How to Buy a House
Buying a home is a big decision. Domestic CEO has 7 tips for buying a house.
Last week, I talked about how to decide if you should sell or rent out your home. While I was talking with my property manager friend, I also started talking with one of the best real estate agents in Phoenix I know. Don Aldrich has been helping people buy and sell homes in the Phoenix area for over a decade, and has done hundreds of transactions, so I know he would be able to help me put together a list of tips for potential home buyers to follow when buying a home.
Figure Out Your Numbers
The very first step when you are starting your home buying process should be to meet with a great lender AHEAD of time. A mortgage banker or broker can help you determine what type of a mortgage is best for you, how much you qualify for, and also how much you really want to spend each month. Aldrich insists that it’s always better to know your numbers before you start looking. Not only will it help prevent you falling in love with a house you can’t afford, but it will also make you look more serious when you put an offer in on a house. The seller will know that, if your offer is accepted, it’s much more likely for the deal to close.
Sponsor: Thanks to Audible for supporting our channel. Â Get a free audiobook of your choice at Audiblpodcast.com/ceo.Â
Find a Great Agent
Once you know how much you can afford, it’s time to find a real estate agent to represent you. When looking for a real estate agent, I’d recommend getting referrals for 3-4 agents who have done recent transactions in the areas you think you want to buy. Then, ask if you can set up an appointment to meet with them for 30 minutes. Even if this appointment is by phone, you can start to get a feel if they will be a good person to represent your interests. Do they listen to you? Do they seem to understand what your goals are? Or, are they offended by the very fact that you asked them to meet with you first? By having a quick conversation with a handful of agents, you will likely start to gravitate towards one or two over the others. Buying a home is a big decision, so take a little time to make sure the person you choose to represent you is someone you trust and will listen to you.
Learn the Process
If this is your first time buying a house, or it’s been a number of years, it’s a good idea to have your agent explain the process that you will have to go through to buy a house. There have been a lot of changes in the mortgage and real estate industry in the past few years, so there may be different steps than you remember from your last home purchase. By having your trusted real estate agent walk you through the process, you’ll be able to have your expectations set correctly. Buying a home typically isn’t a super fast process, especially if you are getting a loan, so knowing what kind of a timeline to expect will help you make decisions on everything from your current living situation, to when you will start shopping for new furniture.
Aldrich encourages buyers to make their agents educate on the whole process up front, starting with what will happen when you write an offer, write a check for earnest money, go through inspections, get an appraisal, go through loan qualifying, complete your final walk through, and finally move in. That way there will be no misunderstandings and your expectations will be met in timely fashion.
Define Your Parameters
When you have your agent picked out, he or she can set up a profile for you to receive daily updates on listed homes that match the criteria you want. Aldrich recommends talking through your absolute must-haves with your agent to make sure he or she is clear on the things you really want from your next home. If you only want to see homes between 3000-4000 square feet, on acre lots, with at least 4 bathrooms, and with RV gates, you can do that. If you want to receive updates on 2 bedroom/1 bathroom condos, in complexes that have a pool and workout room, and underground parking, you can receive those updates instead. When putting the specifics of your wants and needs together, I feel it’s best to stay a little more general in the beginning. If you insist on needing a Jacuzzi tub, that is going to greatly limit the number of homes that show in your updates.
Even if you don’t like every house that pops into your updates, Aldrich reminded me that this is one of the best ways to have your finger on the pulse of the market. That way, when a “hot” house appears on the market, you can immediately jump into action. You can see what similar homes to the one you eventually buy are being listed and sold at. You can see when their prices increase or drop, and you can decide if you want to change the parameters to help refocus your search. As soon as you change your mind on criteria, make sure to let your agent know so the search can be updated. Otherwise you’ll continue to receive updates for homes that you no longer are interested in.
Hang Out in the Neighborhoods
Once you have an idea of the neighborhoods you want to buy a home in, start hanging out in those areas. Park your car in the neighborhood and walk around during different times of day. A neighborhood that is quiet on Sunday mornings may be that way because there are parties happening Saturday nights. Are people greeting you with smiles, or are they staring at you from behind closed windows? Are there dogs barking incessantly in back yards, or are there always people out walking their dogs? Neighborhoods have personalities, so find the one that fits what you and your family are looking for by hanging out in the area on multiple occasions.
What’s the real estate agent’s advice on this? Aldrich advises to drive the areas and neighborhoods that you like to get familiar with them, and, if you wish to change the parameters on your search after gaining knowledge of the homes and the areas, notify your real estate agent right away to amend the parameters of your search.
Buying New? Bring Your Agent
In certain markets, like Phoenix and Las Vegas, there are lots of new homes being built. It can be tempting to stop by the sales office and start walking through model homes, but my agent friend cautions that you always want to let the sales agents know you are represented by an agent on your first visit to the property, and preferably have the agent with you. The reason? The person you speak with in a sales office at a new build is an employee of the builder, and no matter how helpful he or she appears, is representing the builder, NOT you.
If you go in unrepresented, you may end up signing paperwork that makes it really difficult, or even impossible, to bring your agent in when you decide to buy from that builder. By letting the builder know you already have an agent, your agent will be allowed to represent you and negotiate on your behalf. It won’t cost you a dime to have your agent represent you, and it will likely help you save money or get additional incentives you wouldn’t have been able to get on your own.
Think About the Next 5-10 Years
When you start looking at homes, I have found it important to not think too far in the future. It’s easy to walk in to a home and start imagining growing old in the house, but the reality is that most people move about every 7 years. Your life situation will likely change dramatically in the next decade, and likely in ways you can’t even imagine now, so don’t tie your entire future into your current home purchase.
I just had a conversation with one of my best friends about this. We bought our homes around the same time, and even bought similar sized homes. But now, both of us are ready to start down-sizing. My husband and I bought our home with the intent of hosting parties on a regular basis. We weren’t planning on having kids, but a 2700 square foot, 3 bedroom house with a movie theater screen in the loft seemed like a great decision at the time. And we did get a lot of use out of the house for the first year, but then our friends started having babies, and the parties got fewer and further between. Similarly, my friend and her husband bought a 2500 square foot, 4 bedroom house because they were planning on having kids, and anticipated that grandparents and aunts and uncles would come to stay with them. What they didn’t count on is that grandma and grandpa would buy a house of their own in the neighborhood, and all the guest spaces would go unused. Now, both of us are itching for smaller homes that better fit our families’ needs. How long have we been in our homes? 7 years. Go figure!
Buying a home is always a big decision. Financially, it’s usually one of the biggest decisions people make in their lives, but it’s also a big emotional decision. By following these 7 tips, you can make sure you are more prepared when going in to the decision-making process.
I am curious to know what the best advice you’ve received when buying a house. Share your advice on my Facebook wall, or in the comments section below.
Until next time, I’m the Domestic CEO, helping you love your home.Â
