Buying and Selling Real Estate & Foreclosures
How to Buy a House
Buying real estate is one of the biggest purchases most people make in a lifetime, but it also forces a wholesale examination of the homebuyer's goals, commitments and lifestyle. With the right guidance and advice, an increased understanding of real estate will help homebuyers identify their specific objectives. The more educated a buyer is on purchasing real estate, the easier it will be for them to make decisions throughout the buying process. The steps and strategies that buyers should follow will vary accordingly to whether they are a first-time buyer, upgrading, or downsizing, but all buyers should be sure to do their homework before diving into a deal.
The Real Estate Buying Checklist:
Step 1: Credit Check
The vast majority of homeowners purchase their home with some type of home loan or mortgage, and it's the homebuyer's credit history that determines the loan amount they qualify for. Credit information such as the debt to income ratio, current borrowing capacity, and payment history are used to calculate an overall credit score ranging from 340 to 820. The higher the score, the more likely it is that the home loan application will be approved.
Step 2: Get your Mortgage Pre-Approved
Before delving too deep in searching for a home, it's important to get a mortgage pre-approved from a lender. Lenders will typically approve a mortgage up to a certain amount based on income, debt, and credit history; and knowing this amount will help narrow the search to properties within that price range. In addition, having this number in writing will make you more attractive to sellers since it shows that you're serious.
Step 3: Identify What You're Looking For
Most potential homebuyers already have an idea of what real estate they're interested in, but a written list of desired property attributes can be a valuable tool from the beginning. Real estate experts suggest breaking down this list into:
- Property Specifics:
- Must-have's – Specifics about the property such as lot size range, number of bedrooms, number of bathrooms, etc.
- Absolutely Not's – List the features that you will not tolerate, such as fixer upper shortfalls.
- Surrounding Area Considerations:
- Quality of Schools
- Property Taxes
- Local Government Services
- Economic Stability
- Location – Local Community, Town or City
Step 4: Find a Realtor or Real Estate Agent
Most buyers utilize the services of a realtor or real estate agent in their quest to buy real estate. Having an agent can be a significant time saver during a home search. Homebuyers can pass their list of property attributes, along with their pre-approval amount, off to their agent who will return with a list of homes available that meet the criteria. Agents are also an incredible asset during the buying process and can offer negotiation advice once a buyer has found a property they like.
Step 5: The Hunt Is On! – Search for your Home
This is usually the most exciting time. Again, all the steps leading up to the hunt set the foundation for finding the perfect home without any question for the homebuyer or the agent regarding what the price range is or what property attributes or amenities are important.
Step 6: Making An Offer on Your House
Before an offer is made, it is important to fully investigate the property - its structure, features, contract contingency, deed restrictions, renovations that may be needed, etc. The input of a real estate agent is paramount here, as they possess the know-how and experience to properly advise with the homebuyer's best interests in mind. When both the homebuyer and the agent agree that the property is worth pursuing, a written offer is drafted and presented to the seller for review. A counter-offer from the seller may follow, at which point negotiations proceed until both parties arrive at an agreed upon selling price.
Step 7: Real Estate Inspection
This step pertains mainly to houses, townhouses, condominiums, and cottages. In some states, real estate inspections are accomplished before the final purchase contract is signed. In other states, inspections take place after an offer is finalized. Regardless of when home inspections occur, this is a critical step to fully understanding the condition of the property.
Every home inspection should include a checkup of the following:
- Foundations
- Roof
- Heating and air conditioning systems
- Ventilation
- Common areas (for condominiums)
- Septic tanks, wells or sewer lines*
- Insulation
- Plumbing and electrical systems
- Ceiling, walls and floors
- Doors
- Hazardous materials concerns
Step 8: Closing the Deal for Your New Home
Once the buyer and seller have agreed to a selling price, then there will be plenty of administrative tasks (paperwork) to be done in order to finalize the deal. Although this task may be tedious, it should be executed with keen attention to detail to avoid any mistakes that could prolong the process. At this time, its also important to understand conditions that may affect mortgage payments such as making other major purchases or changing jobs.