11 Things You Need to Know about Buying a House


1.  Work with a Realtor you can Trust.  Don't think for a minute calling every sign for every house you like is in your best interest! Hopping from sign to sign or broker to broker is not your smartest move.  Remember, the Seller pays the Buyer Brokers commission and the Listing Broker (the person with the sign in the yard) is representing the SELLER, not you!   A double dipping listing broker (yes, they do get both sides of the commission) is not working in your best interest.  Their #1 job is to get the best deal for their Seller client.  

Working with a Buyer Broker in your transaction ensures a much better home buying experience.  Find an honest, upfront and trustworthy real estate professional. Remember they are working for and representing you and your best interests.  If your broker only tells you the "good stuff" and none of the bad 


2. Don't buy for the life you have today.   Plan ahead.  Just because a 1 bedroom condo or a 2 bedroom house works for you now doesn't mean that's what you should purchase.  You never know when you need an extra room for an office, art studio, or growing family.  Most buyers plan on staying in their first place for 5-7 years, then leveling up.  If you are planning on getting married, expanding your family, relocating for work or personal, then plan accordingly.  Discuss with your real estate professional all you can so they can offer recommendations if needed.   


3. Look beyond the cosmetics.    Look at the BONES of the home, are they solid?  Are size of rooms okay?  Floorplan work for your lifestyle?  Will the furniture fit?  How about the Kitchen size?  Storage?  Any structural issues?  Falling in love with the granite in the shiny new kitchen can distract most buyers, who often end up paying top dollar.   Instead we recommend looking at what can be done to improve the home.  Don't underestimate what a little paint, new carpet and elbow grease can do for your new home.  Be careful of paying top dollar because someone rehabbed cheap and put lipstick on a pig.  Is it a good rehab or did they cut corners? (see #9)  How does the home value compare with neighboring sold comparables?  These are questions to ask your real estate professional.   


4. Know the difference between Seller Market and Buyer Market.   When the housing slump hit us all after 2008 - it was definitely a Buyer Market.  We had more inventory on market, for lower price tags and market times were upwards of 8-15 months in some areas.  Alternatively - now we are in a Sellers Market.  We have limited inventory on market and homes are selling fast - sometimes within a few hours!   A Sellers Market is not the time to offer "low" on homes or ask for large assistance with paid seller closing costs.  If you want the home, don't mess around.  We don't always get a second chance these days, and disappointment in not getting the home hurts.  Don't worry though, new homes are coming on market every week.  Your home is out there!   


5. What are Seller Closing Costs?  You already know you need your down payment, but buyers also have closing costs due at closing.  The amount varies but expect $3500-$4200 additional.  During negotiation we can ask for Seller Closing Cost credits, depending on what you need if you are short $.  If you don't need the assistance for closing costs, we recommend don't ask for them!   You will pay interest on the amount you are asking for over the term of your loan, which will be much more than paying it now.  


6. Get Preapproved BEFORE you enter a single home!   You are NOT buying a car, you don't test drive a home and then "see" if the numbers work.   Quite the opposite!   Your real estate professional can provide a recommended transaction partner to review your financing options.  Whatever the lender requests, give whatever documents are requested within 24 hours so you don't delay the process.  Be sure to communicate if you ever had a bankruptcy, divorce, foreclosure, pre-foreclosure or short sale, defaults in loans, etc.  They need to know more than your income and debts to calculate through the process to shop for your best rate.   Your lender will relay to your real estate professional the best case scenario so your numbers work, every penny down to the DTI has to coordinate for the final underwriters to approve your loan.   A savvy and astute lender is imperative to getting a transaction to the closing table.  


7. Buy the home you know you can afford.   I remember my grandfather telling me that housing expenses should never be more than 1/3 of your monthly net income, and that still rings true today.  This includes your mortgage/insurance/utilities/HOA if applicable.  While your numbers may qualify you for a home more than that,


8. Plan for a Rainy Day.  Keep a "house fund" of 6-9 months in reserve "just in case" a job loss, illness or life hiccups take center stage.  Build it up over time and don't touch it.  It's not for vacation or to buy a new TV or car.  Invest it and if you never need it, great!  But if you do, these challenging moments will be more manageable.    


9. Get a Home Inspection.   The best $ you will spend during your transaction is the home inspector.  Using a certified, state licensed inspector will allow you to better negotiate or get out of a contract with an unwilling to cooperate seller.  True, it's a cost you won't get back - but they will identify problems in the home that may be unseen to the untrained eye.  They test all the electric, check for plumbing issues, crawl around in your attic or crawlspace, and can report if there are any questionable items to request repairs or credit from seller.  


10. Hire a real estate attorney.  If you don't have one, your real estate professional can recommend one.  Attorney fees are paid at closing (or invoiced if your deal falls apart) and cost $400+.   Don't cut corners on an attorney.  You want someone on your side to navigate the process after contract that can continue to work on your behalf.  Buying or selling a home is the largest single transaction you will likely make in your life. A purchase involves contracts, work with a real estate attorney that understands these contracts.  Be sure you are represented during the process.   


11. You don't have to buy a house.  It's true, you don't.  But consider the dollars you are throwing away while renting.   If you paid rent of $1200/mo x 7 years = $100,800 you could have put towards your own home.  Rather than paying your landlords mortgage, why not instead pay your own?