OK, so you’re ready to dive in and buy a home. That’s wonderful, buying a home can be so exciting and it’s one of the biggest purchases you will ever make. That being said, it can be very stressful too, knowing where to start and who to contact is very important. Having a good realtor and lender are the first things you should nail down.
Start with your credit. Credit reports are kept by the three major credit agencies, Experian, Equifax, and TransUnion. They show whether you are habitually late with payments and whether you have run into serious credit problems in the past. You need to know where you stand and contacting a lender “first” can reduce stress and help you nail down the budget.
Set your budget. Next, you need to determine how much house you can afford. You can start with an online calculator. For a more accurate figure, ask to be pre-approved by a lender, who will look at your income, debt, and credit to determine the kind of loan that’s in your league.
Line up cash. You’ll need to come up with cash for your down payment and closing costs. You may need anywhere from 3.5% to 25% depending on your situation. Your realtor and lender can help you navigate through this process.
Find an agent: Most sellers list their homes through an agent — but those agents work for the seller, not you. They’re paid based on a percentage, usually 5 to 7% of the purchase price, so their interest will be in representing the seller inmost cases. A transaction agent can represent both, but I think its best to have someone that represents you alone.
That means you need “exclusive buyer agent.” Sometimes buyer agents are paid directly by you, on an hourly or contracted fee. Other times they split the commission that the seller’s agent gets upon sale. A buyer’s representative has the same access to homes for sale that a seller’s agent does, but his or her allegiance is only to you.
Searching for a home? Your first step here is to figure out what city or neighborhood you want to live in. Look for signs of economic vitality: a mixture of young families and older couples, low unemployment, and good incomes.
Pay special attention to districts with good schools, even if you don’t have school-age children. When it comes time to sell, you’ll find that a strong school system is a major advantage. But the bottom line is you have to like the home and it needs to meet your lifestyle. I always focus on the buyer’s work and lifestyle needs first.
Make an offer. Once you find the house you want, move quickly to make your bid. If you’re working with a buyer’s broker, then get advice from him or her on an initial offer. If you’re working with a seller’s agent, ask him or her to provide comps, but I would come up with a strategy yourself as well.
Try to line up data on at least three houses that have sold recently in the neighborhood. If you really want the house, don’t lowball. The seller may give up in disgust. Remember, that your leverage depends on the pace of the market. In a slow market, you’ve got muscle; in a hot market, you may have none at all. For more information about buying I’m happy to help. Just contact me.
