How Not To Pay Too Much For Your Home

Whether you are a first-time home-buyer or an old pro, the process of buying a home is an intense and time-consuming adventure. It is also emotional journey filled with difficult choices. You want to be sure that this is the right home for you and your family today and will continue to fill your needs in the future. There is usually a dollar sign attached to every choice you make and nobody wants to pay too much. The next few steps are designed to help you become a savvy buyer, by pointing out some of the pitfalls inherent in the home-buying process.

#1 Before you shop know what you want.

I’m sure you have a pretty good idea or what your perfect home will look like. It has everything doesn’t it? It has everything you NEED and everything your heart desires.  However, when it comes time to buying a home, the desires cost more. That’s why it’s a good idea to have a “GOT TO HAVE” and a “IT SURE WOULD BE NICE” list. This list will help you determine what your basic needs are: how many bedrooms and baths, parking, etc. Once you know what you NEED then you can look at what you’d like them and see if you can afford to have them. With such a list, you’re less likely to be caught up in the rush of the search. You’ll have a good idea of what you need, within your price range, and if you can afford those additional items.

#2 Get pre-approved prior to looking at homes

Talk to your loan broker before you go any further. Know how much you can afford and save you and your Realtor time.  Be sure to get a mortgage commitment in writing. You want to have a PRE-APPROVAL in hand before you write an offer

#3 Have the right people in your corner

Buying a home is a complicated process. From choosing the right mortgage, to finding a home inspector, to viewing available properties, there are many steps involved. With a Realtor® you’ll have access to these services, already in place, and highly recommended. A good Realtor® has the knowledge and experience developed from many years of helping both buyers and sellers. During this time they have developed a network of people, from lenders, lawyers, home inspectors and movers, to assist both homebuyers and sellers.

#4 Communicate with your Realtor®

Spend time looking at a few homes with your Realtor® so she’ll have a good idea of what it is you are looking for. Communicate your needs and fear with her.

#5 Location, Location, Location

A home does not stand on its own. The value of a home is affected by the surrounding homes. Don’t let your emotions determine your purchase. Think resale. The resale value of your home depends largely on location. People want a desirable community. When viewing listings ask your self: How does this home compare to others in the neighborhood? Are yards fenced? Are there many children playing in the streets? Are front and backyards and the exterior of the homes properly maintained?
Talk to the people living in the area. If you like the community, examine the home you like. Generally speaking, extremely large homes surrounded by smaller homes tend to appreciate less than a large home among other large homes. Alternatively, the smallest home in the neighborhood tends to stand out by the other homes on the block. Sometimes, it could take a bit longer to sell a smaller home, as some people are reluctant to pay extra for the neighborhood. Additional factors that affect the property value of a home include traffic, sounds, smells, zoning bylaws. Be objective. Be sure you are completely satisfied with the neighborhood. If you choose a neighborhood with problems, you likely won’t get as much as you hoped when it comes time to sell.

#6 Ask Your Realtor®

Your Realtor® is trained in all aspects of Real Estate, including understanding supply and demand, economics and the neighborhoods of the city in which they practice. They should view listings as they come on the market. Realtors are at the hub of knowledge and information about housing trends and prices. A good Realtor can save you time and money, by thinning out your prospects to those that meet your requirements. Knowledge of the available homes in your neighborhood is one of your Realtor’s strongest assets. With the aid of the MLS, a Realtor is notified within minutes when a home becomes available. Click here to search the MLS and to be notified by e-mail when a new property that matches your needs comes on the market.

#7 Leave your heart at the door

When people purchase a home by following their hearts instead of their heads problems may develop later. Shopping for a home is an emotional process. Using your head and asking for advice from your Realtor could help you avoid costly mistakes.

#8 Watch out for those red flags

When evaluating a home, be sure you know the difference between an acceptable and an unacceptable problem. Cosmetic items like old paint, torn carpeting, and ugly wallpaper can be easily fixed. Major problems such as huge foundation cracks, water damage, inadequate electrical systems, and rusty plumbing could turn your dream home into a money pit.

#9 Hire a home inspector

A home inspection gives a Buyer detailed, in-depth and unbiased information about the overall condition of the home before contingencies are removed.  A qualified inspector will evaluate the physical condition: structure, construction and mechanical systems. They will identify items in need of repair and estimate the remaining useful life of the major systems, equipment and finishes.

#10 Is a fixer a good idea?

Purchasing a home that needs some work could be a challenge and a chance to make money. Often, a fixer-upper can be purchased below market value, and repaired to bring it to good sale condition with a profit realized. This depends upon the price of the home, the amount of repairs needed and the market conditions at the time of sale. If the price isn’t right, you may not recover your investment of time, trouble and money. Know what you’re doing or partner up with someone who does.

#11 Consider your future needs

Take a look at your life now and down the road. Will you be needing extra space? Maybe you’ll start a home business or have a baby or maybe your child will be moving back home? It may be easier and less expensive if you purchase a home that can meet these needs now, rather than moving up to a larger home a few years later.

#12 Proceed quickly

When you´re ready to buy, move fairly quickly: good properties usually sell fast. This is especially true when there is a shortage of homes available. However, when you work with a Realtor, you have access to the most current technology. As part of the MLS network, a Realtor has access to properties within hours of when they are listed. Technology works to your advantage. When a Realtor knows your needs, they will notify you when properties that meet your criteria become available. Many Realtors now have personalized websites which allow you to sign on and receive notification of these listings via email. You save time and effort, and you can view only those homes that come closest to your needs.

#13 Who Works For You?

In any real estate transaction, be very clear about who is working for whom, and what the relationship represents. Many people believe that the agent they are working with automatically represents them and their interests. Yet, without specific disclosures this is not true. Unless otherwise stated, the agent represents the seller in transactions for the sale of a home. This agent, as part of his or her fiduciary duty, must ensure his loyalty protects the seller’s position throughout the entire process.

#14 CMA

A Comparative Market Analysis (CMA) shows you the sale prices of comparable homes in the neighborhood, along with asking prices of other homes in the area currently on the market. Ask your Realtor to provide you with a CMA in writing before you decide on a price.

#15 Know The Seller’s Motivation

Knowing about the seller’s reasons for moving could work for you during negotiations. A seller who has been transferred to another city, may be more motivated to sell than someone who is still shopping for a new home. A vacant house, a house that has been on the market for several months and reduced in price, could also be indications of a motivated seller.

#16 Keep Your Motivation To Yourself

Conversely, information could be used to your detriment. Information about your mortgage, size of down payment, move-in deadline, or circumstances for buying, could be negotiating factors. While you want your Realtor to know these details, don’t reveal any of this information to the seller.

#17 Stay Cool

Emotion could cost you money. If the seller knows how interested you are in the property, this might be seen as a financial opportunity. You could be an easy target for a higher price. On the other hand some Sellers are very emotional about their homes and are looking for someone to love it as much as they do, this may mean more than dollars to them. This is a definite advantage of working with a professional Realtor. Trained to be non-emotional and be sensitive to everyone, a Realtor can ensure you get the best price.

#18 Feel Good About The Deal Or Don’t Sign

Not much to say here. Listen to your gut.

#19 Negotiate

Most people expect to haggle over the price. That’s often why the list price is a higher than the selling price. There is always room for negotiation. If you want to get the best home possible for the least amount of money, then negotiation.

#20 Multiple Offers

The Seller’s agent may try to scare you into writing too high an offer or before you are ready. Be prepared to walk away. Another interested Buyer does not make the property worth more. Know what the fair market value of the house is before you write (CMA) then don’t be pressured or tricked into going any higher. Let someone else overpay, there is another house for you around the corner.

#21 Read the Transfer Disclosure Statement

By law sellers must disclose all known material defects of a property. This will come to California Home Buyers in the form of the Transfer Disclosure Statement. Read this document carefully. Show it to your Home Inspector and let him/her help you determine the importance of the defects.

#22 Watch For Hidden Costs

There are more costs to buying a home than the mortgage. You will be responsible for mortgage insurance, appraisal fees, escrow fees, inspection fees, transfer taxes, title insurance, inspections, etc. Your Realtor can give an idea of the costs associated with buying a home that are beyond the final negotiated price of your home.

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