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Buying Tip - Do Your Homework First
Finding a home you like enough to buy is exciting. It can also be frightening. What if you pay too much, or buy a home you end up hating? To ensure a successful home buying experience, do your homework before you make an offer.
It's useful to make a list of the features you want and need in a home. If you have a wish list, how does the home you're considering measure up? Home buying involves making compromises. However, if the home in question bears little, if any, resemblance to your wish list, reconsider.
Buyers who haven't gone through the exercise of analyzing their housing needs should do so before making an offer. A purchase offer becomes a legally binding contract once the sellers accept it. If you back out of the contract for a reason that's not allowed in the contract, you could suffer financial damages.
When you're sure you've made the right decision, the next step is to put your finances in order. Today, many buyers get preapproved for the mortgage they'll need to make a home purchase. A preapproved buyer has loan approval subject to finding a home to buy. If you aren't preapproved, contact a mortgage broker or loan agent and start the process. Ask your loan representative for a letter that states that your loan application has been submitted and that your good credit has been verified. This will help in your negotiations with the seller.
Next, find out as much as you can about the seller and the property. Your real estate agent should have a conversation with the seller's agent to find out as much as you can about the seller's situation. Also be sure to read any existing reports on the property.
Most home sale negotiations involve give and take on the part of both the buyer and seller. If you discover that the sellers have already bought another house, you might be able to negotiate a discounted purchase price if you offer to close the transaction quickly.
Before you start negotiating, make a list of the terms the sellers want, such as a short close, a certain price, or an all-cash deal. Then make a list of the terms you want, such as a certain price, a long close, seller carry financing, or the freestanding appliances. If you can offer the seller something he wants in exchange for something you want, you'll have a win-win situation.
FIRST-TIME TIP: To avoid over-paying, ask your agent to prepare a comparative market analysis of the home you're considering. Use information about other similar homes that have sold recently to determine an appropriate price for the listing in question. Find out how long the listing has been on the market. How well priced is it in comparison to similar homes that are currently listed for sale?
Set a realistic price limit for yourself. This limit should be based on what you can afford and on what the house is worth. Resolve not to pay significantly over your limit, but don't lose out for a small amount of money. Good houses are hard to find.
Review the purchase agreement that you'll be using before you sit down to make an offer. Most buyers overlook this detail. Offers are often made in haste. Consequently, many buyers don't understand the terms of their purchase contract even after the seller has accepted it.
THE CLOSING: Don't be surprised if you feel like withdrawing your offer before it's presented. It's common for homebuyers to approach a purchase with trepidation. Buying a home is a big commitment.
By: Dian Hymer November 12, 2001
Dian Hymer is author of "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.
Copyright 2001 Dian Hymer
Distributed by Inman News Features
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