Tips to Buying a Home

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Earnest money is money that is included with your offer. It is typically 1% of the purchase price, but is negotiable. It's in your best interests to put down as little earnest money as possible but still be taken seriously by the seller and seller's agent. Generally speaking the money is held by an escrow agent, like a title co. and not directly by the seller. The money is usually refundable if the inspections are unsatisfactory, if the seller backs out of the contract, or your financing falls through. However, this money is not refundable if you simply "change your mind" so it's important to realize after you sign off on the inspections and negotiated on repairs, you have purchased a home and are part of a legally binding contract. This is even more important if you are building a new home (see the section "Building a New Home") as the earnest money required is typically much higher and not refundable.

This is a biggie! If you are not a first time buyer and you have a house to sell, I can't more strongly recommend that you sell your home first. First of all, in this market sellers are often unwilling to accept a contract that is contingent upon the sale of your home. You may also become emotionally attatched to your "dream home" and end up selling your current home in a panic at a lower price than you normally would have found acceptable. This is a very stressful situation to put yourself in and really unnecessary. Some people choose to get a "bridge loan" and sometimes this works, but I would still advise you not to move out of your current home until it's sold.

Make sure your Realtor pulls all of the comparable homes in the neighborhood and their sale prices prior to making an offer. Having this knowledge is essential to getting the best deal on your new home. Don't assume that because you got a certain % off the list price that you got a great deal. If the house was overpriced to begin with you may have just bought it at market vaule! The opposite is also true; you can pay full price for a home and still get a great deal on it, if it's underpriced for the market. This is why having "comps" for the neighborhood is so essential.

Some Buyer's Agents have gotten a bad name out there. Here's the scoop. A Buyer's Agent represents exclusively your interests. If you call the listing agent of a property (either from an ad or off of the sign) they represent the interests of the seller and by law must present all things in the light that would most benefit the seller, not you the buyer. The seller actually pays all of the commission for a Buyer's Agent so it costs you nothing to work with an agent on your behalf. Your Buyer's Agent is bound by law to represent you to the best of their ability, they have to make every effort to get you the best terms and price on your new home! Why wouldn't you have one? Well, some sellers are happy when you don't have your own agent. They know that if you have a Buyer's Agent we encourage negotiations that get YOU the best deal. Sellers (and their agents) like it when you show up without an agent and don't even bother with pesky inspections. They love it! They don't have to worry about repairs and essentially leave you holding the bag. Bottom line: get your own agent and buy your home for thousands less and get thorough inspections and get the items you request fixed.

Even if you don't plan on moving for awhile, knowing the resale appeal of your home can help you make important decisions about your home purchase. Some areas are more popular and will always be easier to sell a home in. In addition, consider negatives like backing to a street or other undesirable locations and what effect that will have on your resale value.

Did you know that agents that are members of our area MLS can show ANY listed property? I have a lockbox key that opens the door to every listed property in our area regardless of who the listing agent is. So, if you see a house that's listed with another company you can call me to show it to you. All of the agents cooperate so that you can select the most highly qualified agent and be assured that you have access to ALL of the listed homes through that agent. Even if it's not a Keller Williams listing, I will be more than happy to show it to you and represent you in that transaction.

Be aware that several of the large real estate companies in town pay their agent's a bonus for selling their own company's listings. If you wind up with an agent from one of those companies they may try to steer you towards their companies’ listings to increase their paycheck!

A C.L.U.E. report, that is. As a buyer client of mine, I will advise you to ask for a C.L.U.E. report. It will give you the entire 5 year history of what insurance claims have been made against the property. This is so big, and hardly any agents think to ask for it, or even know what it is. It costs the seller $20 to get the report and provide us with a copy. I see more and more problems arise out of homes that are uninsurable, or worse a buyer moves in and finds out there was undisclosed fire or water damage!

The first step in buying a home is to find out how much you can afford. With that said, the lender you choose can make or break your home purchase. It's important to choose a lender who can offer you not only a great rate, but also the systems in place to make sure your loan closes on time. I highly suggest getting a "Good Faith Estimate" from at least two lenders so that you can compare their costs side by side. Also, be sure to ask your Realtor for recommend some lenders. If he/she has been in the business very long at all they will know reputable lenders, after all this is their expertise! Unfortunately, this is the biggest place where we see people waste a lot of money by paying really high (and unnecessary) closing costs. You should never be asked to pay an application fee and it's free to get pre qualified.

In the past few years loans with no down payment have become very popular. But if you can save even 5% down, you will often be able to get better rates and qualify more easily. If you don't have a downpayment, letting your Realtor and lender know can help them find the most appropriate loan program for you.

You don't know what your credit shows until you take a look. If you do have blemishes from the past, even bankruptcy, most lenders will overlook problems if the past two years show good credit practice on your part. You can check your credit score and get a report (for a small fee) at My Fico. You are also entitled to one free credit report from each of the three credit bureaus: Experian, TransUnion, EquiFax. PLEASE be aware some of these companies will try to "sell" you different services to watch your credit, which is (in my opinion), unnecessary. They may make you write in to obtain a truly free credit report to make it more difficult, of course. they'd like to charge you to view it online. Also, please be aware of where you enter your personal information as identity theft is a growing concern.

A Realtor's knowledge of the local laws, customs, area, fee and market conditions can give you an edge against the competition. Also, if you have a well conected Realtor he/she may actually know about homes that aren't even on the market yet. Your Realtor can also help you narrow your search to a certain areas or rule out certain areas. Again I am networked with great agents all over the country in all 50 states, contact me for a referral to your area of choice.

Put your home wish list in writing. This is a great way to really focus on what things you need vs. things you want. I have a complete form in my Online Buyer's Presentaion. I think this step is especially important if you are searching for a home with a spouse--you really want to know upfront what's important to them and yourself.

You typically have a 10 day time frame after the acceptance of your offer to get a home inspection. You can expect to pay anywhere from $300-$500 for a complete home inspection. The inspector may also offer radon testing (see below) as well as termite inspections. This is not the time to find the cheapest inspector you can! It's essential that your inspector has liability insurance. Again, the best source for finding a great inspector is your Realtor.

Radon has become a serious problem for homeowners in the Midwest. Click here for more informaiton on Radon from the EPA. In brief, Radon is an odorless, colorless gas that has been linked to lung cancer. The highest levels are usually found in the lowest level of the home. We always recommend that buyers test their new home for radon. Often times sellers are willing to pay for all or part of the costs to mitigate an elevated Radon level. The bad news is a large number of our houses here in the area have an elevated Radon level, the good news is, it's an easy fix. A mitigation system costs around $800 and can completely mitigate elevated Radon levels.