© 2009, Brandon Cornett, Home Buying Institute
Welcome to our house hunting checklist for 2010. We published this list to help create a smarter class of home buyers. Because if we learned anything from the housing crisis of 2008 - 2010, it's the fact the first-time buyers need all the help they can get. Click any of the house hunting links below to learn more about that item.
|Visit the Home Buying Institute to learn about the house hunting process.|
|Establish your housing budget by reviewing your debt vs. income.|
|Get pre-approved for a mortgage loan by a lender.|
|Start researching neighborhoods and home prices.|
|Find a real estate agent who is familiar with your desired area.|
|Start house hunting, and be proactive about it.|
|Focus on the parts of the house you cannot change.|
|Ask plenty of questions when looking at potential homes.|
|Make an offer based on comparable sales and your agent's advice.|
|Be prepared to negotiate, and have a plan for doing so.|
|Get the home inspected after your offer is accepted, ASAP.|
Before you start looking at houses, you need to know what you can afford to pay each month toward your mortgage payment. In other words, you need to establish your home buying budget. Many first-time buyers think that the lender will take care of this for them, but that's a dangerous notion. Believe it or not, it's possible to be approved for a home loan that's too big for you. It happens all the time, and it's the primary cause of home foreclosure in this country. You need to set your budget before you even start talking to lenders. Use the article below to learn how.
Learn more: How Much House Can I Afford to Buy?
This is another thing you should do early on, before you start the house hunting process. It's at the top of our checklist for that very reason. There's no sense in shopping for a home until you know how much you can get from a lender. That's where the pre-approval process comes in.
During this step, the lender will review all aspects of your finances (your income, debt, credit score and more) to determine how much they're willing to lend you. This will help you narrow your house hunting efforts on the types of homes you can afford. It also shows sellers that you are financially capable of buying their home, which increases the chance of your being accepted.
Learn more: How to Get Pre-Approved for a Mortgage
When you buy a home, you are buying into the neighborhood around it as well. This has an impact on your quality of life and your property values alike. So do some research to find out which neighborhoods appeal to you the most. Your real estate agent can help you with this process (next checklist item), but it's a good idea to start early.
Here's one way to go about it. Start by making a list of neighborhoods in the area where you want to live. You can use the Internet for this process, with the websites listed below. After that, you should drive through each neighborhood and see it for yourself. Find out which school district each neighborhood falls into, and research the schools system as well. Keep notes every step of the way -- you might even want to start a house hunting notebook or journal for this purpose.
Can you buy a home without the help of a real estate agent? Technically and legally, yes. But if you want to find the best home in the fastest time, without overpaying for it, you should seek the help of an experienced agent. You can learn more about choosing an agent through the library of articles below.
Learn more: Choosing a Real Estate Agent
Now we come to the part of the checklist you're probably most interested in -- the actual house hunting process. And if you have followed the recommended steps up to this point, you'll be well prepared for the process. The key to success here is to use a variety of house hunting techniques at the same time. Your agent will obviously help you with this, but you should help yourself as well.
You can use the Internet to find homes you like in your area, and you can also find them by driving around through your preferred neighborhoods. The weekend edition of your local newspaper probably showcases homes for sale too. Use all of these techniques together.
Learn more: House Hunting Tips for First-Time Buyers
A lot of first-time buyers focus too heavily on the cosmetic items during the house hunting process. They look at the paint on the walls, the carpet on the floor, and similar features. But these things can all be changed, and sometimes fairly easily. So it doesn't make sense to base your home buying decision on such things. Instead, you should focus on the things you cannot easily change. Pay attention to the neighborhood, the lot, the view, the style of house, the square footage, the number of bedrooms and bathrooms, and other fixed and semi-fixed features.
Learn more: How To Create A Home-Buying Wish List
Home buyers naturally have a lot of questions when house hunting for the first time. That's why it's so important to have a checklist, a wish list, and a seasoned real estate agent on your side. It's also important to ask plenty of questions when looking at potential homes. Your agent should expect this from you, and he or she will gladly answer all of your questions. Use the link below for a list of questions to ask when house hunting.
Learn more: What to Ask When Looking at Homes
When you make an offer on a home, it should be based on hard data — not wishful thinking on the seller's end. That's why they call it an "asking" price, and many sellers ask for too much. Your agent will help you review recent, comparable sales (or "comps") in the area. This will help you shape your offer, because it's an indicator of what the true market value is.
Home prices go up and down all the time. Real estate bubbles grow and then they break. It's an endless cycle of appreciation and depreciation. In some cities, the cycle is rapid. In other cities, appreciation comes more slowly and homes tend to hold their values better.
What does all this mean to you, as a buyer? It means that a particular home in today's market may be worth more or less than what the homeowners paid some years ago. Many sellers simply look at what they paid for the house originally and then add on some arbitrary amount of appreciation. But this runs contrary to reality. The only way to measure the value of a home in its current market is to look at recent, comparable sales in the area.
Lastly, be sure you make your offer contingent upon a successful home inspection (see below). This gives you a way out of the contract if you find an unacceptable flaw in the house later on. You might also want to make the offer contingent upon your financing. These are common contingencies you should ask your agent about.
Learn more: Tips for Making a Smart Offer
What will you do if the buyer rejects your offer? Will you walk away or make a higher second offer? What if the seller comes back with a counteroffer at a higher price, right from the start? You should have a plan for this kind of thing, because it happens all the time in real estate. Use your comparable sales data we talked about above to guide you in this process.
It's never a good idea to pay more than a house in the worth in the current market, because you can end up in a negative equity situation right from the start. If you have chosen a veteran real estate agent like we recommended, his or her past experience will be invaluable at this point. Let them advise you on the best offer to make.
Learn more: How to Avoid Paying Too Much
A home inspection will generally cost between $400 and $500, and for that price you get the comfort of knowing the true condition of the house. That's a small price to pay for peace of mind. Home inspectors are trained to see things that folks like us tend to overlook. They inspect the home's foundation, the roof, the electrical system, plumbing, heating and cooling, and the general condition of the property.
When the inspection has been completed, the inspector will give you a list of discrepancies. He will also review this list with you, explaining how serious each item is. Everything on the list is a negotiable item, so technically you could ask the seller to fix anything on it. But you need to listen to your agent's advice on this. If you are overzealous with your "fix it" list, the sellers might tell you to forget it. Be reasonable with your requests, consider the age of the home, and let your agent guide you through it.
This house hunting checklist was created by Brandon Cornett. Brandon is a consumer advocate who has covered the real estate scene for nearly a decade. He is the creator of the Home Buying Institute
© 2009, Cornett Communications. All rights reserved.