The Buying Process

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Planning to buy a house ...what to do, what to expect!

It's a good idea to have a game plan for most things we set out to do. But, for buying a house it's essential.

To start, have a good idea about two things ... where do you want to live and how much house can you afford?  These two questions are at the top of the list because, when answered, they go a long way to setting your home purchase plan in motion.

The location of your home is very important both now and in the future. You definitely don't want to buy in an area where the future value of your investment will be less than what you are paying. Real estate has the potential for providing real growth for your investment, but location is a key factor in determining its future value. For that reason alone it's important to consider location options carefully.

There are many more reasons to concentrate on location. Quality of schools is a big consideration if you have a growing family. Access to transportation and ease of commute is important. Just think of the hours each week you spend coming and going to your place of business. Convenience to the essentials, such as food and medical care is a factor, and availability of recreational facilities is also important.

The list is individual and long. Each item should be considered before you decide on the location of your next home.

The cost of your home is influenced by its location, so right away the plan has to address affordability. You need to have a budget in place so you can determine how much housing expense you can tolerate given your income, current financial obligations, cost of essentials and the cost of your lifestyle choices. Owning a home, making mortgage payments and paying property taxes definitely impacts your taxable income, so put your budget together on an after-tax basis.

Once you have determined your monthly house affordability amount, how much you can spend for mortgage, insurance and property taxes, you need to consider the funds you have available for the investment. There are numerous mortgage down payment options available in today's market; just remember that interest rates and therefore monthly house payments will be different under the different plans.

Besides the down payment and the closing costs, your budget should provide savings for such things as emergencies, retirement and education. Once you get that new house surely there will be plenty of demands for improvements and accessories.

At some point early in the process we recommend you become a client of a very good Realtor^®. The exact timing is different for each person, depending on your familiarity with the area and your comfort index with dealing with budgets. But, under any condition it should be early rather than later in the process. Your Realtor^® can be a great ally as you work through the process of choosing a neighborhood, choosing a lender, determining the type and price range of homes to search for.

As you begin the search in earnest for your next home, start with a well thought out list of your needs, your wants, likes and dislikes and stay faithful to your planned price range. Don't get too specific at this stage.

Start with an on-line search. You won't buy this way but you can certainly eliminate properties that don't fit your needs. Set up tours with your Realtor^®. Consider the early tours as educational, keep notes. You should end up with a good idea of what's available in the market and what property values are and how they relate to the condition of the home. This information will be important when you make an offer to purchase a home.      

When you find the house you think is right for you, take a deep breath, there is a lot more work to do. Before you make an offer, do a self evaluation of the property. What is the condition of the roof, foundation and plumbing? Is the house prone to flood? Of course you will have a professional do an inspection after the offer is accepted, but you should have an opinion about condition as you develop your offer.

Expect your Realtor^® to provide data showing recent sales of comparable homes in the area. Review again those things that influence value such as neighborhood appearance, schools, crime rate, access, shopping, lot and landscape, improvements, size, floor plan and of course, market conditions. 

After due consideration you are ready to make an offer, one that you believe reflects fair value for the house in it's current (AS IS) condition. The offer itself is more than price, it's your "best case" in terms of timing, financing, down payment, contingencies. The offer will provide a timeframe for professional inspections, title verification and mortgage procurement.

This is a negotiation, so expect a bit of give and take during the process. Just know your bottom line BEFORE you make the offer. Only after all parties have agreed to all terms, IN WRITING, do you have a contract. That is the point the clock starts for all those time sensitive specifics in the contract.

Next stop closing. In the normal course you should expect to take possession of the house within 30 to 45 days after the offer is accepted. This assumes no serious defects are discovered during the inspection. The critical item in that timing is usually final mortgage approval. Good communications with and diligent response to the mortgage provider is essential during this final stretch. This is also the time when homeowners insurance is procured, utilities are transferred and moving plans are finalized.

It seems like a lifetime but move-in day does finally arrive. If the plan is well thought-out and executed, this will be a day of celebration, even though the back will be aching from carrying all that "stuff" to your new home.

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