Eight Things to Think About When Thinking About Buying

Thinking about entering the world of real estate ownership, or ready to jump back into the game? Here are a few things to think about and to get ready for.

Step 1: Ask yourself the following questions:

  • Why are you buying?

To stop paying rent? To start to build equity? Upgrading, or downsizing?  To start raising a family? To invest?
The answer to these questions will help you to determine what features or elements you should be looking for in your new abode or investment property.

  • What kind of neighborhood is right for you?
  • What is your family and work lifestyle?
  • What kind of home do you need?

Step 2: Really think about this: Wants vs Needs

Create a Wants versus Needs list. Really prioritize here…it’s crucial that you determine the difference, and that will help you to focus when you’re viewing properties. Remember that a budget is also involved, and you will have to determine whether your budget accommodates your ‘needs’, or ‘wants’, or both!

Step 3: Get pre-qualified.

This is one of the most important steps. You want to know what your budget is BEFORE you start your real estate search! How disappointing would it be to view houses and start to fall in love with some of them, only to find out that they’re out of your price range? Talk to mortgage brokers, or financial institutions, and determine which price point is in the most comfortable, and obtainable range for you. Guidelines have gotten stricter compared to a couple of years ago, so it is very important that you do this.

Also, be sure not to talk to just one source, but multiple sources so you really understand what your options are. Different lenders offer different rates and packages and you want to make sure you’re getting the best deal possible. Ask your lender to give you a truth in lending statement. This will outline exactly what their fees are and what your bottom line is going to be in terms of closing costs. We recommend talking to 3 brokers. Here’s a list, if you need some contacts.

Step 4: Find a REALTOR you’re comfortable working with.

It’s really important that you build rapport with your agent. Your agent should always have your best interests in mind, and a deep understanding of what is important to you. Purchasing real estate is a big deal! You want to make sure you’re comfortable with the agent you’re working with, and that you always feel involved and in control of the process. (By the way, we’re great! Contact us to discuss your needs any time. Take a look at our references from past clients here.)

Step 5: Start looking.

Once we talk about your criteria, we will seek out properties that meet your criteria. We will guide you and advise you as to what should be expected in different areas, what to look out for when looking, and sometimes even remind you what you originally told us! It’s very common for buyers to realize that sometimes what they thought was important wasn’t, really…and priorities shift. Relax. It’s part of the process.

Step 6: Identify the property you’re ready to make an offer on.

Step 7: Make the offer.

Here are some things to consider when making an offer.

  • Find out what the comparable sales are! The only time that this step should be put on the backburner is if you’re in a competing offer situation and you’re on a time limit (and if you really, really want that property). We will find out for you what other like-kind homes in the same neighborhood sold for, and that will be the determining factor whether that home is priced accurately or not. If it’s overpriced, the comparables can be used as a negotiating point.
  • Find out as much as you can about the seller’s situation. Is the home vacant? Is there a mortgage on the property? If it is vacant, and there is a mortgage, you know that the seller is still making payments on a property they no longer reside in. As an interested buyer, this sort of thing is useful information.
  • BE READY! The following items need to be handed in with your offer:
  1. Earnest money check. This is the deposit which will be held in an escrow account once the offer is accepted, and until the transaction is complete. This amount is negotiable, but ranges from 1-5% of the offering/purchase price. Don’t worry; the check will be made out to the designated escrow company (we will have recommendations for you if you don’t know of any) and will not be disbursed to the seller without mutual consent. If the offer does not go through, the check comes back to you.
  2. Pre-qualifying letter from your mortgage professional. This will help you with your offer, and it will give the seller assurance to accept your offer, or at least counter it. They want to know that you have talked to a mortgage professional and that you’re serious about the purchase.
  3. Purchase and Sale Contract. We will help you to prepare this, and specific details in regards to terms will be discussed with you. In a typical offer, several contingencies will be involved.

Step 8: Mutual acceptance…and closing!

A typical residential contract takes about 30-45 days to close, depending on the financing situation, inspection, etc. We will be there guiding you the whole way, updating you and instructing you. Once all conditions are satisfied and the mortgage is funded, we will hand you the keys to your new home!