Buying a Home

Beauty is in the eye of the beholder, particularly when it comes to buying a home. Features that attract one home-buyer may repel another.

However, the one feature of interest to every home-buyer is price. Getting the most home for your money is paramount. The real problem is figuring out whether that fixer-upper on one street is a better buy than the home in next-to-new condition two blocks away. That�s why knowing what to look for before you buy can save you time, energy and money down the line.

The first step is figuring out what kind of house you need. A good buy is only a good buy if it meets your current and future living requirements. Before shopping for a home, decide how much space you and your family require. How many bedrooms, bathrooms? Is a family room necessary? Do you need a layout that will accommodate a lot of entertaining? Do you prefer a spacious or compact work space in the kitchen? If you have small children, can the house easily be childproofed?

Evaluate the front and back yards. Is there enough space to accommodate your children? Do you want a park-like or garden setting? Do you enjoy yard work and gardening, or do you want a low-maintenance yard? Take into consideration the cost of extensive landscaping and upkeep.

Next, determine how much work is required to make the house you are considering livable. Make an honest assessment of your fix-it abilities. How much work are you willing to do or pay someone else to do? Do you have basic decorating, carpentry and plumbing skills? If you plan to learn as you go, make sure you have accurately determined what you are getting into. Ask an experienced friend, family member or your real estate agent for their opinion, and be sure to consider how much remodeling inconvenience the rest of the family can handle.

Unless you are ready and able to tackle a major remodel, look for a house or condominium that needs only cosmetic improvements. These include painting, wallpapering and replacing items like flooring, window treatments, bathroom and kitchen fixtures, light fixtures, cabinet and interior door hardware and appliances. Remember that even these simple changes can be costly if you have to make many of them.

Beware of improvements that seem easy enough at first glance buy may turn into major headaches and require a lot of money once you�ve moved in. Remodeled kitchens and bathrooms, changes to the floor plan, room additions and redesigned landscaping are examples of seemingly minor changes that can easily eat away the money you thought you saved by selecting a so-called �bargain priced� home. Of course, you may be perfectly willing to spend whatever money is needed to customize the house to match your tastes and needs.

Make sure major systems in the house are in good working condition. The furnace, air-conditioning and plumbing should be up to date, since repairs can be costly. Your agent can arrange to have a professional inspector determine whether the electrical wiring and any room additions are to code. Local utilities often offer free or low-cost inspections to tell you if the house is energy-efficient.

Look for a house with universally popular selling points. If you�re impressed, the next buyer down the line is bound to be, too. For example, a roomy, modern east-to-clean kitchen is the best selling point a home can have. A house with only one bathroom is less desirable than a house with two or more. Many buyers expect at least three bedrooms, with a master bedroom that offers a feeling of privacy. Lots of storage space and closets, especially walk-in closets, will be a real selling point. Family rooms or �great rooms� also are desirable. On closer examination, a house that looks like a bargain may lack some of these key features.

Don�t forget the old adage: location, location, location. Unless you�re looking for a fixer-upper, the house should be in a condition that is comparable to other homes in the neighborhood. Avoid buying the biggest or fanciest home on the block. Consider the amount of traffic or noise. Homes located in a quiet area away from a busy street will command a higher price. Make sure the schools in your district have a reputation for quality education and safety. Nearby supermarkets, gas stations, restaurants and theaters also will make a location more desirable.

Good community facilities also add appeal; pools, athletic fields, community centers, libraries and hospitals all add to a neighborhood�s value and desirability. Transportation needs also should be considered. Is local public transit available? How long are typical commutes to places of current and potential employment? Are there several alternate route? How close is a major airport? All of these can affect a home�s pricing.

Consider the cost of living in a home. It�s important to consider not only purchase price but the monthly cost of living in a home. Estimate your utility and maintenance costs. For example, will the house need to be painted on a regular basis and will you need to spend money maintaining a swimming pool? Ask your agent about the property tax rate and whether increases are anticipated. Will you have to pay special assessments for a homeowner�s association? Consider the point in the life cycle of major household systems, such as the furnace, air conditioning, roof and kitchen appliances.

You can find a bargain! Your first step should be to seek out a knowledgeable real estate agent with experience in the market areas where you wish to purchase a home. Your agent can help you locate those properties that truly are �bargains� and help find the home that most closely matches your desires and needs.

Buying a New Home

Do you have twice the number of people in your family as you have bedrooms? Does it bother you that all the rent you pay and there is no equity. Do you really feel like you are going home? Is the landlord more than two months behind on needed repairs? Are you tired of the laundromat routine?

It is time to define what you need in your new home. Write down what you are trying to get away from. With a few questions I should be able to draw a mental picture of what we would look for. We need to develop a time line. School schedules, lease expiration, or new job start date. Where is the ideal location based on schools, job, family, recreation, etc? Now I would like to show you some listings of what is available in that area at what price.

Before you start driving around allow me to put you in touch with a lender, who can pre-approve you for a given amount. This amount that the lender will guarantee you for use within 30 days is critical to our search for your dream home. Always ask the lender for a Good Faith Estimate which will show all costs associated with the lender’s offer. When there are compromises to be made where is the compromise. Are you more flexible on size, style, schools, type of neighborhood, or just available amenities? If your ideal situation is rare we will look at availability pushing on these compromises to see what you are more comfortable with. If time permits we can keep an eye on what new listings are each day. They can be forwarded to your email immediately as they are entered on the MLS. There are usually several days before they appear on Realtor.com.

Now we have found the house that you want. We will look at the comparable sales in the area. I will advise you on amenities, quality, condition, size, floor plan differences to help you determine your offer price. We will then create a written contract to make your offer. It will include:

The legal description of the property.

The buyer’s name or names as you would like them to appear on the title.

Items to include (garage door opener) or exclude (trampoline).

Offer price and earnest money.

Contingency on financing and terms.

Suggested closing date.

Appraisal riders and other contingencies.

Seller’s commitment to gas appliance inspection.

Title and survey responsibilities and payment assignments.

Who pays closing costs?

Inspection rights and contingency period.

Insurability contingency and time period.

Earnest money deposit, remedies, and loss. Contract assignability, obligations of parties, and inclusive nature of contract.

Final walk through and remedies.

Special agreements. To include all special terms.

Seller’s disclosure, agency disclosures, and commission assignment.

Response date and time requirement

Prepare for a counter offer. When negotiating a contract, just about everything is negotiable. This is not only price, but financing, closing costs, repairs, appliances and fixtures, landscaping, carpet and painting, and occupancy timing. After the offer is accepted I will help you with suggesting service providers and emphasizing the time period to have it done to take advantage of the contract contingencies. This includes the home inspection and report handling, the survey, building and flood insurance. I will then coordinate between the lender, Title Company, seller’s agent, and you for transferring information, preliminary HUDs, and no surprises at the on time closing.

What Are Closing Costs?
Closing costs are the total cost of completing the transfer of ownership of a house. These costs do not include the purchase price of the home. Rather, they are the extras -- fees and expenses aside from the purchase price.

On average, closing costs range between 3% and 5% of the total loan amount. So for a loan of $200,000, closing costs might run $6,000 to $10,000 (3% and 5% respectively of $200,000).

What's Included Within Closing Costs?
Closing costs vary depending on where you live and what mortgage lender you choose. But closing costs often include fees for the following (this list is not all-inclusive):

* Loan origination
* Loan application
* Appraisal
* Document preparation
* Attorney's services
* Escrow agent's services
* Pest inspection
* Credit report / processing

Getting an Estimate of Closing Costs
The Real Estate Settlement Procedures Act, or RESPA, requires that mortgage lenders give you a good faith estimate of all the loan-related fees you're likely to pay at closing. They must give you this estimate at the time of loan application. Keep in mind, however, that these are just estimates. Actual closing costs may be more than the good faith estimate closing costs.

Shop Around
It's a good idea to obtain good faith estimates from multiple lenders. Don't choose a lender based on their interest rates alone. Shop around for estimated closing costs as well.

Just realize that large discrepancies between estimated and actual closing costs are not uncommon. You can prepare yourself for this by having enough money in the bank to cover the good faith estimate amount and then some.

A few days before closing, you will receive another document called a settlement statement, or "HUD-1 statement." This document will give you a more exact tally of the closing costs you'll be expected to pay at closing.

Conclusion
Closing costs include a wide variety of fees and charges. They can add up to a sizable amount, so it's important to prepare for them in advance. Be sure to factor closing costs into the equation when looking for a mortgage lender. Proper planning can help you avoid unpleasant surprises on closing day.

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