Juli Doty - Real Estate, Real Advice

Buyers

Buying a Home is a Big Job

First, you make the decision to buy. You then get pre-qualified with the lender of your choice, decide how much you really want to spend, organize your home buying wish list, get familiar with the market, choose a great agent, tighten down your search, compare possibilities, make an offer, negotiate, get the loan and get the deal closed.

That horribly lengthy paragraph should have exhausted you. It's easy compared to the actual work of making a great real estate buy.

Making a great buy can set you up for a financially secure and successful life. By choosing the right home, you will have an asset that gets more and more valuable. Every time you buy a home right, it pays you.

Get Ready!

HOW MUCH MONEY HAVE YOU SAVED for a down payment?

Your goal should be at least 10% down and preferably 20%. This must be actual savings, not available credit on your credit cards.

In order to build your savings faster:

• Create a budget. Include rent, utilities, groceries, debt reduction. Everything.
• Track 100% of your spending. You may be shocked how much money "gets away" from you each month. Stop wasteful spending. Eating out is a huge monthly expense in many households.
• Pay off small balance credit cards and then consolidate high interest credit card debt onto your low interest cards.
• Instigate a new policy that every purchase must be paid in full at the time of purchase. No more charging things you "want'.
• Instigate a 3-Day Rule: No major purchases until you wait at least 3 days.

Get Set!

CHECK YOUR CREDIT. What is your credit score? Is it good enough for you to get the lowest interest rates? If not, go to work right now and clean up your credit.

WHAT KIND OF HOME DO YOU WANT? Have every member of your family make a list of what they want in a home. Include the size, number of levels, location, school district, yard size and whether the home should be new, used or antique. Anything can go on this wish list. It is very appropriate to allow the kids and senior members of the family do this.

Over many years of working with clients I learned that very often, a wife would be shopping for what she thought her husband wanted and at the same time the husband was shopping for what he thought his wife wanted. Do not allow this to common problem to happen! Everyone should write their own list in private and then have fun as you share ideas.

DO YOU HAVE A REAL ESTATE AGENT? Working with a buyer agent allows you easy access to more homes. Be ever so careful that the agent you choose is working for you. Things to consider:

• The listing agent has a legal duty to get the highest price at the best terms for the seller. When you write an offer with the listing agent never tell them how much you will pay or other personal details. You are the only one concerned about your best interest. Some people think it is bet to write their offer with the listing agent as they have a direct line to the seller. I disagree. That direct line to the seller does not make up for the strength offered by a quality buyer agent who is working in your best interest.
• Your agents' job is to research the market, find homes that might work well for you, analyze appropriate prices and make sure your receive full disclosure, understand all your options and every document presented for your signature. Your agents' job is to ensure you are afforded every opportunity while being protected from risk.

GET LOAN PRE-APPROVAL. You will sign a document allowing each potential lender to check your credit. The lender will request verifiable documentation of your bank account balances, job history including payroll records, 2-3 years income tax reports and a list of your assets which includes real estate, vehicles, savings and investment accounts. They will give you a disclosure statement with all costs of the loan. You can interview and apply with various lenders including banks, mortgage companies and credit unions. Very often the amount at which a lender will approve you for a home loan is more than you should spend. The number the lender gives you is a maximum financeable, not the right amount for you to borrow. It is your job to have the restraint required. Do not over buy. Do not buy a house that you cannot really afford.

EVEN BEFORE YOU FIND THE RIGHT HOUSE be sure you fully understand the offer paperwork. Know how offers work. Understand the form and all of it's options. Analyze the appropriate price for the house. Know what to expect to all the parties. Be prepared to make an offer quickly in a hot market. Keep deadlines short and your offer practical. Attend the offer presentation. Watch the attendees. Take careful note of the physical and emotional reactions of the people attending the negotiation. You are looking for their "tell" which is how you will learn what is really important to the other side. Stay calm. Do not over react.

See the Details When You Look at a House

What is the visible condition of the property? Poorly maintained outside probably means problems inside. Problems inside or outside are a clue that a good deal may be negotiated on that home.

Does the house need major repairs? A new roof or furnace system can be costly. Consider repair costs if you decide to make an offer. Homes prices should be set according to the market, the condition and the location, however, that is not always the case. Do your own price analysis based on what you see and what you can learn from the listing agent, home owner and neighbors.

Has the house been well-maintained? Ask the sellers if they have kept any maintenance records. Do not be fooled by a fresh coat of paint. Look deeply into the house to ascertain the actual level of maintenance the home enjoyed.

Where is the house located on the block? Corner lots can be large, but exposed to more traffic and noise. Interior lots can be quieter but too close to neighbors.

What condition are other homes on the block in? If neighboring properties are run-down, they may affect your resale value. If you are in a money making mode, consider asking the neighbor if they want to sell. The best buy is often the worst house on the block.

How long has the house been on the market? A long time on the market indicates a problem. It is your job to find out what that problem is. Are there problems with the house or neighborhood that you need to know? It can also indicate a difficult seller or agent. Investigate, and use the answers to your advantage.

Why does the seller want to sell? If there's a problem with the house or the neighborhood, assess the situation carefully. Investigate possible neighborhood developments that might be undesirable. A job transfer is the most common reason. A family getting smaller or larger. Divorce. Difficult neighbors. Make sure you visit the neighborhood in the morning, afternoon and evening before you write an offer.

Signs a Bargain Might Be Available:

On the market more than four months

Series of cost reductions

Your comparative market analysis doesn't match the sales price

Critical Details - This is Not the Time for Step Skipping!

1. Learn the roles and duties of real estate licensees, especially who each agent represents. Misinterpretation means you give away money. Buyers may innocently disclose information about their buying needs, financial abilities and negotiating strategies to sellers and their agents, especially when not aware of the roles of the licensees involved in a transaction.
2. Buyers often think that sellers pay real estate commissions as well as other closing expenses and seller concessions. In fact, all the money is coming from the Buyer.
3. Buyers often think mortgage companies and appraisers protect and promote the best interests of the buyer.
4. Buyers fail to understand how important it is to craft their written offer.
5. Buyers don't appreciate the benefits they gain when they actually receive the undivided loyalty and trust of a buyer agent. They do not comprehend the power plays between real estate services and real estate commissions.
6. Buyers must understand the rules and practices when competing with multiple offers on one house.
7. Buyers can be unaware of the importance of personally attending home inspections, negotiations and other reviews.
8. Buyers frequently have not been taught the long term value of purchasing an enhanced equity position.

Buyer Closing Costs and Fees

View a sample buyer closing costs and fees breakdown (PDF format, 31k)