The home search and buying process is of one of the most fun and rewarding things you can do for yourself and your family ... but also one of the most challenging. It often comes as quite a surprise to some people how much of an emotional roller coaster the process can be as well. Remember your first car? How long did you deliberate over which model, how much, what color, how old, etc. Did you go back to the dealer over and over again, looking through the lot for the "perfect" one? Or did you drive by the house where the car was parked and picture how it would look in YOUR driveway? You get the idea!
When the time comes when you begin thinking about buying a home, it's important to remember that this is unlike any other buying decision you've ever made. And because the process is so involved, if you're not aware of the pitfalls ahead of time, it's easy to wind up making very serious, sometimes costly, mistakes!
Shopping for a real estate is fraught with emotion. It can also be a very time consuming process. There are a myriad of details to consider as well...many of which probably never enter your mind until your in the thick of the process. And in the excitement centered around the home buying process, it's easy to overlook some important areas. For example:
- Are you paying too much for the home? Or are you "out-smarting" yourself right out of a home?
- Is this the RIGHT home in the first place?
- What about other buyers...what are the chances you could lose this home to someone else?
- What about the financing...what kinds of things should you watch out for?
Here are some suggestions to help you make the most of your home search and buying experience
MAKING AN OFFER WITHOUT DOING YOUR "HOMEWORK"
It's so easy to get caught up in the excitement. The decorating is great, the house is in just the right location, and it's been maintained to perfection. But what about the price? Is it high? Is it a bargain? Without insightful research on the market and similar homes, you could wind up offering thousands too much ... or just as bad, you could be shooting yourself in the foot by not recognizing a steal of deal, well within your budget, and not offering enough.
Case in point. Buyers often think they're "getting a deal" if they're able to negotiate a certain percentage off the seller's asking price. But take a look at this real life situaton and decide which buyer got the better "deal":
Property "A" and Property "B" are virtually identical. They have comparable locations, they're the same floorplan, they have similar lots with similar beautiful views. Both are in terrific condition and decorated with taste and in versatile, neutral tones. For all intents and purposes, as we said, these properties are identical. For the sake of this example, let's say the properties would likely have a "fair market value" of $200,000.
- Property "A" is currently listed for sale at $220,000. Buyer "A" is well qualified and fancies himself a tough negotiator. After a couple of days going back and forth in negotiations, he's able to get the seller to come down $11,000, and even provide a $5,000 credit to the buyer to help with his closing costs. Buyer "A" feels pretty good....5% off asking price plus a $5,000 credit.
- Property "B", on the other hand, is listed for $195,000 and when Buyer "B" sees it, he recognizes it as a good value. A couple of other buyers come to the same conclusion and decide to make offers as well. Buyer "B" decides to offer higher than asking price and places his bid at $198,000, asking for just $2,000 in closing costs. In other words, he is still paying higher than asking price, and the seller accepts his offer.
Which buyer did better? The point here is simple ... the discount off asking price is not the criteria for determining "value". Sometimes even paying full price can represent a "steal of a deal".
IS IT REALLY THE "RIGHT" HOME FOR YOU?
It happens all the time. I call it "pizzazz appeal". A buyer walks into a home and is absolutely wowed by the decorating, condition, perhaps the neighborhood of a particular home. Sometimes you really need to step back an forget about the pizzazz ... and think about how you will "live" in the home. Think about the furniture you already have...how big is it, what type of room would it be in. Think about your family and what their ages are. If they're infants and toddlers, do you really want them sleeping on a different level in the house than you are? Even if everything else in the house is great, will that really fit your needs and lifestyle? If you're a car hobbiest, and there is no place to work on cars, will the house really work for you, even if it does have the greatest stainless steel applianced kitchen on the planet? If you have a large family and absolutely love to entertain, would the most beautifully decorated house in the world work for you if it has no living or entertaining space in it?
Solution? Before you actually start looking at homes, begin making a checklist. Divide your checklist into your requirements and your wish list (things it would be nice to have, but are not absolutely necessary). Then, we you actually begin looking at homes, don't be afraid to modify your list. It's not uncommon for requirements to evolve as buyers begin to see what is available in their price range and with the parameters they initially set.
GETTING YOUR FINANCIAL "DUCKS IN A ROW"
If the financial crisis of 2008 taught us nothing else, it certainly taught us about giving serious thought to our financial decisions...including our home mortgages. Before you ever begin looking for a home, it's very important that you speak with a couple of well qualified lenders. It's best to use lenders who are referred to you, either by friends, coworkers, or family who have used them and been pleased with their services, or by your real estate agent. Your agent is in a very unique position because they get to see up close and personal what kind of a job a lender is doing for a buyer. They are also in communication (if the agent is a good one) with the lender throughout the loan process, so they know whether the lender stays on top of the loans in progress or not. Your agent will know several lenders who have already proven their skills in servicing their buyers ... they can also tell you some of the lenders you'd be wise to avoid!
When you have a pretty good idea which loan officer you're most comfortable with, tell them you'd like a "Pre-approval" for a loan. This will not only give you a great idea as to what price range of home you'd be qualified to purchase, it will also put you in a much better "negotiating position once you do find that home.
There are also some questions it would be wise to ask any lender you interview. To help set you on the right track, take a look at this Lender Guide.