Whether you are relocating across town or across the country or buying a vacation or investment property, the home buying process varies little from place to place within the United States. Here are some tips to help you get started:
1. Financing the property
If you plan to pay cash, make sure you have proof of funds (with your confidential information blacked out) available.
If you plan to finance your purchase, obtain a pre-approval letter from a reputable lender. A pre-approval letter is different from a “pre-qualification” letter. A pre-approval letter means you have submitted documentation to the lender, which includes pay stubs, bank statements, and tax returns, documenting your income and assets.
The choice of lenders is one of the most important decisions you will make with respect to your purchase. You want to work with a lender who has a reputation for closing on time. Ask your REALTOR for local lender recommendations.;
2. Home in on your needs and preferences
How many bedrooms/baths do you need and how many do you want? What type of neighborhood do you desire? Would you prefer a home in a residential setting? Do you want to be close to public transportation? If you are buying a second home, are vacation rentals important to you? If you are buying a primary residence, are schools important to you? Do you desire acreage or prefer the ability to “lock and leave”? If you can narrow some of these decisions before meeting with a REALTOR, it will save lots of time exploring homes or areas that will not meet your needs.
3. Find a Buyer’s Agent
A REALTOR must adhere to the National Association of REALTOR’s Code of Ethics. At a minimum, you want a REALTOR vs an “agent”.
What’s the best way to find a REALTOR in a new town? If you are relocating, the relocation company may give you a few names. If you do not like any of those agents or if they do not specialize in your preferred location, you may be free to use someone else as long as that agent signs an agreement with the relocation company. Ask your local REALTOR if he/she knows someone in the area where you are looking to purchase. If a REALTOR is part of a national or international brokerage, he or she may already know someone or another agent in his/her office may know someone in your new town.
Word of mouth is another great way to find a local agent. If word of mouth leads to a dead end, then get online and start searching.
It is essential that the REALTOR you choose is an expert and experienced in the area where you want to purchase. Any agent can buy a spot on Zillow or Yelp. Some of these agents work 50 miles from neighborhoods where they advertise. Does the agent have a website, Facebook and/or Instagram account? These will provide clues about the agent’s expertise in a particular location. Read their online reviews.
4. Interview carefully
Prepare a list of questions to ask the REALTOR(s) you interview. You want someone who has the right experience and someone who you like personally, as you will be working very closely with the person you select. The REALTOR should sell a minimum of 12 properties/year or else he/she is either part-time or inexperienced. Here are some good questions:
- How long have you been selling real estate in the area?
- How many houses do you sell each year?
- How many buyers and sellers do you work with each year?
- Are you part of a team? If so, will I work with you or a buyer’s agent? (You don’t want to get pawned off on a junior associate).
- Which brokerage do you work with? Why did you choose that brokerage? What is your brokerage’s market share in the area? (Small brokerages may not have the same access to new listings and may not provide agent support and continuing education.)
- Do you live in or near this area? Are you familiar with the schools, restaurants, shopping, and entertainment options in the different neighborhoods?
Once you start working with the agent, if you are not happy, then do not feel bad about switching to someone else. If you have signed a buyer-broker agreement, that agreement is with the brokerage. You can call the broker and ask to be switched to an agent who is a better fit.
5. Spend some time learning about the location if you are unfamiliar with it
Your buyer’s agent is a tremendous resource for providing guidance regarding schools, health care, restaurants, and other lifestyle matters. Your agent is not a tour guide. Plan on renting a car so you can explore neighborhoods on your own.
6. Learn the local home purchasing process
Some states require escrow companies and others require lawyers. Find out the purchase process in the state where you will be buying. Ask about the costs to you as a buyer. Which inspections are customary? In Park City, Utah, where I work, we don’t have termites. In California, termite inspections are mandatory. In Houston, TX, elevation surveys are required.
Find out if the buyer or seller pays for the customary inspections and the timeline for completing them. Which contingencies are customary (inspection, loan, appraisal?) and what is the timeline for each? If you are buying a vacation home, what is the process for transferring furnishings and/or other personal property?
7. Tour properties
If you are working with a savvy REALTOR, the selection of properties you tour should be narrowed to no more than 5 in one day. If your REALTOR has carefully listened to your needs and wants, he or she will find the 5 properties that best meet your specifications. You can always double check online real estate websites to ensure you are not missing anything.
8. Write offers
Ask your REALTOR for statistics on the average list/sale price in the area. Work with your REALTOR to determine a reasonable offer price and competitive terms. Expect some negotiation. If you are writing an offer in a very hot market, the REALTOR may suggest you come in at full price or even higher. If the average days on market are longer, then you will have more negotiation leverage.
9. Contract to close
Once you have come to an agreement with the seller, you will need to carefully monitor all dates to ensure you perform and do not place your deposit at risk. If you are obtaining financing, do not make large purchases until your loan closes. Purchasing cars or furnishings can jeopardize your loan and home purchase and could put your deposit at risk.
Buying a home is a large investment. Make sure you hire the right REALTOR and receive expert assistance with your purchase.