How to Buy a House

images-1So, you want to buy a home but you have no idea what to do first. Well, this article is being written to be your “how to” guide. All I ask from you is if you find it helpful, please share it with your friends.

The first step to buying a home is to choose a buyer agent. I know what you are thinking, I am not ready to purchase a home, I don’t want to waste anyone’s time. Well, get rid of this thought. This is your mind’s way of trying to make you think negatively. You are not wasting anyone’s time. This is what a “good” real estate agent does. If you don’t have a plan, you will surely fail so don’t plan to fail, by failing to plan.

If you don’t know any real estate agents, you can contact me if you are in PA or New Jersey. If you are outside of those areas, I can still refer you to a great real estate agent in your area. You can also ask a family member or friend if they have a real estate agent they always use.

There typically is a fee to hire a buyer agent. Each agent works for themselves so everyone’s fee will vary. There are some buyer agents who do not charge a fee (up front). Keep in mind that nothing is free so if an agent should tell you they do not charge an up front fee, ask them if they charge a conveyancing fee. If they do, there’s your fee but the only difference is that that fee will be paid at settlement. In essence the agent is gambling with you. There is no guarantee that you will purchase a home. No home, no fee for the agent. I don’t know about you but I don’t gamble. If I don’t charge a fee up front, I can’t pay my bills with a maybe I will buy a home. Some agents will try and tell you that an agent charging an up front fee is wrong or “not normal”, but I can assure you that it most certainly is. Someone working for free on the other hand, is not. If you can show me someone who “works” for free and still maintains a home, family, car etc, on their own and is not independently wealthy, I will work for free for you. Nobody can afford to work for free so you have to ask yourself, what type of service does someone who works for free provide?  If I wanted the best lawyer, I wouldn’t go and hire someone pro bono and expect the best representation. 

Typically, a buyer agent will schedule time with you (or should) schedule time with you to explain the home buying process and answer all of your questions. This is what I do for my buyers. I do recommend you writing down all of your questions before hand this way you won’t forget. If an agent you choose does not first schedule an appointment for you to come meet with them to do this and insists you meet them at a home, it is my professional advice to you to find another agent. This appointment is extremely important because this is where you will learn about the buying process as well as the types of services you can expect from the agent. My buyer consultations usually last an hour or two. If an agent doesn’t have time to meet with you to explain the buying process, they probably won’t have time for you during the buying process.

You want to make sure that the agent you hire is an expert negotiator. Negotiating your sale is probably the most important part of your agent’s job. If the agent is timid or is not good with confrontation, how do you think negotiations will go?  You can’t tell if someone is a good negotiator just by asking them, just and FYI.

After you meet and hire your buyer agent, the next step is the mortgage. If you are not willing to meet and talk with a lender/mortgage consultant, it’s probably not the right time to think about buying. Meeting with a mortgage person does not mean you have to buy a home. It’s just another piece to the puzzle. Doing this, will help you know how long it will take for you to get in the position to purchase and if you are in the position to buy, getting the mortgage process out of the way, will allow you to go find your home and put an offer in immediately. It makes it much easier to put that plan together. Once you know your financial situation.. keep in mind that some people think that they know their financial situation but once they meet with a lender, they realize they didn’t know at all, you can put that plan into action. Sellers also do not want buyers who are not already  approved for a mortgage to view their homes. That makes sense doesn’t  it? Would you want people searching all over your home if they really had no intention of buying it?

When choosing a lender, your agent usually will have someone they have worked with in the past that they trust. I always provide my buyers with the name of someone my past clients have used who they absolutely loved. I always tell my clients that they are free to choose any lender they want. I warn them to stay away from walking into a bank or credit union because banks and credit unions won’t give personalized service like that of a mortgage consultant. With banks you basically become a number, they close by 5 or so during the week and aren’t available on weekends which is important should you find a home on the weekend that you want to put an offer on. I know that it is very important to me that anyone I refer my clients to, be available after 5 and on weekends and something that is non negotiable is attending settlement. If the mortgage consultant can’t attend settlement with the buyer, I say find another mortgage lender. Settlement is the most important day of the entire home buying process. If your lender is not at your settlement and something goes wrong, there is a chance you won’t settle and that can cost you a lot of money as well as the home and could create legal issues.

After the mortgage situation is out of the way, you are ready to go out and view properties. If your not in the position to actually start the buying process, you know what you have to do to get in that position now.

Buying a home is a process of steps.. if you miss a step, it will definitely delay the process.  You don’t want to do what many people do which is putting the cart before the horse by driving around looking for homes and then calling the agent on the sign and asking them to show them the home. You don’t know if you can afford that home and you are calling the agent who works for the seller who hired that agent to get them to find a buyer to pay them what they are asking for the home.  You never want to use the agent on the sign. NEVER!  If you did use the agent on the sign, that would be called “dual” agency and that is a topic for another time.

You will definitely need to have some money saved for your down payment. A down payment is different than a deposit. Typically when you put an offer on a home, you will need two deposits. One with your agreement and then one more after your home inspection. This may vary by state so make sure to speak with your agent about this. The deposit will be held by the listing agent’s office in an escrow account. When you go to settlement, your deposits will be included in your closing costs. So for example, if your closing costs were $10k and you had $5k on deposit, you would only need to bring $5k to settlement.

You will need money to pay for your inspections and appraisal fee. You won’t want to make any big purchases during the transaction as this could change your standing with the mortgage lender. 

Remember, buying a home takes up a lot of your time so if you feel that you don’t have the time to put in for meeting with your real estate agent and the lender, I would suggest that you put off purchasing until you can put in the required time. Sometimes it is necessary to meet with your agent during the process a few times to change things. I know that I have had to meet with clients 5 or 6 times during the process to discuss their needs and make changes. Some agents do not do this or feel this is necessary and if you are fine with that, then maybe that is a good fit for you, however things can change and I always feel that it’s best to give my client’s my personal attention to address any issues, concerns or re-evaluate their needs and tweak things if need be.

You don’t buy a home every day or even every few years so you want to make sure that you find an agent who is going to take the process seriously and put your needs first before anything else. If you don’t trust the agent or feel that you won’t be able to trust them, then that is not the agent for you. You must trust what the agent is telling you and  be willing and open to taking their advice. 

Don’t rush in to choosing an agent because the wrong agent could cost you hundreds of thousands of dollars.

I hope this helps you and if you have any questions about this article, feel free to contact me.

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