Find out the process of
buying a home in 10 steps. From finding your house and obtaining a
mortgage until the closure.
Buying a home can be a
long and complicated ordeal. You will probably be making the biggest
purchase of your life. It is a process which takes careful
consideration because you (and your family) will be making it your
home for years to come.
To aid you in this
process we will list the most important steps at which you should
look carefully.
How To Buy a Home
First tip for buying a home
Do not be naive when it
comes to the legal aspects of buying a home. There will be a lot of
documents which need to be signed and thoroughly read. If in doubt,
always contact your lawyer. The terms and conditions can be
misleading and incoherent, so if you are unsure of yourself, get
some professional aid.
Second tip
Carefully study your
financial situation. You can judge your situation by asking yourself
the following questions:
Do I have a steady source of income? Have I
been employed on a regular basis for the past 2 years? Can I rely
on my current income?
Is my credit history sound? Are the bills payed
on time each month?
Are there any other longstanding debts which
need paying off?
Do I have sufficient funds for a possible down
payment?
Will I be able to pay off the mortgage payments
each month?
If the answers to the
above mentioned questions are negative, it will be hard to find the
right mortgage. Try to manage your current situation so you will be
able to give more favorable answers (for the lender) to the
questions when buying a home.
Third tip
Think about what your
ideal house should have. What does it require to fulfill your needs.
For example, one bedroom or two (maybe you wish to expand the
family). Garden or no garden? Etc.
Fourth tip
Find the right broker. Find
a reliable broker with whom you feel comfortable.
Fifth tip for buying a home
Find the right mortgage for
you. A mortgage is of course the most important aspect of buying a
home. Pay close attention and do your research. Here are the most
common mortgages available:
Fixed Rate Mortgages (FRM) - FRMs are still considered
the best types of loans available for many people due the simple
fixed rate concept. This entails that the interest rate will not
fluctuate over time.
Adjustable Rate Mortgage (ARM) – The main
difference in regard to the FRM is the fluctuating mortgage rate.
This is dependent on outside influences such as the prime interest
rate. The main advantage is that the rate can be favorably low at
times.
Federal Housing Administration (FHA) – A
government-insured mortgage with the following advantages:
- You can put down less cash to qualify under liberal guidelines
- There is no maximum limit on income to qualify.
VA loans (Veterans Administration) - VA loans benefit
borrowers who are eligible veterans. Liberal qualifying, little or
no cash down, relatively high loan amount.
Sixth tip
Find the house you wish to buy. There
are several ways of buying a home such as:
Buying a built home. Buy a used home which you feel already
caters for your needs.
Build a house.
Manufactured home
Rehab a home (fix up the house)
Seventh tip Get the home inspected. Before making an offer it
is good to get the home inspected by an independent authorized home
inspector.
Eighth tip
Get the house appraised.
The lender requires you to do this when buying a home to assure that
the amount you loan is not more than the value of the house. For
this process it is advantageous to call in the help of an appraiser
or your broker.
Ninth tip
Get a homeowners
insurance. This is for the benefit of you and the lender when buying
a home.
Tenth tip for buying a home
Settlement (closing).
The closing is often the most confusing step of buying a home, which
can involve several persons, documents which need signing and
several fees to pay. However, the settlement procedure may be a lot
simpler when you have a better grasp of the process.
How To Sell Your Home
You'll find home selling tips for houses, town homes, villas, and
condominiums, scams to avoid, how to choose a seller's real estate
agent, what to put in your contract, real estate agent tricks to
watch out for, and negotiating tips for dealing with tough buyers.
Great Expectations
Many sellers have unrealistic expectations for their property value,
especially on condominiums and townhouses. These types of property
at least here in Florida do not hold their value very well, and very
few of them appreciate. Often the builders of new condos and
townhouses charge buyers too much money and when the buyer resells
years later, they are shocked to see how much value their unit lost.
They will have a hard time selling their condo, especially if the
maintenance fees are high.
In how to buy a home, we tell you that sellers do not set the price,
it’s the buyers and the market who set the price. We
buy stocks all the time that drop in value and real estate can do
the same thing. There are no rules of what
appreciates or depreciates. Some sellers get the idea in their head
that their house should sell for say $200,000 because they bought it
a few years ago for $175,000. They may have bought the house when
the market was hot, and in a soft market, their house may not be
worth the asking price. A millionaire in Fort Lauderdale put one of
his homes up for sale in 1999 for $12 million. A year later he
lowered the price to $10 million. By early 2001, the asking price
was $8 million, and still no sale. This is another case of a seller
thinking they could set the price. The market was forcing him to
lower the price. If you don't price your property correctly to the
market, you simply won't sell it.
So how do you
price your home?
There are three tools to use, a property appraiser, a listing
real estate agent, and a list of recent home selling prices in your
neighborhood. If you wisely chose your listing agent and they have
experience in your neighborhood, they can guide you to a ball park
selling price, then the appraiser will fine tune that number, and
you can use a list of recent selling prices as a sanity check. The
appraisal can cost $250 or more.
Pretty it up
before you list it.
Before you turn your home over to the listing agent, make
sure it’s in it's best form. First impressions count and the first
thing buyers see is your front lawn and garden. Make sure your lawn
and trees are fertilized about 2 weeks before you list the house.
Make sure that the lawn is in good shape, and has a perfect edge
along the perimeter, make sure the garden looks nice, with no weeds,
and repair any cosmetic damage to the house that can be seen from
the outside. If your driveway has oil stains, it could be time to
reseal it. If you have a paver brick driveway like me, make sure it
has a good fresh coat of sealant on it. It makes a world of
difference. You don’t want any letdowns at all when the buyers drive
up to look at the house. Try walking down your street and see what
looks good on the other houses, and note what
looks bad. Put yourself in the shoes of a buyer and list the items
that make a house undesirable. Think curb appeal. Spending a
few dollars on some flowers can go a long way. For $50 you can buy
several bags of wood chips and a few trays of flowers and have your
garden looking 100% better in one
afternoon. Fertilize the lawn also. Give
it curb appeal, and house buyers won't just slow down and drive off,
they'll park and visit.
Replace your AC
filter and any other filters that might be checked during the
inspection process. Don’t leave black marks and scuffs on the walls,
either clean them off or walk around the house with a can of paint
and spot paint. You want buyers to see perfectly clean walls.
Remove any excess rugs and furniture to make the
rooms look bigger. If your house is empty, make sure the
carpets are clean and vacuumed. If there are any stains, have them
cleaned off. Do not let buyers in your house
until you have clean carpets. You want your house to get top
grades all around. It will give the buyer
fewer things to complain about, and fewer items to negotiate the
price down with. In short, pull out all the stops to make your house
look as desirable as you can. Give the buyers every reason in the
world to buy your house, instead of excuses not to buy it. Remember
they are looking at 15 other houses, and your house better look
nicer than 15 other houses, or it will not sell.
How to
photograph your house
Don't photograph your house with a car in the driveway. It's
a no brainer, yet I see idiots all the time with a car in the
driveway for the photo. What were they thinking? You're
selling a house, not an SUV.
Photograph your house on a nice sunny day with a few clouds in the
background and no cars! No toys, no trash cans,
close the garage door, just house and lawn. Take the picture
at the time of day when the sun is shining at the proper angle to
light up the entire front of the house. This usually means not
taking the picture when there may be deep shadows
on the front. Get a decent camera
and take several shots of the house and choose the one you like
best. Then print several to give out to your selling agent. Don't
rely on your agent to take the picture, most of them just don't have
a clue. I see too many Real Estate Agent ads with cars in the
driveway. I'll bet half those cars belong to the idiot who took
the picture. Taking the photos yourself means you have more to give
to a second agent if the first one does not work out. Then
you don't have to go through getting pictures taken of your house
all over again and chance that they are done wrong
again.
Real estate agent scams to watch out for if you're
selling the house yourself
You have an ad in the paper. Real estate agents call you like
crazy, saying they have a "Re-Lo", (relocation buyer), coming in
from out of town, who is desperate to buy your house, as they love
what they saw in the ad. The agent wants to see your house so they
can report back positive comments to their phantom client who will
supposedly buy your house. But what really happens is the agent
shows up and slaps an excusive contract in your face and "promises"
they'll get their client to buy if you sign their exclusive
contract. My friends were selling their house and 5 agents pulled
this trick on them. There's no buyer waiting in the wings, these
are just loser agents who can't get a seller to list their house
with them the honest way, so they pull this scam, which they all
learned at the same seminar. They are playing to your heart
strings, telling you just what you want to hear: "I can get this
guy to buy your house". But there are 2 realities. First, they
lied about having a buyer waiting in the wings. Second, no one in
can promise that someone else will buy your house. Here's how you
unravel the scam when they call you. When they call you, tell them
this:
"I'm on to your scam, you're the 6th real estate agent to pull this
trick on me so far, which frankly I find unimaginative, and I'm not
signing an exclusive contract with you, nor anyone else.
Furthermore, you can't even come over to see the house unless you
have this phantom buyer with you. Don't even think about showing up
alone, the buyer does not need you to view the house for them, they
want to see it themselves."
"You'll never get that high of
an asking price for your house".
This is one of the top complaints I hear from sellers about their
agent. You would think the agent knows more about property values,
but often the appraisal sides with the seller. Agents who pull this
trick seem to
want you to list your house for less to get a quick sale. My sister
wanted to list her house for $210,000 but 3 different agents told
her "they'll never get that in a million years."
That is their exact words. These are professionals who are
supposed to know their neighborhoods and prices. One agent wanted
to list the house for $195,000. But a better agent had an
aggressive and professional marketing plan and took the listing at
$210,000. Luckily for my sister, the
appraisal came in slightly higher than $210,000, leaving the other
real estate agents in the dust. My sister also knew houses were
selling like hot cakes in their neighborhood, and sure enough, it
sold in 10 days, for $205,000 before the marketing plan even had a
chance to be enacted on.
The question is, why didn't the other real estate agents know this?
They knew, alright. They were just after the
quick sale. They would have cost the seller $15,000 in losses.
SELLER'S TIP:
Part of the commission you pay your agent to sell your
house should be used by the agent to advertise your home in web
sites, newspapers, magazines. Make them put it in writing that they
will use all these sources. Don't accept verbal
promises. Selfish agents try to maximize commissions by
spending nothing on ads, just listing your
house on MLS, and giving you excuses why advertising is a waste.
This unethical practice is a bad for you, and takes longer to sell
the house. This type of agent I'm sure
will also demand lengthy exclusive listing agent contracts.
Stay away from
long term contracts!
Don’t sign long term exclusive agent contracts. Any decent
agent should have your house sold in 90 days in a good market. Of
course agents will complain to me about this. But if they really are
as good as the picture they painted for you, they should have your
house sold in no time. With a 90 day listing period, you put the
pressure on your Real Estate Agent to do some work and sell your
house. Many of our friends who sold houses report that their real
estate agents aggressively tried to shove long term contracts down
their throat. Don’t let this happen to you! For more detailed tips
on choosing and working with real estate agents. You'll also find a
great list of the top home buyer complaints about real estate
agents, and a list of the top Real Estate Agent "sales gimmicks" to
watch out for.
