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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.
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.
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.
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.
Communicate
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.
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, etc.
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.
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 available.
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 worthwhile investment.
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.
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.
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.
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.
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.
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.
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.
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.
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?
Be aware of hidden
costs
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.
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