Step One: Get pre-approved with a mortgage lender
Too many times we get calls from new buyers that are wanting to look at homes without actually being pre-approved. In the past I would show them properties hoping that they would be approved once we found them a property. This was the thing I should not have done. The reason is that sometimes a buyer is not aware of how much the lender will approve them for and when they finally do see what they qualify for they will only be disappointed when they are told how much “House” they actually qualify for. So for anyone looking to purchase a home always speak with several lenders including your own bank so that you can know exactly how much you are going to be approved to borrow for your home.
Step Two: Hire an Agent
Some people like to go at it alone and there is nothing wrong with this as long as you are familiar with the process. But since I am an agent, I believe in hiring a buyer’s agent first. But again, you don’t have to. If you prefer to go to open houses and look for homes online it is an option. Mostly, an agent will save you time and agony of finding your dream home only to find that the property has an accepted offer.
An agent can send you listings directly from MLS that fit your requests, and you won’t waste time looking at active short contingent listings that have accepted offers.
Agents often know of new listings coming up that are not yet on the market.
You can save mileage on your vehicle and use the agent’s gas and not your own when you tour homes.
If you are busy but eager, some agents will preview homes for you.
An agent can generally spot overpriced listings and advise you accordingly.
Step Three: Find a Home to Buy
Buying a home can be an overwhelming process and emotionally draining. Finding the right home is not always an easy task. I advise agent to show buyers a maximum of 5-7 homes at a time because any more than that will make a buyer’s head spin.
Most buyers conduct a lot of research online before ever stepping foot in a home. Buyers spend an average of 6 to 8 weeks, according to the National Association of REALTORS, trying to figure out where they want to live. But once the desired neighborhood is selected, some buyers end up buying a home after 2 or 3 home tours.
Step Four: Negotiate the Offer
Buyers sometimes make the mistake of comparing the sales price of a home to other homes they have seen. It’s a mistake to compare sales prices among homes for sale. That’s because sellers can ask any price they want. It doesn’t mean the home will sell at that price. Another thing to consider is that the seller may not be able to sell the property at the price they you want to pay because he may owe more than the property is worth.
An agent can provide you with comparable sales and examine the currently pending sales. This will save you lots of grief and agony. Comparable sales are similar type homes in the same condition and that have sold within the past 3-6 months in a 1-mile radius.
FYI-In most cases the pending sales will become the closest comparable sales price by the time your home closes.
In some cases if you find the home of your dreams you may need to pay over list price in a seller’s market, especially if many buyers are viewing the same inventory. Your agent can give you a reasonable price range and help to manage your expectations. A good buyer’s agent knows there is always more to an offer than its price.
Step Five: Do a Home Inspection
In some states, a home inspection is conducted before buyers make a purchase offer. In other states, a home inspection is a contract contingency. A contract contingency means a buyer has the right to cancel the contract. You might not want to be locked into buying a home that has a faulty foundation, or property with multiple faulty conditions. Don’t try to save money to buy the biggest purchase of your life. Spend the money PLEASE.
Sellers are required to give you a list of potential or current issues when they fill out a property condition report but unfortunately are not all forthcoming in this. If there are issues found during the inspection, generally the seller is not required to make repairs but can be asked by the buyer’s agent in an amendment.