As we’re sure you’ve heard, interest rates are low. Prices are still at a low. Why aren’t you buying a home? If the process scares or confuses you, check our our tips for home buyers:
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Work with a Real Estate Professional
Most of the homes that you encounter ‘For Sale’ on Zillow, Trulia, Redfin etc. are already listed with a Real Estate Professional. Why should you care? In short, the cost of hiring a realtor to handle the purchase of your home is free. The seller pays the cost. Having an agent search the market, negotiate the contract, and make settlement happen would be worth paying for, let alone enjoying the seller picking up the tab. When you come across those internet listings, it implies that a commission has already been arranged between the seller and their agent. Furthermore, by marketing on the MLS (Multiple Listing Service) the listing broker is also probably paying a commission to the buyer agent. Why does this matter for you? The agent wants to get paid! They will work with reputable agents and want the process to be as streamlined as possible, making everything easier for you.
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Get a Mortgage Quote
Speak to a trusted mortgage broker, or shop around a little, to get a good sense for what you can afford. Be prepared to be honest with this person and share confidential information regarding finances – they are licensed and state regulated so you are protected. This will establish your upper limits for purchase.
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Find a few homes that you like
If you work with a great agent, they will send you lists of homes. It is your job to be as specific as possible, so that you see as many homes as possible. A common rookie mistake is to fall in love with one home, and throw the farm at it. Instead pick a few places. If you fell in love with a house on Spruce St online, chances are high that someone else did too.
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Know your leverage
It is essential that you know the market, especially the local market. If the house of interest is the only place for sale for 50 miles in that price range, you have less leverage. If there are hundreds for sale, your buying power increases greatly. While this is often imprecise, having a sense can save you thousands.
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Write your offer
Contracts vary from state to state. In PA for example you have to send a full contract for the agreement of sale as your offer. Other states allow you to write a simple letter of intent to purchase the property. This process is complex in PA – so please speak to a professional on this part. (Even if you are opting out of working with an agent, many will gladly help.)
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Counter, Decline or accept
In all likelihood, the sellers will counter, which means they essential offer another proposal. You have the same three options that they have. They may decline your offer if a better one came in, or if it was too low to even counter. The third option is to accept, but you aren’t out of the woods yet.
Depending on your contract, there could be a whole extra process, including inspections and more. A good contract will offer you plenty of breathing room and ways out if things go wrong. Stay tuned for our upcoming series on writing a Contract.
DRG Philly 