Does the house have a good foundation and “bones”? Will there be enough room? Are the rooms large enough for your belongings to fit? Imagine the possibilities and don’t sweat the small stuff unless you are adamant about having it completely move in ready. If that is the case, maybe you should only consider new construction. But remember, when the home is yours, you can make it your own personal style.
7. Have a backup
It’s important to have a backup home. There are a number of things that can happen. You may have found the home of your dreams, but the seller may not agree to your price and terms, or issues may come up during a home inspection that are unable to be resolved. It is a good idea to be emotionally leveraged so that if your dream home does not work out, you have a plan B to fall back on.
8. Know what the market value really is
Ask your agent to do a CMA (Comparative Market Analysis) for you. There are many websites that will give you an estimate on the value of a home, but the comparable information is not always up to date and may not always be accurate. These sites do not know the local market like your agent does.
Depending on your home and your market a CMA report can vary in length from a couple of pages in length to a very comprehensive guide consisting of 50 or more pages. The length and complexity of these reports depend on the agent’s business practice as well as the size of your neighborhood. Standard comparative market analysis reports contain the following data:
- Active listings – This includes all the homes in your area that are similar to yours that are currently on the market.
- Pending Listings – These are formerly active homes that are pending a sale but have not yet been sold.
- Sold Listings – These comparable homes have recently sold and the amount for which they sold is listed. This is important information to you, the seller, and can help you determine an accurate and fair price to list your own home. It is important not to overprice your home.
9. Know all that you can about it
It might be worthwhile to visit the town hall or their website to find out more about the property. If the home has a history of adding additions or remodeling take some time to talk with the building and zoning departments to see what work has been done to the house, and that permits were pulled and a certificate of occupancy was granted. Building and zoning may also have a survey on file for you. If a recent survey has not been created you may want to consider getting your own done. There are other matters you should know as well, especially in light of any recent weather-related events.
You should find out if the home is in a flood zone, and whether or not you need an elevation certificate for your insurance company. If you are planning to do work to the home, you will be able to find out what the town and FEMA require you to do before any additional work is done to the home. A visit to the tax assessor’s website will let you know if there are any liens on the home. The sellers are required to complete a Seller’s Disclosure usually during the offer period and any known issues must be disclosed. If there is any uncertainty this is the time to dig further.
10. Be prepared and breathe during the inspection process
An inspector’s job is to find everything wrong with the house, if they don’t they aren’t doing their job. Many of these issues that will be listed are small, insignificant things. Others may not be quite so small or insignificant and yet others could potentially be quite grave. After the inspection, make a list of your priorities so that you can decide for yourself what’s a non-issue and what could potentially be a large problem. You can always discuss these matters with professionals to give you more information, as well as an estimate of the work needed to resolve the problem.
Becoming a homeowner whether you are new to the game or a seasoned veteran requires your attention. Buying a home is one of the biggest purchases you will make in your life. Buying a home can be different every time with varying degrees of issues, circumstances, and procedures.