Buyer’s Guide

Buying your new home is a serious venture. It can be an absolute pleasure or a massive headache. Your house is not just your home, it is a serious investment in the dwelling, the area and your future.

When buying a home – you’re bound to have many questions. For example, “In what area can I find a home that suits my needs?”, “How much money will I need to afford the monthly payments?” and “How long will the home buying process take?”

Below are some articles that you might find useful in the home buying process. Please feel free to click on one of the links below to read more.

Buyer Articles


Advice for First-Time Buyers

  • Pre-Qualification: Meet with a mortgage broker and find out how much you can afford to pay for a home.
  • Pre-Approval: While knowing how much you can afford is the first step, sellers will be much more receptive to potential buyers who have been pre-approved. You’ll also avoid being disappointed when going after homes that are out of your price range. With Pre-Approval, the buyer actually applies for a mortgage and receives a commitment in writing from a lender. This way, assuming the home you’re interested in is at or under the amount you are pre-qualified for, the seller knows immediately that you are a serious buyer for that property. Costs for pre-approval are generally nominal and lenders will usually permit you to pay them when you close your loan.
  • List of Needs & Wants: Make 2 lists. The first should include items you must have (i.e., the number of bedrooms you need for the size of your family, a one-story house if accessibility is a factor, etc.). The second list is your wishes, things you would like to have (pool, den, etc.) but that are not absolutely necessary. Realistically for first-time buyers, you probably will not get everything on your wish list, but it will keep you on track for what you are looking for.
  • Representation by a Professional: Consider hiring your own real estate agent, one who is working for you, the buyer, not the seller.
  • Focus & Organization:In a convenient location, keep handy the items that will assist you in maximizing your home search efforts. Such items may include:
    1. One or more detailed maps with your areas of interest highlighted.
    2. A file of the properties that your agent has shown to you, along with ads you have cut out from the newspaper.
    3. Paper and pen, for taking notes as you search.
    4. Instant or video camera to help refresh your memory on individual properties, especially if you are attending a series of showings.
    5. Location: Look at a potential property as if you are the seller. Would a prospective buyer find it attractive based on school district, crime rate, proximity to positive (shopping, parks, freeway access) and negative (abandoned properties, garbage dump, source of noise) features of the area?
  • Visualize the house empty & with your decor: Are the rooms laid out to fit your needs? Is there enough light?
  • Be Objective: Instead of thinking with your heart when you find a home, think with your head. Does this home really meet your needs? There are many houses on the market, so don’t make a hurried decision that you may regret later.
  • Be Thorough:A few extra dollars well spent now may save you big expenses in the long run. Don’t forget such essentials as:
    1. Include inspection & mortgage contingencies in your written offer.
    2. Have the property inspected by a professional inspector.
    3. Request a second walk-through to take place within 24 hours of closing.
    4. You want to check to see that no changes have been made that were not agreed on (i.e., a nice chandelier that you assumed came with the sale having been replaced by a cheap ceiling light).

     

  • All the above may seem rather overwhelming. That is why having a professional represent you and keep track of all the details for you is highly recommended. Please email me or call me directly to discuss any of these matters in further detail.

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How to Negotiate with Sellers

Buying a home is one of the most important purchases most people will make. In order to make the right decision the first time, potential buyers need to be prepared. Consider the following before starting negotiations:

  • Be prepared Research the housing market in the target area. Once you have information about the general area, focus on the particular property and seller. Look for answers to questions such as:
    1. Why is the homeowner selling? (If they’re moving because they find the area undesirable, you might want to consider this issue.)
    2. How long has the home been on the market? (If it has been on the market for a long time, perhaps there are negative facts about the property that you need to know.)
    3. How much did the seller pay for the home compared to the current asking price? (If the seller paid more, find out why. Was it a general real estate trend, or did property values in that particular neighborhood go down?)
    4. What is the seller’s time frame for selling and moving? Does it fit within your needs?
    5. Are there any defects in the home or problems with the surrounding neighborhood? (For example, is the roof so old that it will likely leak during the next storm? Is there a new construction project in the area that will lead to major traffic congestion?)

As the potential buyer, you want the advantage. While you want answers to all your questions to the seller, reveal very little about your circumstances. Do not give the seller personal information such as your income, the maximum you are able to pay for a down payment or the home, or when you want to move. Make sure that your agent knows not to reveal any such information to the seller or his/her agent.

Also, do not let the seller see how much you want the property. If you appear desperate or overly enthusiastic, the seller then has the stronger bargaining position. When meeting with the seller or listing agent, keep your emotions in check.

  • Establish a Timeline Find out if the seller needs to have the sale closed sooner rather than later. If the seller is feeling pressured to sell, use that to your advantage in negotiating. Even if you, the buyer, are the one with the deadline for purchasing a home, don’t let yourself be rushed into making concessions or a purchase you may regret later.

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Bidding War Basics For Buyers

When you’ve found that perfect little house you’d like to call your home, the last thing you want is to have to compete with other potential buyers. But bidding wars — especially in hot real estate markets and urban centres — are more of a reality now than ever. So what do you need to know to stand the best chance at signing on the dotted “sold” line? Winning a bidding war is always a roll of the dice, but read on for the real deal on how to prepare before entering the multiple-bid realty trenches.

Loan Logic
Get pre-approved for a mortgage so you know the maximal financing available to you. By pre-qualifying for a loan, you’ll not only be aware of your offer’s ultimate ceiling, but you’ll shop around — and bid — accordingly. Speak with a broker to evaluate your options before you settle. A thumbs-up from the bank, along with agreeing to put down the biggest deposit or downpayment you can afford, can also help establish to sellers that you’re serious about buying their property.

Keeping Up with the Joneses
You don’t have to actually keep up with the Jones family, but when it comes to the houses you’re serious about bidding on, you do need to be aware of comparative market analysis. In other words, do research to learn what the fair market value for any house you’re interested in is considered to be, as well as the fair market value of similar houses that neighbour them. Real estate websites are good resources to get a sense of what’s out there. When you find out what comparable houses to the ones you’re looking at are going for, you’ll know if you’re shopping way beyond your means, or well within it. Knowing the current market value a house will fetch may also help you determine what you think other bidders will offer, to in turn establish the bid you want to make.

Play Clean
Don’t add unusual requests, terms or conditions to your bid, like, for example, buying someone’s home on the basis that you’ll first sell yours. Additional clauses contingent upon any extenuating circumstances can cause headache to vendors, who may have another offer at the exact price you’re tendering, but one without any loopholes. Which one would you choose? By nixing the contingency plan and making a “clean” or firm offer, you stand a better chance at getting what you want.

Inspect the Goods
Set aside a fund for pre-buy home inspections, which should cost about 1 per cent of the house’s asking price. This is often money well spent. If it turns out that the house you think you want to buy has a roof that’s about to fall in, better to know before you bid — especially since it might make you look twice at a very similar piece of property around the corner that is going for the same asking price, but with, for example, a recently renovated roof. Consider setting up a home inspection fund in case you end up in a bunch of bidding wars on houses lost to other buyers, since you’ll also have lost your home-inspection fee.

Don’t Get “Fluffed”
Fancy art, furniture that’s moving out with the homeowner and gorgeous draperies may make a formerly drab house look fab, but none of those things will be there when you buy the house. As soon as the showing’s over, the homeowner may well ship that Persian rug back to the prop rental store it was leased from. Also, the drama in the colour of the paint in the living room, dining room and bedroom might look impressive, but might not suit your furniture…at all. Just because a house may show famously, doesn’t mean it’s the right one for you. Make sure you’re not being taken in by the smoke and mirrors of objects that are not part of the home’s innate architectural charm.

Uneven Steven
Don’t bid $250,000 on a house whose asking price is $250,000 when you’re in a bidding war and your budget could easily permit you to extend $251,200. It may seem as though bidding an odd number would make little difference, but not only will your bid stand out from the rest, it may just beat an offer that came in at a slightly lower figure with a more common-sounding bid.

Revisit Kansas
Try to go back to see the house that seemed so magical to you on first viewing more than once — and more than a couple of times, if possible. One reason is that what strikes you as a great first impression may make a poorer second or third impression. Another reason is that more than a few sentimental homeowners have sold their house to a young family that somehow reminds them of themselves when they were starting out. Often, if you are able to meet the homeowner and they establish a connection with you, they may look upon your offer more favorably than that of another bidder — even if your competitor’s bid is higher.

Pull the Trigger
Try to figure out the vendor’s “trigger” — what it is that would make them sell. If you know that the homeowner has a certain closing date in mind which differs slightly from yours, offer to meet their ideal terms — sometimes this is all it takes to be selected over another bidder, even if the competing offer is higher. If you can afford to, add incentives like agreeing to pay all closing costs. And if you know the sellers are not looking forward to moving their weighty piano or basement-assembled pool table because it’s expensive to move and the closing date is tight, inquire about buying it to see if that will sweeten the deal.

Hide Your Hand
Bidding wars are a lot like gambling — the stakes are high and a lot of luck is involved. Rather than trying to figure out how much you can afford to bid without breaking the bank, try to strategically figure out the highest competing bid you’re trying to beat. If you don’t have finely honed psychic abilities, what helps is knowing the true value of the house. Let’s say you’re pre-approved for a $400,000 loan and the house you’re interested in bidding on would, according to your realtor’s estimation, be fairly priced at $350,000 as compared to other similar houses in the same ’hood. If you know that the homeowners are not accepting offers ’til Saturday, and have listed the asking price at $345,000, and then find out Saturday that there are two other offers, think about what those two other offers might be. You may be smart to bid higher than their asking price and more than fair market value but still less than $400,000.

Know Right from Wrong
In the end, don’t get caught up in the excitement of bidding. There’s an age-old maxim: “buy the most expensive house you can afford.” This is a savvy real estate suggestion, because if you can afford a $325,000 three-bedroom home but instead settle for a $275,000 one-bedroom home thinking you’ve saved some money, you could regret it sooner than you think. Consider that if you need that extra bedroom space — like if you and your partner decide to have kids — you’ll be looking to buy a new house, sell your current living space and move house in a relatively short period of time. It’s just common sense to make the highest offer you can afford that you’re comfortable with. Every time you visit a new property ask yourself: Is this the wrong house? That’s right, the wrong house. Rather than falling blindly in love with any given dwelling, play devil’s advocate with yourself, scrutinizing how the house you’re looking at right now is any different from the one around the corner that you just looked at. In bidding wars, there’s a grave danger of overpaying if you get swept up in the auction-like fray — know when to fold ’em, walk away and run.

So before you engage in battle, arm yourself with credit pre-approval, a little research, an arsenal of financial strategies, heightened market value awareness and a great realtor. Then cross your fingers and go forth to find your own home sweet home.

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Why A Home Inspection

Whether you are looking to buy or sell a home, you should have a professional home inspection conducted. If you are buying a home, a home inspector will ensure the systems and foundation of the home are free from severe damages that may increase your liability in the future. Likewise, if you are selling a home, failing to receive a satisfactory home inspection will make it very difficult to sell your property.

General home inspection items include:
– Structural elements of the home (walls, ceilings, floors, roof, foundation etc)
– Exterior (landscaping, grading, elevation, drainage, windows, trim etc)
– Roofing (ventilation, framing, gutters etc)
– Plumbing (drain, waste, pipes, toilets, showers, sinks etc)
– Electrical (circuit breakers, main panel, wiring, grounding, exhaust fans, light fixtures etc)
– Appliances (dishwasher, oven, garbage disposal etc)

If you are purchasing a home, you need to know any underlying issues with the home before you close the deal. A professional home inspector will disclose any known problems with the home that may affect your buying decision.

If you are selling a home, you should know about any hidden problems before your home goes on the market. Usually, any buyers will require a professional home inspection as one of the contingencies before they decide to purchase. If the inspector addresses any serious problems, the buyer will likely back away from the deal. Any issues with the home should be fixed before your home is put on the market. This will make selling your home a lot easier.

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Applying For A Loan

Applying for a mortgage is often the most stressful time for home buyers. After all, securing financing can be one of the most critical factors in achieving your goal of purchasing your dream home.

However, by following these few basic tips, you will be well-equipped to glide through the loan application process:

1.  Know about different loan programs available

It is important to understand the differences between the various mortgage programs available to you. You should also be aware of the advantages and disadvantages of Fixed Mortgage rates and Variable Mortgage rates.

2.  Lock in the interest rate or let it float?

If you decide to lock in your interest rate, you are committing to a set interest rate throughout the term of the loan. If you decide to let your interest float, the interest rate you pay will fluctuate up or down depending on current market conditions. Historical data indicates that Variable Mortgage rates have been the best choice for consumers.

3. Shop Around

Don’t rush into anything you aren’t sure about. Take your time to study your options and decide which package suits you best. The last thing you want is to find out that you could have gotten the same loan from another lender at a lower interest rate.

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