Let's face it—buying a home has become quite an involved experience complicated by extensive paperwork, negotiations, inspections, real estate agents, mortgage lenders and title companies. Not only do you need to be at least aware of all of the components that make up the process of buying a home, you ultimately take responsibility for your decisions and that can include potentially expensive mistakes. Here are four essential home buying tips to help you navigate the modern real estate market and successfully buy a home.
1. Utilize your Internet resources!
The Internet has been an absolute boon for real estate consumers. Never before has so much information been available for free at your fingertips. If you have not taken advantage of this free access to extensive real estate information, you need to begin that process immediately. Keep in mind that not everything that you read on the Internet is true, nor is it all applicable to your situation.
You need to become familiar with basic real estate terminology, learn about the general steps involved in buying as home, discover the basics about the various people you will come into contact with during a transaction and seed your mind with questions to ask along the way. Then, as you begin the process of buying a home, continue to use the resources of the Internet to refine your knowledge specific to your personal needs.
2. Bone up on basic economic market skills.
Many of us have enjoyed at least elementary economics classes, and some of us have real-world experience with market principles including pricing and value. It's time to dust off those brain cells and get ready to apply your education and knowledge to making one of the largest transactions that a person can make—buying a home.
A home is really just a product similar to what you would buy in a store, except it is a lot more expensive and complex. As well, emotions can run high during the purchase of a home and that can skew values. Very simply, you need to apply the difference between pricing and value to your decisions when negotiating for a home. The value of the home to you, and others, can include not only the actual structure, but the location, the "feel" of the home and the viability of the home for certain uses. You have to make reasonable estimates of value and then adjust your pricing to reflect that value. Any error here can have long-term negative economic consequences, especially if you overpay for the home because you miscalculated value.
3. Interview all parties with whom you are going to choose to work.
Too often, home buyers decide to work with the first real estate agent that they meet or with the mortgage lender that was suggested by a friend. If there was ever a time to recognize that you are ultimately making a business decision, it is when buying a home.
So, treat all parties with whom you might work in a business-like manner. This means that you need to interview these folks in as formal of a manner that you feel comfortable. Whether it is face-to-face or over the phone, you must ask the tough questions and make a competent decision whether or not the person you are interviewing is going to be the best fit for you. Mistakes can be costly as many of the people that you meet throughout a real estate transaction could potentially cost you thousands of dollars if their guidance fails to meet your needs.
4. Understand the complexities of a home.
To many of us, a home appears to simply consist of walls, ceilings, floors and cosmetic decorations. The reality is that a typical home is a very complex system of interlinked structural components, electrical, mechanical and plumbing systems, plus all of the bells and whistles usually added to a home as conveniences.
No one person, inspector, contractor or engineer can tell you in detail everything that you need to know about a home. Therefore, you need to enlist the help of a variety of persons to help you with your evaluation of a home for condition and value. A home inspector is there to give you a general overview of issues with a home, and you must take the home inspection and have any issues discovered further investigated by experienced professionals competent in their niche—plumbers, electricians, structural engineers, roofers, etc. Remembering this point can potentially save you thousands of dollars by catching trouble early enough in the transaction to either allow you to adjust negotiations or to terminate the deal.
It is certainly not easy to buy a home and have everything work perfectly. You must get involved and be willing to take responsibility for your decisions. Be cautious, alert, proactive and wise in your decisions and take ownership of the process. Despite all of the information and help available to you, you take a much greater financial risk than necessary unless you stay engaged and follow through. Buying a home should be a fun, enjoyable and positive experience. So, gear yourself up for the journey and make it a good one.
Joe Hayden is the owner and manager of the Joe Hayden Real Estate Team with Keller Williams Realty—Louisville East. He can be reached through the team website at JoeHaydenRealtor.com.