10 Great Tips for First-Time Homebuyers

10 Great Tips for First Time Home BuyersBuying a home is an exciting, often tiring and at times confusing process. Many venture into house-hunting without understanding the importance and intricacies of each stage and spend years searching for that perfect home. Here are a few tips that promise to make the buying process trouble-free and easy for a first-time homebuyer.

1. Are you ready to make a long-term commitment?

Buying a home is a huge personal and financial responsibility. Weekly trips to expensive spas and meals from five-star restaurants may not be on the menu much longer once mortgages, taxes and maintenance expenses come into the picture. You can no longer call your landlord and ask him to fix that leaking roof; it’s all up to you now.

You may also have to shell out a huge portion of your savings to pay for the down payment. Be true to yourself and find out whether you are ready to take on the responsibility even though it may require tightening up the entertainment budget.

2. Make a wish list

Before you start house-hunting, make a list of all the things that your dream house must have, such as space for a home office, a two-car garage and so on. Carry the list with you when you visit houses and note down whether the house meets your requirements or not. If the homeowner or realtor allows, click photos of each room. You may be visiting so many houses in a single day that it will be difficult to remember what each house looked like later. Once you have narrowed down your choices, visit the top three homes in your list once again to make sure that you see all elements that you might have overlooked on your first visit.

3. How much house can you afford?

Gather all your financial documents and visit a reliable mortgage lender or bank to find out how much house you can really afford. There is no point in looking at houses outside your price range and setting yourself up for disappointment. If possible, get yourself pre-approved for a loan or at least, pre-qualified. This will help you in speeding up the process once you have decided on a house. Sellers may also give you greater preference when there are mutliple bids if you are already approved by a bank.

4. Find the right realtor

To buy the right house, you need the right people on your team. Some real estate agents might try to sell you the first house that you see because they are only bothered about their commission. But a good real estate agent will truly be interested in what you are looking for in a home and try to show you houses that match your criteria and fall within your price range.

Finally, he should be able to guide you in placing a competitive bid that is not insulting to the seller. Don’t choose a real estate agent just because you know him personally. Find out whether he has the required knowledge and expertise to guide you towards your first home.

5. Choose the right home

Buying a home is a lifetime investment. If you do it right, it will bring your family happiness and comfort for generations to come. Don’t be pushed into saying yes to a home just because your realtor thinks it is perfect for you. Evaluate your decision wisely, ask for opinions from people you trust who are home owners and don’t overlook things like; is the neighborhood going to be a good fit for your family now and in the future and what will your commute be like.

My sister and her husband fell in love with a newly built home a few years back and they became hyper focused on all the positives that came with living in a brand new home. I pointed out that it was 20 miles further out then where they had previously been looking and advised them to drive out there in the morning and test that long drive into work during rush hour.

Shortly after that, they purchased a home much closer to the downtown, where they both work, and have been happy home owners ever since.

6. Make sure you understand the legal documents

Once the seller has agreed to the deal, a purchase agreement clearly stating the legal description of the property and zoning information, the terms of the contract, the purchase price, payment schedule and so on should be drawn up. It should also have the necessary clauses for you to withdraw from the deal in case of any contingency such as major issues during the home inspection. Don’t hesitate to ask your realtor for clarification on any and all items you are not perfectly clear about.

7. Your new best friend – the home inspector

Since you are a first-time homebuyer, you may not know that each home should be inspected by a professional home inspector before the deal is finalized. A good professional home inspector may charge anywhere between 400 to 600 USD depending on the size of the home. But he can help you appraise the value of the property correctly and also point out whether the home has any major structural faults or damages that you should be aware of as a future owner.

If he discovers any serious flaws, you can either try to negotiate the price further or withdraw from the deal altogether.

8. Do your house hunting homework

It is very important to do your homework carefully before you buy your first home to avoid being taken for a ride by the seller or the realtor. Find out the future prospects of the neighborhood your new house is located in and don’t get blindsided by the announcement of things like a new highway coming in close to your house two years later. What facility is going to come up in the empty plot next to your home? Will you have any trouble selling the house later? How safe is the neighborhood? Is it primarily a residential community? Will your kids find it difficult to travel to school daily? These are but a few points that you should clarify before finalizing any deal.

9. Get your new home insured
As a first-time homebuyer, you may be unaware that your lender will require a copy of your home insurance before closing day. The cost of home owners insurance is determined based on the cost it would take to rebuild your house if it was totally damaged and not on what you will pay for the property. The location of the house will also be considered while determining the cost of home insurance. On the other hand, title insurance can be purchased at closing to protect yourself in the event the title to the property is found to invalid.

10. What happens at the closing?

The big day has finally dawned and you are understandably nervous. In many parts of the country, the process has become automated that you no longer have to be personally present at the closing agent’s office to complete the deal. You can just make sure that your signed documents reach the agent in time.

As a first-time homebuyer, you may want to consider having your own attorney present at the closing to explain all legal papers that you will be signing, but in most cases a good realtor and mortgage professional can answer any questions and guide you to a legally sound transaction. Along with your certified or cashier’s check, make sure that you are also carrying a photo ID and proof of insurance with you.

Happy house hunting and good luck!

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10 Things to Look Out for When Buying an Older Home

10 things to look for when buying an older homeOlder homes possess an allure that cannot be found in a new home. The mesmerizing architecture of an older home and its distinctive character may appeal to you at first sight, but do not forget that not only are older homes reminiscent of the years gone by, but they also bear the brunt of time. Older homes need careful inspection and maintenance – a task which may not suit all buyers.

The first step to successfully buying an older home is to weigh your options and decide what features could potentially turn out to be deal-breakers. What do you look for in a house? What purpose would your house serve and what kind of furnishings do you intend to use? Answering questions like these will help clear up any confusion and give you strong points for or against buying any home.  Deal-breakers could vary from excess expenditure in repairs to the location of the house. Bear in mind that the level of commitment required to own an older home can be greater than owning a newer home and being a “renaissance man” may come in handy.

1.       Careful inspection of the disclosure

Buying a home involves a lot of communication between the buyer and the realtor or seller. If you have a realtor to represent your interests, it does not mean that you have no part in the dealings or communication. A realtor would help narrow down prospects that best suit your requirement. However, careful research on your part is a must and could save you a lot of money and time.

To start off, you should be a well-informed buyer so be sure to ask lots of questions regarding the condition and history of the property. Understanding and inspecting previous repairs and replacements could help you come to a decision on whether the major concerns are manageable or feasible. Disclosure statements from sellers are an obligation and should be carefully inspected to make sure that you are completely aware of the issues and problems which could affect your purchase.

2.       Cost of homeowners insurance

Insurance is essential to safeguard your home against damages that result from accidents. Additional policies could be added to insure the house against damages resulting from natural calamities. There are several forms of insurance which covers various levels of protection to suit the interests of the owner. Insurance agencies may be skeptical when it comes to insuring an old house and you may end up paying more than you expect. Have a candid conversation with your insurance agent about the home so you can be certain of the cost of insurance before buying the house and avoid any surprises down the road.

3.       Foundation

Older homes are more likely to have problems when it comes to the foundation. A clear inspection of the basement will reveal possible cracks and shifts in the frame. Cracks are a bad sign and may indicate permanent, serious damage to the structural integrity of the home. Old houses are known for their strong foundation, but with time they may have suffered serious wear and tear. A thorough inspection should reveal serious troubles with the foundation – a definite deal-breaker.

4.       Electrical wiring

Older homes may need updated wiring, especially considering the high demands of our electronics hungry society, and rewiring an entire house may turn out to be painfully expensive no matter how much you love the beautiful wood work and ornamental designs. The cost and effort of rewiring the house should be considered before you finalize the deal. If a house has three-pronged plugs, it hints at a modern grounding. Presence of other modern safety upgrades such as reset buttons on outlets could also mean upgraded wiring. However there are many problems that may go unseen and hence, do not forget to have a professional inspection done.

5.       Plumbing

If the house has original plumbing, then depending on how old it is, there is a good chance that it’s outdated and will require work down the road. In case of previous repairs or replacement, the installations should be inspected. Leaks and clogging are a common problem with old houses. Just because the plumbing has been upgraded, it does not guarantee that it is functional or won’t pose future problems.

6.       Heating and cooling systems

If you are accustomed to central air and an even temperature throughout your home, you may be in for a surprise. Replacing the HVAC in an older home can not only be expensive but it may also not deliver the immediate changes to heating and cooling that you are familiar with in newer homes. Older fixtures may also cost you a lot in terms of utility bills. Older homes can come with radiators which require fuel oil and may not be practical in the long run. It’s also a good idea to see a years’ worth of utility bills

Older homes may very well have a properly working furnace but make sure the person you choose to inspect your home before the sale has experience with older homes and heating and cooling systems.

7.       Roof

If the roof has been previously worked upon, then it is a must to check for signs of leakage and make sure that any changes to the roof line have the proper structure under the roof. Moldy wood, drips and water stains are a clear indication of trouble. If the original roof is still in place, then there is a good chance that some work will be required before long – which translates to more time and expenses.

8.       Windows.

Old homes come with old windows which may offer poor insulation. If a previous reconstruction has widened window frames, then the quality of the work must be assessed. Improper extensions and tampering might cause problems such as rigid windows and collapsing of the frame under severe circumstances. Also look for any leaks around the windows, both original and/or replacement windows.

Keep in mind that replacing all the windows in a 3,000 square foot home will cost in the 10s of thousands of dollars.

9.       Extensive repair work

If the house requires extensive repair work, it is going to drain a lot of your money and time. The return on investment may or may not be worth the money (remember the movie “The Money Pit” ;). Is it really practical to take on such a huge responsibility? If you’re handy with tools and love working on projects, this may be a great opportunity for you but if you’re more like me, not the handiest guy in the world, this home that you love my be the end of you or at least your marriage J. You may feel an emotional connection to the house, but is it going to be worth the effort?

10.   Compatibility between the house and your existing fixtures and appliances

Household items were different back in the day and definitely less demanding of the house. To ensure that you do not have to invest in a brand new set of furniture and appliances, make sure that your existing sets are compatible with the house in terms of size, proposed utility of appliances etc.

In spite of the hurdles and anomalies, older homes are often worth the effort. They are unique and elegant with a personality of their own that will add a lot to your pride of ownership!

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7 Things Every Home Buyer Should Know Before Buying a Home

7 things every homebuyer should know before buying  a homeBuying a home is a huge investment for your future and perhaps, one of the biggest decisions that you would make in your life. To ensure that your dream home does not give you nightmares, here are a few things that every home buyer should know before finalizing a deal.

1.       What are your needs?

Have a clear idea of what you are looking for. Do you need a home in the suburbs with lots of open space where kids could run around? Or would you prefer living in the heart of the city where you have easy access to malls and restaurants? If you have children, you’ll have to take into consideration the distance they have to travel daily to reach school. And don’t forget to ask yourself whether you are okay with spending three hours on the road every day traveling to and from work.

Whatever your needs are, every home buyer should know that finding a perfect house which meets all your requirements and falls within your budget is going to take time and effort. But the results are going to be well worth the effort.

Do not comprise on things that matter or get coaxed by an agent into buying a house that is not suitable for you. For many, buying a house is a lifetime investment. A well-appointed house in an unsafe neighborhood is always a bad idea, even if you are getting a very good deal. Never rush into a deal only to regret it later.

2.       Do you have a pre-approved loan?

Pre-approvals help to determine your maximum purchase price. Be ready to provide detailed financial documents to a lender who can tell you how much house you qualify for. You can narrow down your search based on this estimate and save time which would have been otherwise wasted looking at houses outside your price range.

A pre-approved loan lets the seller know that you are serious about buying a house, especially if he is considering multiple bids. It can also speed up the process once you’ve found your perfect house. Again, some banks are ready only to pre-qualify a buyer and do not offer pre-approvals.

At this stage, also calculate how much money you can put down as a down payment on the property.

3.       Are you in a position to meet the miscellaneous expenses?

Owning a house comes with a lot of miscellaneous expenses, such as property taxes, maintenance, utilities, insurance, home owners’ association fees and so on, in addition to your mortgage payments.

Don’t jump into buying a new home just because your friends are doing so or the real estate market is booming or your cards tell you to. Only you can decide whether it is the right time for you to buy a house.

Does your budget allow for a new property at this point in your life? If it means that you have to make tough choices such as moving your kids to a slightly cheaper and less reputed school or your spouse has to slog at office every day without time for personal life, stop and rethink. It may be better to wait for a few more years when you’ll have enough funds set aside to ensure that your lifestyle does not take a beating as a result of moving into your own home.

4.       Should you have a professional inspection done?

It is always a wise decision to have the house inspected by a professional before you reach the closing stage. Some lenders require a professional inspection to ensure that the purchase price is in accordance with the market value of the property.

Though hiring a professional will cost you a few hundred dollars, it is going to save you a lot of money and heartache in the long run. Though it may be tempting to do the inspection yourself, do not attempt it. A professional will be able to tell you if the house has any structural damages or issues that are not evident to your untrained eye.  Though he will give you a written report after the inspection, it would be better if you are able to accompany him during the inspection. He will be able to guide you in person on what repairs or renovations have to be done once you buy the house.

If the professional evaluation unveils any flaws, it can also help you in further price negotiations before you close the deal.

5.       What is your back-out plan?

If the inspection has thrown up huge problems in the property that is going to cost you thousands of dollars to repair or the appraisal value is far less than the purchase price you agreed to, you may want to reconsider your decision and hence the importance of a solid back-out plan.

Make sure that your purchase agreement includes a contingency plan that allows you to back out of the deal and void the contract if the home inspection throws up any major problems.

6.       What comprises a competitive offer?

Though you may be dependent on your real estate agent to get you a competitive deal that is fair to both parties, it is always better to conduct a market analysis which can help you understand the value of the property and tell you what buyers are ready to pay for similar homes in the same area. This can help you come up with a unique bid strategy that will keep you ahead of the competition.

If you are frequently losing out on bids or being rejected, it may be time to reevaluate your approach. In real-estate, low-balling does not always get you the best deal and in today’s competitive housing market, low-balling probably won’t get you the house you want

7.       Will you have enough money to spend on refurbishing and decorating later?

If you invest all your loose cash in down payment and closing costs on your new home, you may find yourself short of money to do the necessary upgrades and decorations before you move in. Save enough money beforehand so that you can adapt your new home to suit you and your family, buy new furniture, convert the third bedroom into a home office and so on.

As you can see, there are many things to consider when embarking on your journey to buy a home.  If you are a first time home buyer, the best advice is to work with a reputable Realtor and do your homework.  Many home buyers have rushed in to buying a home only to find themselves living in a beautiful home with no money left over each month to leave it and enjoy life. But home buyers that pay attention to the details, especially the financials of owning a home, end up be very happy home owners.  Here’s hoping that will be you!

Click here to see current homes for sale anywhere in the US.

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5 Things to Look For When Choosing a Home Builder

5 things to look for when choosing a home builderWhether you are planning to buy a ready-to-live condo or build a customized home, it is very important to choose the right home builder. A beginner to the real estate market might find himself overwhelmed by flashy brochures and aggressive marketing that promise you the moon – and the stars. So how does one separate the wheat from the chaff? We have put together a list of 5 things that you should look for when choosing a home builder.

1.  Is there a match between your needs and the builder’s experience?

Does the builder’s overall experience match with what you are looking for? Many builders specialize in different categories such as luxury apartments for the upper class, compact modern apartments for the urban couple and so on. However, if you are planning to live in a traditional home with an old-world feel, you need a builder who has expertise in this area. This is hugely important because the building process and materials themselves may differ in each case. Find out if the builder has worked on similar designs in the past and ask to see previous constructions or model homes. If the firm is relatively new, find out if they have experienced professionals on their payroll.

2.  What do their previous customers say?

Most builders these days are ready to provide references. Though you can always talk to them, it would be better if you can search for others on your own. Set a day aside to visit his previous projects and talk to a few customers. Plan your visit mostly on a weekend when people are relaxed and willing to talk.

Ask the home owners whether they are satisfied with the builder, whether he kept his promises, whether they faced any problems during construction and after they moved in and so on. Try to find out if they are willing to buy another home from the same builder or to recommend the builder to a close friend or a relative and most importantly – their reasons for the same.

Visiting an actual home provides a better feel of the quality of construction. A model home is usually displayed fully furnished and can tend to distract you from the actual construction.

The local home builders’ association and consumer complaint forums may be other good sources of information on the builder and his reputation in the market. You may be able to determine whether there are any pending complaints against the builder or whether any previous customer has filed a legal action suit against him.

3.  Do they offer guarantees?

If you are buying a new property, find out if the builder is giving a long-term structural warranty or guarantee on the building. What is the standard response time that can be expected? Find out from previous customers whether the builder has been regular in his promised services, responses to complaints and maintenance. Are they ready to give it to you in writing?

If your builder’s warranty does not extend to even the minimum market standards, then I would recommend that you rethink your decision.

4.  Is the builder insured?

Are the builder and his contractors covered by insurance for job site injuries, accidents, storm damage or other hazards? Make sure that his policy offers protection against property damage and includes employers and public liability insurance.

Public liability insurance covers injury to the general public and third parties during construction (for example, a passing pedestrian is hit by a falling metal sheet). Employer liability insurance provides protection to the employee who is injured while working on the construction of your building. Make sure that your builder has this coverage, or you may find yourself dragged into unnecessary litigation. A contractors’ all-risk coverage will protect the under construction building against accidental damage.

Also find out if the builder is licensed and if so, by whom. Some areas require that you work with a licensed builder.

5.  Quality and resale value

A home is one of the biggest investments that you might make in your lifetime and hence it is important to do your homework carefully. The quality of the construction and products used will make a huge difference in its resale value down the years.

When you visit the builder’s previous or other ongoing projects, pay special attention to quality of construction and building materials. Are they signs of seepage or outward structural issues? Are his homes environment-friendly? Are the plumbing fixtures, electrical switches, woodwork etc. of good quality or is he trying to cut costs? Has he used the same products that he used in his model home? Some builders use well-reputed brands in their models and use substitutes in the actual construction. Read the fine print in their marketing brochures carefully. Don’t forget to ask what items displayed in the model home will be included in the standard pricing and what comes at an additional charge.

If you are venturing into real estate for the first time, read your contract carefully or have a real estate lawyer go through it. Never take a hasty decision while choosing a home builder or it may end up being a very costly mistake that you have to live with for the rest of your life. The cheapest may not always be the best option. You may end up spending more in the longer run on repairs and maintenance if the builder has tried to give you a cheaper quote by using substandard materials in his estimation.

You may also want to check with your builder at what stages before or during the building process you will be able to suggest additions and changes. Though some builders are not agreeable to changing their plans for a single owner, especially if you are buying into a condominium, there may be certain stages of the construction or before it when you can request for specific upgrades.

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Multiple Listing Services (MLS) Demystified

The MLS - Multiple Listing Service - Homes for Sale

If you are new to the real estate market and are interested in buying or selling property, a Multiple Listing Service (MLS) is the place to go to. But what exactly is the MLS and how does it fit into the real estate sector?

Multiple listing services are huge databases used by real estate brokers to share detailed lists of properties entrusted to them. Of course, the agent should have the consent of the homeowner before he adds the property to the service. Another real estate agent can bring a buyer and both agents will share compensation if a sale happens. Usually only licensed real estate agents or employees of a company which is a member of a Board of Realtors are allowed to become members of an MLS. A member is expected to post details of all properties with the service, unless the owner has said otherwise.

What are the benefits of MLS?

Real estate agents use comparative market analyses (CMAs) and reports provided by multiple listing services to arrive at a good price for a property that you may like to sell or buy. An agent may also be able to sell more properties than he would have if he was not a member of a multiple listing service. Transactions also happen much faster when there are more people working to identify and bring forward actual buyers for a property.

Who can use the MLS?

But is MLS only for real estate agents? No. As a seller you will be happy to know that listing your property on such a service gives it greater exposure and a bigger outreach than an advertisement in a newspaper. More interested buyers mean greater pricing power for the seller. Though you will have to work with only a single real estate agent, a number of other agents will also be working to find the right buyer for your property with the help of details given on the MLS system. The chances of your property being sold faster and at the best possible price are higher if your property is MLS-listed.

If you are a buyer, you have more options to choose from and get easier access to a larger number of property listings that meet your requirements. For example, coming up with a list of houses that match a specific price range, location or square foot area can be as easy as a few clicks. MLS systems are much more detailed than other similar tools in the real estate industry and include information such as condition of the property, history, renovations done, zoning information and so on. You can also see several properties listed under the service through a single agent instead of contacting different real estate companies for each property.

Search the MLS

A brief history of the MLS

Are multiple listing services a recent phenomenon? Not really. Hundreds of years ago, groups of real estate agents used to meet at local associations where they used to discuss properties known to them. If another agent was able to come up with a buyer and help speed up the sale of the property, they would agree to compensate him. The first MLS was thus born out of this unique spirit of sharing and mutual benefit in the real estate industry.

Initially MLS data used to be available only to real estate agents. Huge lists of properties were printed monthly and updates used to be sent out every week to all real estate agents who had registered for this service, showing which new properties were added to the list that week and which houses were sold. But today with the advent of internet, the process has become extremely simple and less cumbersome. There are more than 800 such services operating across the country. Many update their lists every hour so that current real-time information is available at your fingertips.

What’s more, today any ordinary person who has access to a computer and is interested in buying a property can search for listings on an MLS website on his own. Of course, some information is withheld from a prospective buyer for security reasons and made available only to authorized real estate agents.

What are FSBO listings?

A homeowner can directly list his property on an MLS without going through a real estate full service real estate broker by using an FSBO (For Sale By Owners) service. FSBO companies charge a fee to post your home for sale on the MLS.  Earlier you had to pay a percentage of the sale as sales commission if you wanted your property listed on MLS without an intermediary, but now many MLS websites allow you to submit your property details for a flat fee of a few hundred dollars and gain the same exposure you would have if you had gone through a Realtor.

Real estate listings and much more

Today MLS websites offer much more than a comprehensive listing of all properties available for sale or rent in your area. Current real estate news, analyses and resources, mortgage and tax calculators, free and paid property appraisals, virtual tours, interactive maps and detailed information about cities and neighborhoods are other features offered by such websites to help their customers ease into the process of buying or selling a house.  Most websites also send automatic emails to home buyers who subscribe to the service for free to update them of new listings that meet their criteria.

 Click here to search the MLS in any city in the USA

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