If you’ve read my previous articles on clark.com, you know that I paid off my $86,000 mortgage in 2 years. Now, I’m excited to be moving into a new home after recently becoming a third-time homebuyer. While the real estate process isn’t new to me, there’s always something to learn because the industry is evolving so quickly.
Here’s a list of 10 things that you need to know before buying your next place
1. Assess your needs and wants
Before I began my search for a new home, I made a list of my needs and wants on a piece of notebook paper and tucked it away in my wallet. This exercise helped me narrow the property search and save time. I realized that location was more important to me than square footage and that I would consider a fixer-upper for the right price. Be realistic. Just like on those real estate TV shows, you may not be able to get everything on your list.
2. Don’t immediately fall in love
This can be tricky because when I went to preview homes I tried to visualize myself in the space. I would think about where I would put my furniture, how I would paint the walls and even where the plants would go. That’s not a bad thing. However, I got into trouble by getting so excited about a property that ended up being out of my price range. Try not to get ahead of yourself. If it doesn’t work out, you’ll find something else.
3. Get pre-qualified before you write an offer
You want your offer to be the most attractive to the seller in this competitive real estate market. Sure, price is one factor. But another one is your overall financial health. Getting pre-qualified before you submit an offer gives the seller confidence that you’ll be able to complete the transaction. It also gives you an idea about how much of a monthly payment you’ll be able to afford.
4. It’s okay to walk away
Negotiating doesn’t come natural to all of us. I found the back and forth with the seller to be one of the most difficult parts of the homebuying process. If the seller isn’t willing to negotiate, don’t hesitate to move on. Maybe it’s a sign that home isn’t for you. With one particular home I was considering, the seller had a change of heart and wanted to negotiate after I had given up on the deal.
5. Shop for the best lender
Your real estate agent can provide you with a list of preferred lenders. Keep in mind, a competitive rate isn’t the only factor to consider. As a buyer, you’ll be asked to complete a lot of paperwork under deadline pressure. You want an organized loan specialist who won’t ‘misplace’ any of the documents that you’ve forwarded or completed. Still, I suggest creating a folder on your computer to store all of your forms in case you have to resend them in a hurry. Also, ask your lender how much can be done using an electronic signature. I found this very helpful. It really cut down on the amount of printing and scanning that I had to do.
6. You may not get a deal in this market
The market was struggling when I bought my first condo in 2008. In 2014, it’s a different story. I made offers on multiple properties and kept wondering why I wasn’t going under contract. It took me some time to come to terms with the fact that I might have to pay the asking price or even higher. Obviously, this depends on the location. Your real estate agent can help you assess how competitive the market is where you live.
Read more: 6 steps to paying off your mortgage early
7. Try to put 20% down if you can
Putting 20% down makes it more likely for the bank to approve your loan. In addition, your interest rate may be lower if you can come up with 20% or even 25%. Another advantage is that you won’t have to pay PMI (private mortgage insurance).
8. Read the condo/HOA documents carefully
This is especially important for condo buyers. If you think that you can turn around and rent your unit anytime, you better check the documents. Many condos have rental restrictions. In addition, you’ll want to look closely at the rules and regulations, which outline things such as the number of people who can live in your unit and pet restrictions.
9. The seller may or may not show up at closing
I was caught by surprise to see the seller at my most recent closing. In the past, only the seller’s real estate agent has showed up because the paperwork was completed in advance. Knowing that you could be sitting across the table from the seller is a good reason to be courteous when dealing with them during the negotiation process.
Read more: 9 things to ask before selling a home
10. A good real estate agent makes all the difference
Spend some time researching real estate agents in your area. You want someone who is knowledgeable, honest, a good listener, detail-oriented and accessible. If you don’t have family or friends who can refer someone to you, read reviews on websites such as Zillow, Trulia, and Yelp. It’s worth the effort. A good real estate agent can help make one of the most stressful times of your life a lot more manageable.
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