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Guys, may I ask for your kind tips on home buying, especially those borne out from your experiences (good or bad).
To make it organized, let's number the tips sequentially following the last number. That way, we could easily comment on one's tip based on the number.
If someone is a first-time buyer, I would recommend a few things.
First, take your time. Don't be rushed into buying, even if you think it's your dream house and are told you might "miss your chance." There are new homes put on the market every day.
If you're single, taken a trusted (and hard-nosed) friend to look at the house before making an offer. Ask them to give you their honest opinion. It's very easy to get carried away, or not notice certain things when you're buying a house. "It's a great house! And, the landfill is next door so I won't have to pay for trash pickup!"
Have the home inspected if you don't know anything about construction, and maybe even if you do.
Be sure you can afford the house. "We have a combined family income of $65,000, we can afford a $475,000 home, can't we? We can get a loan with Countrywide." This is probably going to be less of a problem for the next few years.
Location, location, location. It's an old adage, but there's a lot of truth to it. Try to buy in a good general area, in a good neighborhood, on a nice street. If you take care of this, and don't overpaid by too much, you probably won't be disappointed years from now if you decide to sell.
I would have numbered my "tips", but I have no idea who might post before I get this typed. Maybe you can organize them, Nashter.
Here's my tips as I learn each day. Some painfully :
1) Calculate your estimated property tax per house you are looking at compare. Then see how gasoline expense and tax savings would play out.
2) If you have small kid/s, avoid neighbors with big unleashed dogs.
3) Drive around the house first to get the feel of neighborhood and see the house itself, instead of making appointment with the agent.
4) If you must see the surrounding of the house, especially the back view, notify the listing agent. The agent could in turn notify the owner of the house, hence, the owner would not mistake you as a robber and unleash his/her pitbulls out.
5) We have no control of what the neighbors going to do . . . they could still unleash their dogs, so make sure you are prepared for it. (question: how does one prepare for a full attack from a pack of German Shepherds?)
6) If you are paying for a waterfront property, make sure the waterfront is part of your private property and not communal. You don't want to be waking up one day with a party of fishing folks on your lawn.
7) Check the air-conditioner if it has heating options. You may want to use electric heater going forward.
8) Negotiate directly with the seller's agent (aka the listing agent). This hopefully gives you better leverage in lowering the seller's price as bringing in another agent (buyer's agent) means another cut from the proceeds of the owner/seller. Seller's agent does not get to split his/her share of commission (around 6%) from another agent as this is firmed up already in a contract with the owner/seller. So, additional agent means another $$$ cut off from the the owner. The owner, knowing this addtional cut, would protect himself/herself by being less agreeable to price reduction. So, to make it short, deal with the listing agent, negotiate for a lower price, and everybody leaves happy.
9) Wear your whitiest socks. You'll never know when the owner would ask you to take your shoes off.
10) Get mortgage quotes from as many financiers as you can. Then select the lowest.
11) If you could save some more instead of buying now, do it. You'll get better house as downpayment is a % of the price of the house. The higher you can afford for downpayment, means the house is more expensive, means it is "supposed" to be a better house.
12) Put your savings in downpayment instead of closing costs. Ask the seller for assistance on closing costs. The lower your loanable amount, the less interest you pay.
. "It's a great house! And, the landfill is next door so I won't have to pay for trash pickup!"
That cracked me up!
Nice alleycat.
As for the numbering, it's quite ideal, but not really practical as, you have mentioned, another might have gotten ahead of on one's post numbers. Funny thing is it just happened. I numbered my stuff and by the time I finished, you had already posted yours.
So erase my impractical but well-intended suggestion please. And let's keep this loose and fun!
In regards to #8, unfortunately that is a common misconception. The fee is set with the owner that the listing agent will charge. This usually is an amount the listing agent splits with the buyer's agent, but it's not split in the listing agent's contract with the seller...it's one fee. Sometimes they'll split it 50/50 with the buyer's agent. Sometimes it's not split equally. However, if no buyer's agent is present, the listing agent then receives the entire fee. The owner still pays the same fee in the contract regardless of whether an agent is involved on the other side or not. So it doesn't get you a better price at all. That's why listing agents love for you to call them directly about the house or purchase the house unrepresented. They get double the pay for the same amount of work they would have done anyway. However, this is to very little benefit to you. It puts you at more of a disadvantage because the seller has representation, and you do not. You're negotiating with an industry expert with access to information you do not have. Sure, you can do some research online, but will not be as complete and they should have a more thorough knowledge of the market overall. With a buyer's agent, you get all of that, many times for free. They can provide you with the information you are having to look up yourself on different sources now. They can set up the appointments for you and show you all the homes that meet your criteria.
I will advise the following:
make the offer contingent upon the home inspection. Always get an inspection, even if it's new construction.
give a time limit on your offer (2-3 days is a good average.)
make sure you're using a TAR contract, which is written for your protection.
use the comparative market analysis your agent runs as a basis for determining where the market prices are. Data on many online sources is a little bit dated. So an up-to-date search on the MLS will be more accurate on the average sales prices.
I could go on, but if will give more upon request...
If you are buying a new home, be aware of the real estate tax issue in your monthly payments. Most new home builders show you a monthly payment amount, but it's an artificially low number. This is what to be aware of:
Since RE taxes are 1 year in arrears, the first year in your home you will be paying the taxes on an empty plot of land from the prior year. Then the second year rolls around and you not only have to pay full taxes now, typically since you have to escrow your money with the bank (assuming you have <20% equity) you have to catch up with the bank to make your escrow whole. This can be a several hundred dollar a month hit in year two.
It catches back up in year three and your payment goes back down, but I know for a fact it sunk many unsuspecting buyers in my townhome subdivision back in suburban Chicago.
I say read the purchase offer common to your area (if there is one) prior to making an offer. Understand it or ask questions now before it becomes very important to follow.
if it's not split, then it's eventually two fees. no agent would walk out from a deal empty handed, right?
Let's look at this two ways using a flat fee of $4000 to sell a home with a basic 50/50 split.
One fee to seller of $4000 regardless of how the house is sold.
One agent involved.....$2000 to the company and $2000 to the agent.
Two agents involved....$1000 to the listing agent and $1000 to the listing agent's company. $1000 to the buyer's agent and $1000 to the buyer's agent company.
Still one fee to the seller per the listing contract.
It puts you at more of a disadvantage because the seller has representation, and you do not.
I'll gently disagree. Both sides are to have equal representation. But what makes it tough is that the listing agent is trying to get the most money for the seller and also trying to get you the lowest priced deal. Serving two masters, never an easy thing.
Dual agency is best left to the experienced buyer who has a deeper understanding of real estate and a solid relationship with an agent they trust. A novice should find another agent to handle their side.
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