HOME BUYING TIPS

Buying a home can be one of the most exciting times in your life.  There are many things to consider when you purchase a home. 

How much can you afford?

The first step is to determine how much you can afford to buy.  You should take a look at your monthly budget and determine how much money you can afford to spend on a home.  Then you should contact a lender to find out what you could qualify for a loan amount to purchase a home.  There are many factors involved including employment, credit scores, and long-term debt.  It is best to know exactly how much you can afford and what price range you will feel comfortable with before you look at homes.

If you start looking in a higher price range and then find out that you need to find a lower-price home, it makes it much more difficult to select a home.

We can provide you with a selection of financial lenders to contact for loan information.  Most of the time, you can do it over the phone for the initial information.

Selecting a home

Before you start looking at homes, you should sit down and discuss the reason you want to buy a home and make a list of the areas that are most important to you.  If you are buying the home with your spouse or another party, you should make your lists separately and then compare them.  From those lists, you should make a list of items that are non-negotiable, items that are important, and others that would be desired but are not necessary to make a decision to purchase a home.

There is not a “perfect home” waiting for you.  Each home will have good points and areas that you may not like or that you wished it had.  If you search and search for the “perfect home,” you will never buy a house. 

Unless there is a reason for a certain style of home, it is best to consider all styles of homes.  Often a buyer is determined to have a rambler or a two-story home and in the beginning does not preview other style homes.  Most commonly, buyers never purchase the home that they initially thought they wanted.  So many times over the years that we have been helping buyers find homes, we have seen buyers who wanted a two-story home in Puyallup purchase a rambler in University Place. 

Keep an open mind and concentrate on your “non-negotiable” areas and those amenities that are important to you, and you will find your home.  When you walk in the door, and go through the house, you will know that this is the house for you.  It may not even closely resemble the list you made when you started looking at homes, but you know this is the one!

It is just like any time you have decided to purchase a dress or suit, a car or a television.  You started out with a preconceived idea of what you wanted but when you went to the stores, what you thought you wanted was not available or you didn’t like it that well.  But, you found something else that was perfectly suited (or maybe better suited) to your needs.

As you preview homes, write down what you like about certain homes and the things you do not like.  Revise your list from time-to-time and share this information with the agent.  Every time you preview a home, you should share with the agent your impression of the property.  Let the agent know how the positives and the negatives of each home.  This helps the agent get a better perspective of what type of homes to show you.  Since your ideas may change as you continue to look at properties, let the agent know what has become important to you and what areas you no longer are concerned about.

There is a phrase among real estate agents – “buyers are liars” because they so seldom purchase the type of home they told the agent they wanted.  We have never agreed with that characterization.  It is just that once buyers are out looking at homes, they discover that there are many more choices than they realized and perhaps they discover that a different style home or another area would be more advantageous to them.  Unfortunately, often they do not share that information with the agent – the person who is trying to find the home for them.  The agent will not be offended.  Agents only get paid when they successfully sell a home to a buyer and the transaction closes.  They need to know what you want – even if that concept changes as you see more homes.  It is a waste of everyone’s time to look at homes you would not consider purchasing.

Buying the home

Once you select the home, it is time to make the offer to purchase.  It is common to hope that you will have your offer accepted – and, at the same time, afraid that it will. 

The most common question is what should we offer?  If you have been looking at a lot of homes in that price range, it doesn’t take an appraiser to determine a fair price.  If it is priced within the range of other similar homes, then the asking price is probably right.  If you want to make a lower offer, then there are some things to consider:

• In a good market, there probably are other buyers who are going to be making offers on the same property.  In fact, there may be many buyers making offers.
   
• In a normal market, yours may be the only offer.  However, even if a house has been on the market for a while, it is not uncommon to have more than one offer come in during the negotiating process.  It is like “Murphy’s Law.”  Just when you found this house and decided that it was perfect for you, some other buyer had the same experience.
   
• So, as you decide what you are going to offer for the home and the concessions you are going to ask the seller to make, keep in mind that you may be in competition with other buyer’s offers.  Usually the agent doesn’t know until the offer is received – or right after it is received.
   
• If you are going to offer less than the asking price, then determine what would be a fair price and yet not offend the seller.  If your offer is substantially less than the asking price and the home is listed at a price within the range that it should be, the most likely affect is that it will make the seller made and the offer will be rejected.  There is a misconception that the seller will make a counter offer back to the buyer and then they will go back and forth until they reach an agreement.  The seller is not obligated to counter offer.  At times, we have seen sellers so angry, they refuse to write “rejected” on the offer and initial it.  Knowing that sellers have been told by their agent to expect lower offers, put yourselves in their shoes and that will help you decide what to do – if you really want the home.  If it does not matter to you whether you get the home or not, then make any offer you would like.
   
• You may want to ask the seller to pay your closing costs or do certain repairs or upgrades to the home.  Have your agent explain how much this would cost the seller so you are aware of how this is going to impact your offer to the seller.  Sometimes buyers do not realize that these concessions will cost the seller several thousand dollars.    For example, on a $300,000.00 house, if you ask for buyers closing costs, it will cost the seller an additional $9,000.00.  Many times the sellers do agree to pay the buyers closing costs or some reduced portion of them while others will not agree.  It is not uncommon for us to hear that they had to pay closing costs when they bought the home so they shouldn’t have to pay them again.  You just never know.  In a strong market, this could prevent your offer from being accepted.  In a slower market, it might not make a difference.  It is just something you have to decide.
   
• The more concessions that you ask the seller to pay, the more it reduces the changes that your offer will be accepted.  However, some buyers will ask for the concessions but will make an offer higher than the listed price to cover all or some of the expenses so it makes the offer more attractive to the seller.  Of course the consideration in this instance is if the home will appraise for that price and if you can obtain a loan for that amount.  It is all a balancing act and you have to decide what will work in your favor.
   
• The bottom line is that you need to purchase a home that you feel will work for your needs and that you can afford the monthly payments.

What other areas to consider?

The price of the home is only one of the considerations you need to make when you select the home.  You need to make the agent aware of any other concerns or requirements that you have.

• Property lines.  If this is important to you, then you need to hire a surveyor.  Unless there are surveyor posts in the ground, no one can provide you with the correct information.  You cannot count on landscaping or fences.
   
• Additions to the property.  You need to go to the appropriate agency to determine if you can expand the property or add a building (like a garage) and if you can get a permit (get it in writing!).  Neither the seller nor the agent can tell you that.  Only the agency that will grant you the permit. 
   
• Don’t assume that everything you saw will remain at the home.  Regardless of what the listing agreement or marketing flyer says, if you want something to be included with the sale, put it in writing so there are no misunderstandings.  And be as clear as possible.  For example:
   
• The double-door Westinghouse stainless steel refrigerator will included in the sale at no expense to the buyer.
• The crystal chandelier in the dining room will be included in the sale at no expense to the buyer.
• The big toy play set in the back yard will be included in the sale at no expense to the buyer.
   
• Home Inspection and Pest Inspection.  Spend the money on these inspections.  When you are budgeting for the purchase of the home, be sure to set this money aside.  They currently are between $250 and $350.  For $350.00 you can normally get a combined home and pest inspection.  Do not risk purchasing a home without these inspections!  We have even seen things turn up on brand new homes.  This is well worth the money.  No one else can provide you with this valuable information.  Keep in mind that the seller may not perform all the work requirements.  Usually the buyer will review the list and determine whether to ask for all of the repairs or certain repairs are the most important.  Then list is presented to the seller for consideration and the buyer and seller negotiate which repairs will be completed or if a financial consideration will be made to the buyer for the cost of the repairs.
   
• An appraisal will be made, the work requirements will begin to be done (usually they are not started until the appraisal comes in to be sure that the transaction will be successful), and the closing process goes forward.
   
• Consider purchasing a Home Protection Plan that covers a number of the appliances, the furnace, electrical and plumbing in that first year.  Often buying a home exhausts the buyers savings reserve and if something goes wrong after the closing, then you are responsible for the expense.  The only requirement is that they are operating on the day of the closing.  Once the sale has closed, you are the proud owner of a dishwasher that no longer works or a furnace that needs repair.  Having a home inspection does not reveal when something might quit working – only which it is working at that moment in time.

Watch your expenses and spending during the closing process:

In addition to our down payment  you will have other costs.  The closing expenses are around 3% of the sale price.  If you are going to pay them or the seller is going to pay them, in some circumstances they may exceed the 3% by a few hundred dollars.

You should keep in communication with your lender about the money you will need to close the transactions.

This is not the time to make any purchases that would reduce your bank balance or increase you credit card debt.  Wait until after the transaction closes before buying new furniture for the home!  The lender will be checking your figures right up to the day that you are signing the closing papers – and beyond – before the transaction is recorded.  Many transactions do not close because of last minute changes in the buyer’s finances!  We have even seen them go bad after the closing papers were signed.

A lot of things can occur during the closing process.  It is normal.  These are just things that need to be worked out, negotiated, and dealt with.  There are always issues that come up during this period and your agent will work with you.  It is important to keep a cool head during this time.  Don’t let an angry moment or some frustration overwhelm you.  Buying and selling homes are not always easy but if everyone cooperates, the transaction usually closes and both parties get what they wanted to happen – the seller sold their home and you got your new home.

Do a walk through before you close!

A few days before the closing, you should go back and walk though the house.  This way you will make sure that the home is as you expected it to be and satisfy yourself that all the work has been done to the home and that double-door refrigerator is still in the kitchen.

Getting the keys

Often the buyers think they will get the keys to the property when they sign the closing papers.  Actually, you will receive the keys when ownership passes.  You may sign the paperwork on one day and the seller is coming in the next.  After everyone has signed, there may be a delay in the actual recording of the deed.  The lender may do last minute reviews of the loan or something could delay the delivery to the county for recording.  Once the deed is recorded and ownership is transferred is the time you will receive the keys to the property.  Some agreements allow the seller to remain in the home for up to three days after the recording of the deed.  There is a risk involved in having someone who does not own the property living in the home after ownership transfers.  You should discuss this with your agent, your insurance agent and your attorney.  This is the same reason that you may not have the keys to the property until ownership transfers to you.