Buying your new
home is a serious investment & venture which can be an absolute
pleasure or a massive headache. Not only are you investing in a home,
you are investing in the dwelling, the area and your future
When buying a home you are sure to have many questions. For
example, "In what area can I find a home that suits my needs?", "How
much money will I need to afford the monthly payments?" and "How long
will the home buying process take?"
Below are some tips
that you might find useful in the home buying process. Please feel free
to click on one of the links below to read more.
- Advice for First Time Buyers
- How to Negotiate with Sellers
- Surviving Escrow
- Pre-Qualification: Meet with a mortgage
lender and find out how much you can afford to pay for a home. Be
prepared to provide them with all of your financial details, (income and
expenditure) to enable them to give you a quick response.
- Pre-Approval: While knowing how much
you can afford is an important first step, sellers will be much more
receptive to potential buyers who have been pre-approved. You will save
time and also avoid being disappointed when going after homes that are
out of your price range. For a Pre-Approval, the buyer actually applies
for a mortgage and receives a commitment in writing from a lender,
subject to the final negotiation, and valuation ratio. Be prepared to
provide a copy of this to the Agent. This way, assuming the
home you're interested in is at or under the amount you are
pre-qualified for, the seller knows immediately that you are a serious
buyer for that property. Costs
for pre-approval are generally nominal and may vary amongst lenders
.You may be permitted to pay them when you close your loan.
- List of Needs & Wants:
Make 2 lists. The first should be your must have (i.e., the number of
bedrooms you need for the size of your family, a one-story house if
accessibility is a factor, etc.). The second is your wish list,
things you would like to have (pool, garage, etc.) but that are not
absolutely necessary. Realistically, for a first-time buyer, you
probably will not get everything on your wish list, but it will keep you
with a Professional: Consider working with a real estate agent to
take a lot of the hassle out of looking for a home and remembering that
they do this all the time. It is their business to know things you won't
be aware of.
- Focus & Organization: Keep handy a
list of the items that will assist you in maximizing your home search
efforts. Such items may include:
- A file of the properties that your agent has
shown you, along with ads you have cut out from the newspaper.
- Paper and pen, for taking notes as you
- Instant or video camera to help refresh your
memory on individual properties, especially if you are attending a
series of showings.
- Location: Look at a potential property as if
you are the seller. Consider if a prospective buyer would find it
attractive based on school district, crime rate, proximity to positives
such as (shopping, parks, public transportation access) and negatives
such as (abandoned properties, garbage dump, source of noise) features
of the area.
- Visualize the house empty & with your
decor: Are the rooms laid out to fit your needs? Is there enough
- Be Objective: Instead of thinking with
your heart when you find a home, think with your head. Does this home
really meet your needs? There are many houses on the market, so don't
make a hurried decision that you may regret later.
- Be Thorough: A few extra dollars well
spent now may save you big expenses in the long run. Don't forget such
- Asking for an inspection & mortgage
contingencies in your written offer.
- Have the property inspected by a professional
- Request a second walk-through to take place
within 24 hours of closing. You will want to check to see that no
changes have been made that were not agreed on (i.e., a nice chandelier
that you assumed came with the sale having been replaced by a cheap
All the above may seem overwhelming but that
is why having a professional working with you and keeping track of all
the details for you is highly recommended. Please feel free to contact us to discuss any of these matters in further detail.
How to Negotiate with Sellers
Buying a home is
one of the most important purchases most people will make. In order to
make the right decision the first time, potential buyers need to be
prepared. Consider the following before starting negotiations:
Research the housing market in the target area. Once
you have information about the general area, focus on the particular
property and seller. Look for answers to questions such as:
- Why is the homeowner selling? (If they're
moving because they find the area undesirable, you might want to
consider this issue.)
- How long has the home been on the market? (If
it has been on the market for a long time, perhaps there are negative
facts about the property that you need to know.)
- What is the seller's time frame for selling
and moving? Does it fit within your needs?
- Are there any defects in the home or problems
with the surrounding neighborhood? Is there a new construction project
in the area that will lead to major traffic congestion and noise?)
- Arrange for an appraisal of the property
should you decide this is the one. Note that it is a requirement by the
Lenders and is usually requested by them to have an appraisal done.
The cost of an appraisal can be from $400 and up depending on the
complexity of the property.
As the potential buyer, you want the advantage. While you
would like the seller to answer your questions, reveal very little about
your circumstances. Do not give the seller any personal information
such as your income, the maximum you are able to pay for a down payment
or when you want to move. Make sure that your agent knows not to reveal
any such information to the seller or his/her agent.
Also, do not let the seller see how much you want the property. If you
appear desperate or overly enthusiastic, the seller then has the
stronger bargaining position. When meeting with the seller or listing
agent, keep your emotions in check.
Find out if the seller needs to have the sale closed
sooner rather than later. If the seller is feeling pressured to sell,
use that to your advantage in negotiating. Even if you, the buyer, are
the one with the deadline for purchasing a home, don't let yourself be
rushed into making concessions or a purchase you may regret later.
You've Opened Escrow, Now
Congratulations, you are on your way to owning your
very own home! Follow these suggestions (and your realtor's advice) so
that settlement will go as smooth as possible.
You will be asked
for a down payment on the home you are purchasing. Remember the more
you put down toward the total price of your home, the less time it will
take you to pay off and the less your mortgage payments will be every
month. But keep in mind any repairs or upgrades you may want to make.
During this period of purchasing your home, you are going to
need an attorney to act on your behalf and the vendor has his own
attorney. Usually the Vendors attorney holds the deposit but in some
cases this can be negotiable. The attorney's will work and coordinate
much of the activity that goes on during the escrow period. This
deposit check may also be held in the broker's trust account. Make sure
that there are sufficient funds in your account to cover this check.
The deposit check will be cashed. Assuming the sale goes
through, this money will be applied to the purchase price of the home.
If for any reason the sale is not consummated, you may be entitled to
receive all of your deposit back, less standard cancellation fees. In
certain instances, the seller may be able to retain this money as
liquidated damages. Prior to executing a purchase contract, it would be
wise to speak with your counsel regarding whether or not it is your best
interest to have a liquidated damages clause as part of the contract.
The period that you are "in escrow" is often 60 days, but may be
longer or shorter. During this time, each item specified in the
contract must be completed satisfactorily. By the time you have opened
escrow, you have come to an agreement with the vendor on the closing
date and the contingencies. Each contract is different, but most include
contingency: this should be completed as soon as possible after the
contract to purchase is signed as unsatisfactory results of the
inspection may mean that you will want to cancel the contract.
- Financing contingency: once the
contract is signed, you have a certain amount of time to secure funding.
If, for any reason, you are unable to secure funding during the period
of time granted to you by the contract (and the seller will not provide a
written extension of time), you must decide whether you want to remove
the contingency and take your chances on getting a loan. You may choose
to cancel the purchase contract.
- Marketable title. A requirement
that the seller must provide marketable title.
Your attorney will
review the title report. The title must be "clear" to ensure that you do
not have legal issues regarding your ownership.
homeowner's insurance. This will probably be required before you can
close the sale. It would be in your best interest to apply for insurance
as soon as possible after the contract is signed.
utility companies to schedule to have service turned on when you close
Schedule the final walk-through inspection. At this
time, you should make sure that the property is exactly as the contract
says it should be. What you thought to be a "permanently attached"
chandelier that would come with the property might have been removed by
the seller and replaced with a different fixture entirely.
You've made it! Once the sale has closed, you're the proud owner
of a new home. Congratulations!