Whether you are buying your first home or your fifth, the process of buying a home
can be an emotional, time-consuming venture. Feeling that, in the end, you made
the right decision and got a good deal can make all the difference.
As with most major decisions, the amount of work and research you undertake
before you start shopping can have a dramatic effect on how well you do in the end.
#1 Do you really need that backyard tennis court?
Everyone can picture their ideal home. If you haven’t thoroughly prepared yourself
prior to viewing houses, chances are that you will find what you think is your ideal
home, and will wind up paying too much for it.
It is essential to treat the buying process in a slightly detached manner. Those who
fall in love with houses usually pay too much.
That’s why it’s recommended that you develop a list of needs and one of wants.
When looking at houses, make sure that they cover all of your needs – things like
adequate space, a good neighborhood, perhaps a garage – and then have fun with
items on your wants list. Treating the process in a regimented manner will help you
to make a rational, informed decision.
#2 Get pre-approved
Visit your lending institution prior to shopping. Be sure to get a mortgage
commitment in writing. Being pre-approved gives you a solid price range, and lets
your Realtor® and potential sellers know that you are serious and not just a browser.
#3 Get the right people behind you
Buying a home is a complicated process, with many people involved. Having the
right people on your side can make a big difference. An experienced, dedicated, and
knowledgeable Realtor® can put a team of advocates, including lenders, lawyers,
home inspectors and movers, on your side immediately.
The more you share with your Realtor®, the better he or she will be able to represent
you. Letting your representative know exactly what you’re looking for, in terms of
needs/wants, price range, and location, can eliminate unnecessary trips to unsuitable
homes and that focus can help ensure that you wind up in the right home.
#5 Location, location, location
It’s still true. The desirability and resale value of your home depend on location more
than any other factor. People want a desirable community that includes character,
quality of schools, access to work, major transportation arteries, recreational facilities,
On your viewing trips, take a careful look and ask the following questions: How does
this home compare to others in the neighborhood? Are yards fenced? Are there many
children playing in the streets? Are the front and back yards and the exteriors of the
homes properly maintained? The less expensive houses in a better area tend to
appreciate faster than the most expensive houses in a less desirable area.
Additional factors that affect the property value of a home include traffic, sounds,
smells, zoning bylaws, and many others. 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 with it comes time to sell.
#6 Use your Realtor’s® knowledge
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. A professional Realtor® can do
much of the work for you, by reviewing your needs, reviewing available properties,
and making an informed match. A comprehensive knowledge of the available homes
in your neighborhood is one of your Realtor’s® strongest assets. With the aid of
computerized systems, a Realtor® is notified within hours when a home becomes
#7 Pay attention to red flags
When evaluating a home, be sure you know the difference between acceptable and
unacceptable problems. Cosmetic items like peeling paint, worn carpeting, or
unattractive wallpaper can be easily remedied, and can be used as negotiation items,
as there will be costs involved in updating the home.
Major problems, however, are clearly red flags. Look for items such as major
foundation cracks, water damage, outdated electrical systems, and inadequate
plumbing. These items could be too expensive to remedy to make the home a
#8 Hire a home inspector
A home inspection is an inexpensive way to gain peace of mind, and guard your
pocket book. A proper inspection will cover all areas of the house including
foundation, electrical, heating, plumbing, floors, walls, ceilings, attic, roof, siding and
trim, porches, patios, decks, garage and drainage. A professional inspector can give
you an objective view of the property, with a written report, indicating the present
condition and items that will need repair.
#9 Be cautious with fixer-uppers
Sometimes, a fixer-upper can be purchased below market value, and once sufficient
repairs are made, can be sold at a significant profit. However, not all fixer-uppers will
bring in the profits you might expect.
Consumers often overestimate their level of dedication to doing extensive renovation
work, and underestimate the costs associated with such work. A wall that needs to
be replaced can often lead to the discovery of faulty plumbing, electrical, or other
major undertakings. Your Realtor® and home inspector are your best allies when it
comes to cost-benefit analyses.
#10 Consider your future needs
A move can be a major undertaking. Take a good look at your current lifestyle and
consider the future. Will you need extra space for a home office, a child, or perhaps a
child moving back home? Perhaps 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 down the road.
#11 Proceed quickly
When you’re ready to buy, act. Good properties sell. This is especially true given the
current state of most real estate markets. However, when you work with a Realtor®,
you have access to the latest technology. As part of the MLS and Agent Handshake
networks, a Realtor® has access to properties within hours of when they are listed.
Technology works to your advantage. Many Realtors® now have personalized
websites which allow you to sign on as a client, and receive notification of new
listings via email. You save time and effort, and you can view only those homes that
come closest to meeting your needs.
#12 Clarify relationships
In any real estate transaction, be very clear about who is working for whom, and what
the relationship represents. Unless otherwise stated, an agent represents the seller
in transactions for the sale of a home. This agent, as part of his or her fiduciary duty,
must ensure that the seller’s (and not your) position is represented throughout the
entire process. Get a buyer’s agent on your side, or ensure that someone is acting in
your best interests.
#13 Ask for a written CMA
A Comparative Market Analysis (CMA) is an analysis of comparable homes in a given
neighborhood. It 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. A Realtor® can request this report for any home and neighborhood. Ask for
this report in writing. With this valuable document, you’ll have solid, reliable
information about how fairly a home is priced compared to its real market value.
#14 Know the seller
Understanding a seller’s reasons for moving could work to your advantage during
negotiations. For instance, 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, or a house that has been on the market for several months and has been
reduced in price, could also provide the opportunity for lucrative negotiations.
#15 Keep it impersonal
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 used to the seller’s benefit in negotiations. While you want your Realtor® to
know these details, maintain your poker face and keep your cards hidden with the
sellers and their agents.
#16 Measure twice, sign once
While you definitely want to move quickly once you’ve made the decision to
purchase, you don’t want to cave in to pressure for a quick close. Someone who is
trying to pressure you into buying a home is likely doing so for a reason. Make sure
the reasons for you to buy a home are your reasons, not theirs.
#17 Exercise your negotiating skills
Even if you prefer not to haggle, it’s worth it, especially when it’s your home and one
of your biggest investments. Most people expect to haggle over the price. There is
always room for negotiation, and your Realtor® should be a professional negotiator.
#18 Avoid bidding wars
In some cases, the seller’s Realtor® may use scare tactics to rush the sale or
increase the price. Falling for this trap could cost you money. If there is another
buyer, or some other reason this pressure is being applied, whoever wins also loses
because they tend to overpay. Let reason be your guide, not passion.
#19 Get it in writing
Legally, sellers must disclose all known material defects of a property. Ask for this in
writing. Also be sure to consider the ramifications of these defects. Will they be costly
down the road? Are they “serious” defects?
#20 Be aware of hidden costs
While Realtors® often tempt first-time buyers with rent/mortgage comparisons, there
is more to a home than simply the mortgage. You will be responsible for other items
including mortgage insurance, appraisal fees, legal fees, inspection fees, transfer
taxes, title insurance, inspections, property tax, increased bills, etc. Your Realtor®
can give you a good idea of the costs associated with buying a home that are beyond
its final negotiated price.