Advice for first-time home buyers.
A couple weeks ago a friend and first-time home buyer asked me for advice.
Where to start? What’s important? And how to find the right home?
Find out your budget; how much money you have and how much you can borrow. What will be your monthly payment.
Select your favorite and an alternative location. Cruise around for a few days, weekdays, weekend, morning, evening and nights. Collect information online, and check online what’s available. Maybe you have to settle for your alternative location.
Determine the size and condition of your new home. Can you fix stuff yourself or do you need a contractor?
Decide if you can handle it or if you need help from a Realtor. If you need help, select a very good buyers’ agent. This won’t create additional costs, because the buyers’ and sellers’ agent have to split the usual 7% commission, which comes out of the sales price you are going to pay. He should provide you with all the necessary info, however – don’t expect he works on the lowest possible price for you, that’s your part. Again, the commission depends on the final sales price.
What do I mean with “all the necessary info”?
It is not just the age and size of the home, he should be able to give you a floor plan, detailed information about the neighborhood and property taxes. If the home is located within a subdivision or if there is a home owner association, you need the covenants.
You also should get a sellers’ disclosure. This should be a Yes or No sheet, if you notice remarks like “seller doesn’t know” or “not to his knowledge”, your Realtor should dig into this. There is no excuse for the seller to not know the condition of the home, unless it is sold as is. But this applies usually for auctions, bank possessions or fixer uppers.
You also want to know if there were any insurance claims in the past. If yes, who made the repairs?
Now it’s time to make an offer. Low balling is ok, stay realistic, but don’t overpay, regardless of what they tell you.
If you still like the home and are ok with the price and the information provided, you should spend the money and hire a home inspector, even if the home was pre-inspected. Don’t hire just any home inspector, hire the best one. If you are ok with the results of the home inspection, you have to decide how much it is to do possible repairs or upgrades. This is the hardest part, most likely you need several companies, and they might charge you for estimates. If you want to go forward, you have to go back to the lender (if you need one), they will order an appraisal, but you still can choose your title company that will do the final paperwork, like title search, lean on the property, and make sure the sale is legal. Call several companies, because you can save quite a bit money here.
Next step, you have to make a down payment into an escrow account. If you do it without a Realtor, insist that the money goes into an escrow account from a title company.
Congratulations, you are approved and after signing countless documents you will be the new home owner. Don’t hesitate to ask until all your questions are answered. If you don’t ask for all information you are a gambler, if somebody is not cooperating with answers, just walk away. Remember, they all get paid from your money, and if you don’t buy, nobody gets paid.
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Hi - this is Werner with Home Inspection Tennessee