House Hunting 101

House hunting can be a scary experience, especially if you are new to the biz. With a bit of prior planning and homework, you can make the experience less hectic and have fewer surprises.

The first thing to do is go to your bank or financial institution that you want to deal with and tell them you are thinking about buying a home and would like to use them for financing. You might say,

“Wait a minute, I haven’t even picked out a home yet.”

That’s OK. The “bank” will get started right away to qualify you. They will let you know what you can afford based on your income, how much down payment you will need, what your closing costs are going to run, what your payments will be etc. They will calculate what your property taxes will be and what your insurance will run.

They will give you ideas. For example, if you don’t have enough down payment, “ Could a family member “gift” you the down payment?” or if you don’t have enough to cover closing costs, “Would the seller be willing to help with them?” (BTW, We do.)

They will also “pull” your credit. If your credit score is not high enough, they should let you know what you need to do to raise your score. Or, if you need more credit, they should tell you how to acquire more. They might suggest that a family member co-sign to help you get the loan.

And all of this is done prior to finding your home.

You need to do all of this prior to finding a home, because there is no worse surprise than finding out that you are not qualified, or you have picked out a house bigger than your wallet and will have to settle for something less.

Once you’re pre-qualified, the actual house hunting can begin. It usually is the most fun part of the whole process. While the “bank” is verifying your employment, address, SS#, etc. you’re out looking for your new home. By now you have made a list of all the things you want your new home to have, like: 3 bedrooms and 2 baths, new kitchen cabinets with a big sink, a private master bath, carpet, and fenced yard. You also may need to know what schools the home is located near. Is the home on city sewer? Or, on a cul de sac? Is it energy efficient? How old is the roof? What part of town is it in? Is there a neighborhood association (and dues) etc? And a whole host of your own questions. One great source of information is the neighbors. They’ll tell you about your house and the neighborhood.

“This is IT”

Finding the home you like, brings you closer to buying. Making an offer sounds scary, and it can be. You should hire a real estate attorney. He will be an extra expense, but the piece of mind alone will be worth it. He works for you, not the seller and not the bank and he should take the surprises out of the process. Prior to making an offer, I suggest getting a blank offer form from your attorney and reading it. If you have any questions, ask your attorney to explain it to you. You may not like that form, so ask for another one. The forms are all different and while covering the basics, they may cover different areas of real estate that are of specific interest to you. Once you have found an attorney and a form you like, you can make an offer with confidence. Remember:

“Everything is Negotiable.”

The price, the furniture (if you want it), new carpet to be installed, paint the bedrooms pink, remote control for the garage door, adding motion detector lights, or tint to the windows, remove that pile of leaves prior to closing, or add more insulation are all negotiable items.

Be sure to be specific about what you want to stay (It might be why you are buying the house). “The rose bushes out beside the master bedroom are to remain.” “The appliances go with the home.” If the house is vacant, I have heard the clause, “Nothing is to be added or removed from the property upon acceptance.”

You should also have contingencies in your offer like, “Subject to buyer obtaining financing at such and such interest rate for so many years” and “Subject to an appraisal that is equal to the purchase price. And, “subject to a acceptable home inspection of the buyer’s choosing” (among other contingencies). Usually the buyer pays for the home inspection, but it is negotiable. Home inspection is another expense and the “bank” may not require one, but I would not buy a home without one.

Once your attorney approves of the offer, take it to the seller. He may take your offer or he may “counter” your offer with another offer of his own. Either one is not unusual. Take the counter to your attorney and continue until (hopefully) you and the seller agree.

The bank will order the appraisal, you order the home inspection etc. Begin to remove the contingencies by satisfying yourself and your lawyer that they have been met. Once your attorney approves of everything, set a closing date and

Start packing!