If you have determined that you are ready to buy a house (click here for more information about determining if you are ready) the next question to ask is how do I do it? What is the smartest way to go about buying a home? What are the first steps in a home search? This article will show how to begin the process of buying a home as well as point out some common pitfalls that can be avoided.
Step 1 – Finding a Really Good Realtor
It’s easy enough to start browsing houses on the internet or going to the random open house, but at some point you will want to get more serious about looking at homes. The first step towards getting more serious about looking for a home is finding a good Realtor who has been through the process time and time again. Most people end up working with a Realtor, so why not engage one early on in the process? Realtor’s have tools that will save you time and put you on track to finding the right home more quickly. A good Realtor is much more than a person who shows you the houses that you have found online, they serve as an information source, an advocate and a guide through the process. Make sure you are working with a Realtor who is more interested in helping you find a great house for the long term rather than a quick sale for them. It takes patience and persistence to make sure you end up in the right home.
Note: A Realtor is a member of the National Association of Realtors and is bound to abide by a code of ethics. Not all real estate agents are Realtors. Make sure your’s is one.
Step 2 – Get Pre-Approved
One of the most important steps in a home search is to find a good lender and get pre-approved. Your Realtor should be able to recommend a few local lenders who have proven themselves to be responsive and know how to get the job done. Using a local lender is important, not only are they accountable but they are there to solve problems at the closing table if anything comes up at the last minute. Your earnest money is at stake! If your lender is delayed at the last minute or their money doesn’t make it to the closing table on time and the seller chooses not to give you an extension, you lose your earnest money. You cannot go back to your lender and recover those lost funds. Choosing a lender is more than finding the lowest interest rate, it is finding an advisor who will help you make a sound financial decision given your unique circumstances. The credit rules change often and it is important to use an experienced lender to help you get the job done in a timely manner.
Step 3 – Looking at Homes Online – The First Showing
The internet is a great tool when searching for homes. When you view internet sites such as Zillow.com, Realtor.com, Redfin.com and Coloproperty.com you are able to easily find and view homes for sale by putting in any search criteria. The results are quick and beautiful. It’s easy to get caught up in the great houses that are available.
But here are the pitfalls of the national home search sites:
- Many of the popular home search sites don’t have all of the properties listed for sale. Listing brokers determine who gets to display those listings and some don’t send to all of the available sites. Many company sites just get feeds from one MLS system so if a listing is listed in another (which is often the case in the Boulder area) those other listings are not displayed.
- The goal of the big national sites is to get as many views and clicks as possible. So properties show up as “active” until they are sold. Don’t fall in love with an active house on Zillow until you check with your agent to make sure that it isn’t already under contract.
- The agent who is listed in conjunction with a given property many not be the listing agent. So if you click on a “more information” button you will most likely be contacted by an agent who has paid for that opportunity and knows nothing about the house.
Now a word about search criteria. When clients tell me their “wish list” I write down every bit of it, but I then explain that it might be better to keep our search wide so that we don’t miss a house that meets 95% of what they want. In a market characterized by low inventory this is especially important.
Note – www.Coloproperty.com is the public site for the local MLS system IRES. This site changes the status of a property (active, under contract, sold) on their display right when it happens. So to get the true scoop go to this site. Disclaimer – I have served on their Board of Managers for 9 years now.
Step 4 – Viewing Homes In Person
How soon is too soon to start actually looking at houses looking? For example, if your lease is up in July and you don’t want to have rent and mortgage payments for more than 1 month, January is usually too soon. However, when to start depends upon how particular you are, how many homes are likely to come on the market during a particular time etc. This is a good conversation to have with your Realtor.
Once you and your agent have identified some properties to view the next step in your home search is that your agent will set the showings with each listing agent (through them, their company or a showing service). Sometimes homes can be viewed immediately but often times the owners require a few hours to 24 hours notice. Sometimes the listing agent needs to be at the showing and that complicates the timing.
Once you are inside a home you will have already begun to judge the house on these criteria; “could I live here?”, “how does it compare with other homes?”, “is this the one?”. If you quickly realize that this isn’t “the one” it’s still good to see the rest of the house but in my experience it’s not necessary to see every little thing. Who cares what the second basement closet looks like! You only have so much memory available and if you fill it up with the tiniest details of a house that you have already determined you won’t buy you end up confusing houses. Was it the yellow house that had the gold faucets or was it the one next to the park?
Once you find the one that you think you want to pursue you will want to go back for a closer look. This is the time to “kick the tires” and make sure you know what you’re in for. Hopefully the second time through will only make the heart grow fonder.
In the next installment in this series I will go through the process of what happens once you find a house that you love.