Buyers Guide

The selling and buying of a house can be a stressful and confusing process. Not only is it very expensive to learn from your mistakes but very few people move often enough to gain the needed experience.

Although there is no substitute for doing your homework (start by asking your family and friends who have recently moved for their experiences) the following list of common pitfalls may be helpful.
 

1. Looking for a house without getting pre-approved by a lender:
When you are pre-approved, you are effectively a cash buyer. This makes it much easier to negotiate with the seller. Do not mistake pre-approval with pre-qualification; pre-qualification is only the first step in gaining pre-approval. Ask your Banker or Real Estate Agent for details.

2. Failing to check out the neighborhood thoroughly before buying:
How do traffic patterns change depending on the day, or even the time of day? Are there any future developments in the works? Is that nice green space down the road actually zoned for high-rise development? Ask around - check it out first.

3. Making an offer based upon the asking price, not the actual market value:
Do your homework. What have similar properties sold for in the immediate area? How long were they on the market? How does this one compare? Is it over-priced, under-priced, or fair value? Ask your Real Estate Agent for an up-to-date market summary.

4. Letting "first impressions" affect your decision too much:
There are entire books written on how the first impression of a home is the single most decisive factor affecting many purchasers' decision to buy. Don't let bad décor or messy housekeeping scare you away from a structurally solid home that meets all your needs. Remember, you are buying the house, not the furnishings.

5. Buying a home without a professional house inspection:
When buying a house, consider getting a professional property inspection. Not only will you know what you are buying, but these reports will protect you from unforeseen nasty surprises in both the short and long run.

6. Assuming that the Bank's quoted mortgage rates are written in stone:
Like many industries, banks are experiencing increased competition and are often willing to negotiate mortgage rates. Depending upon the market and profit spreads, it is sometimes possible to negotiate substantial savings. Ask your Banker or Real Estate Agent for details.

7. Not shopping for home insurance until you are ready to move:
If you wait until the last minute, you will be rushed in finding insurance. Allow time to shop around and get the best deal.

8. Signing documents without reading them:
Do not wait until the last minute before reading the documents; there probably will not be time. Try to get copies of all documents early on in your home search so that you can peruse them at your leisure.

9. Making verbal agreements:
Not only are they harder to enforce, but any written contract you sign will override a verbal agreement. Contract law says that verbal agreements are not enforceable when they deal with Real Property. Always get it in writing!

10. Not knowing your rights & obligations:
If you do not know your rights, then you can be taken advantage of. If you do not know your obligations, you may inadvertently cause friction between yourself and those with whom you are about to enter a contract. Both your Real Estate Agent and Lawyer are great sources of information concerning this - make use of their expertise and resources.

Few of us would consider buying a used car without first having a mechanic look it over, or at least taking it out for a test drive. Yet that is exactly what many buyers do when buying a resale home. They often fail to have a professional home inspection performed on the home they are interested in, even though it is probably the largest and most important investment they will ever make.

Fortunately, there is a growing industry of home inspectors to fill this gap. Unless you are an expert, it is highly unlikely that you will catch a home's minor, or sometimes even major, problems during a typical house viewing. This is why it is important to obtain a professional unbiased second opinion before making such an important decision.

Top 10 most common problems found by Home Inspectors

A good home inspector will give you an unbiased assessment of the structural and mechanical soundness of the home. He or she will identify any existing or potential problem areas, and give an overview of the condition of the foundation, basement, roof, windows, doors, walls, ceilings, floors, plumbing, electrical, heating & cooling systems. The best inspectors will also make suggestions on how to solve any problems they discover and give a general estimate of possible costs.
 
A Home Inspection is the best way to 'test drive' your new home. It allows you to make your purchase with confidence. It avoids nasty surprises once the deal has closed, and it offers the chance to rethink or renegotiate an offer if serious concerns do arise.
 
When hiring a home inspector, make sure of the following

• That they are well established and have the required experience and credentials.
• That they are independent and unbiased - they have no affiliation with any firms that might create a conflict of interest.
• That they will provide a thorough written report of their findings.
• That they stand behind their work. What warranties do they provide?
• That they are members of a professional association, such as ASHI (American Society of Home Inspectors), NANB (National Association of Home Builders) or ICBO (International Conference of Building Officials).

The asking prices of most properties that are for sale reflect present market conditions and recent sale prices of similar homes in the area. When homeowners price their homes they try to walk the fine line between getting the highest price and ensuring the asking price is competitive enough to attract serious offers. While most Selling Agents advise their clients to realistically price their homes in order to attract acceptable offers within a reasonable period of time, some properties may not be properly priced and you should know this before making an offer.

Before making an offer to purchase a home, you should ask yourself the following questions:

• What have similar properties sold for in the immediate area?
• How long were they on the market?
• How does this one compare?
• Is it over-priced, under-priced, or fair value?
• What type of market is it - is it a Seller's, Buyer's or a Balanced market?

By having this information at your fingertips you will be in position to negotiate the best price and take advantage of any opportunities that may show up. This is where the experience and knowledge of a good Real Estate Agent is invaluable. Real Estate Agent spend a lot of time and energy making sure they know their local market inside and out. They keep their finger on the pulse of the market and have the resources, connections and ability to keep you up-to-date with its constant changes. They know all of the properties currently for sale in your area and are literally your best resource for finding the perfect home.

The Main Factors that Affect Market Value Are:

Location:

• availability of community amenities, such as public transportation, parks, stores, churches and schools
• quality and consistency of neighborhood planning
• future development plans and local zoning

Property:

• style, layout, size, age and quality of construction of the building
• size, shape, privacy and landscaping of the yard

Condition of the Home:

• first appearances
• floor layout
• quality and appearance of fixtures
• general overall condition of main systems (roof, furnace, electrical system, central air, etc.)

Comparable Properties:

• the asking and selling prices of comparable neighboring homes
• The best way of establishing a range of value for a property is to have your Real Estate Agent prepare a general
• market analysis of the neighborhood you are interested in. This will give you a good overview of the current
• market and will show what comparable properties have been selling for recently.

Market Conditions and the Economy:

• number of homes currently on the market
• number of people looking to buy
• the state of the local and national economy
• current mortgage rates

Market Conditions: 

No matter the condition or desirability of a property, its value will be affected by current market conditions. Here are the various conditions you may encounter and how they will affect you:

• Balanced Market:
  The number of homes on the market is equal to the number of buyers (supply equals demand). In this market, prices are stable and homes sell within a reasonable period of time. It is a calm atmosphere with Buyers having a satisfactory number of homes from which to choose.
• Seller's Market:
  The number of Buyers exceeds the number of homes on the market (demand greater than supply). In this market prices are increasing and homes tend to sell quickly. As a Buyer you will probably have less negotiating room and may experience competing offers when trying to purchase your home.
• Buyer's Market:
  The supply of homes exceeds the number of Buyers (supply greater than demand). In this scenario prices tend to drop and the properties stay on the market longer. As a Buyer you will have more selection and less competition and thus be better able to negotiate a good deal.

In Summary:
When you understand current market conditions, you are better able to position yourself as a Buyer. It helps to know if you are in a Seller's, Buyer's or balanced market when deciding what price to offer. In a Seller's market, there is little selection and you may have to make a full-price (or even higher) offer if the home is properly priced in order beat the competition. In a Buyer's market, you have a lot more selection and plenty of room to negotiate. In a balanced market you will find a good selection of homes for sale and have a reasonable amount of time to decide on a home and negotiate the price.

One of the most important decisions a homebuyer must make is choosing the right neighborhood. While this is a very personal decision that often hinges on hundreds of different factors, you should always keep in mind the following.

• If you are considering buying in an unfamiliar neighborhood, take the time to walk or drive around it, both during the day and in the evening.
• Check out the availability of community amenities (such as public transportation, parks, stores, churches and schools). If you have school-age children you may even want to visit the local schools and daycare centers.
• It's a good idea to travel the new driving route to and from work during the appropriate times to see what traffic is like.
• The quality of neighborhood planning, any future development plans and local zoning will also have a significant effect on a neighborhood's desirability. Re-sale values and even future property taxes are likely to be affected by any significant neighborhood changes. Are developers interested in the neighborhood? If so, find out what kind of projects they have planned. You should remember that attractive tree-covered empty spaces often become the location of new development in desirable areas.
• Find out if there are major infrastructure projects planned for the area. Major construction projects, which could be anything from building a new mass-transit station to widening the area's major roadway, are usually part of a long-range city, town or county plan. While construction can be disruptive, you need to determine if it will have a positive or negative long-term effect on the neighborhood and its property values. Find out all you can before you decide to buy.
• Look into the local job market as well. You can expect property values to rise if area employers are creating more jobs, especially higher-paying jobs.
• Talk to the neighbors. They could be one of your most valuable sources of community information.

The majority of purchasers are not overly surprised by the findings of their home inspection. Before getting this far, they have usually had a very close look at the property. And yes, they already know about the peeling paint and old furnace. They may even have noticed the wet basement and taken that into account when making their offer.

It is when an inspection uncovers something unexpected that an inspection condition could save you from making a major mistake. Below are some of the more common problems found in a typical home inspection. While most of these problems are usually obvious and have already been reflected in the purchase price, a home inspection lets you know if your personal opinion of the structural condition of the property is correct (i.e. is it in as good of shape as I think it is?).

1. Minor maintenance problems:
Poor overall maintenance usually leads to a large range of problems that will require the new homeowner's attention. These can include everything from peeling paint to rotting decks.

2. Minor structural problems:
These problems are typical in older homes, and can cover everything from cracked plaster to small movements in the foundation. While they are not likely to cause the house to fall down, they should be corrected before they become more serious.

3. Grading/drainage problems:
In many parts of the United States this is a very common problem. Improper grading and drainage can often lead to damp or wet footings/basements. Correction can range from installing new roof gutters and downspouts to installing weeping tiles. It should be noted that sometimes simply re-grading the surrounding lawn to channel surface water away from the house is sufficient.

4. Older/insufficient electrical system:
It is very common to find older homes with undersized services, aluminum wiring, knob-and-tub wiring or inadequate/poorly-renovated distribution systems. It is important to have these problems looked into since they are potentially dangerous.

5. Older/poorly installed plumbing:
It is also very common to find plumbing problems in older homes. Repairs can range from a simple 10-minute fix to expensive replacement. It is a good idea to get an expert opinion.

6. Older/leaking roof:
On average an asphalt roof lasts 15 to 20 years. It is difficult to estimate roof age accurately from the ground unless the roof is either very new or very close to the end of its lifespan. You also need to know how many layers are under it in order to determine if the roof needs to be completely stripped before installing the new shingles.

7. Older heating/cooling system:
Older and poorly maintained heating/cooling systems are inefficient and could pose a serious safety and health risk. While replacement may seem expensive, the newer more efficient systems do reduce heating/cooling costs substantially, thus helping to recoup your investment.

8. Poor ventilation:
Excessive moisture from un-vented bathrooms and cooking areas can damage plaster, promote the growth of mold and fungus, deteriorate windows and cause allergic reactions. These problems need to be corrected before the damage becomes excessive.

9. Excessive air leakage:
Poor weather stripping, badly fitted doors, deteriorated caulking and poor attic seals all contribute to a cold and drafty home. Repairs are usually simple and inexpensive.

10. Environmental problems:
These can include asbestos, formaldehyde, leaking underground oil tanks, nearby gas stations, contaminated drinking water, lead-based paint and radon gas. It is important to discuss these potential hazards with a professional and arrange for a specialized inspection if necessary.

Buying a home is a complex and stressful undertaking; Getting an expert to help will save you time, money, and aggravation.

Looking out for your best interests:
By asking a Real Estate Agent to act on your behalf during the purchase of a home, you create an Agency Relationship and become the Real Estate Agent's client. Real Estate Agent always owe their clients full fiduciary duties, such as loyalty, obedience, confidentiality, accountability, duty of care, and full disclosure of all pertinent facts.

• Getting the best deal - Know the Market:
  What have similar properties sold for in the immediate area? How long were they on the market? How does this one compare? Is it over-priced, under-priced, or fair value? What type of market is it - is it a Seller's, Buyer's or a Balanced market? By having this information at your fingertips, you are in a position to negotiate the best price and take advantage of any opportunities that may show up.
• Negotiation expertise:
  While a Real Estate Agent does many things, one of his or her most important functions is to negotiate on behalf of their clients. When you purchase a home, you want the best deal possible. Your Real Estate Agent's job is to facilitate this by drawing up legally binding contracts, assisting in negotiating offers, offering advice and perspective and, if needed, acting as a mediator during any potential disputes between you and the seller.
• Finding the right home and neighborhood for you:
  Real Estate Agent spend a lot of time and energy making sure they know their local market inside and out. They are familiar with the current market values of properties in the areas you are looking and are your best resource for finding the right home.
• Professional experience:
  A Real Estate Agent brings to the table all of his or her knowledge, training and negotiation skills, and will explain exactly what you can expect from the buying/selling process. He or she will be able to explain your rights and obligations, help organize and strategize, and even discuss financing options.

All Real Estate Agent are members of the National Association of Realtors® (NAR). This organization requires all of its members to adhere to a strict Code of Ethics and Standards of Business Practice. The Code and Standards are very important because they assure that all Real Estate Agent offer the highest level of service, honesty and integrity possible. All Real Estate Agent are subject to constant professional monitoring that keeps them directly accountable to the individual consumers they serve. NAR also ensures that all of its members are knowledgeable and highly trained in order to better serve the public, and offers ongoing education courses so that Real Estate Agent continue to meet the highest professional standards in a constantly changing industry.

• Determining your "wish list":
  What is it that you want from your new home? A particular style, design, lot type? Proximity to schools, services, work? A pool? A two-car garage? A specific price range? A Real Estate Agent will help identify exactly what it is you are looking for and ensure that you get to see all the homes that meet your criteria.
• Assist with financing needs:
  Real Estate Agent are familiar with all of the complexities involved in the pre-qualification, approval and negotiation of mortgage rates. Like many industries, banks are experiencing quite a bit of competition and are often willing to flex from their quoted rates. Experienced Real Estate Agent can often assist in finding the most competitive rates and terms available.
• Access to Multiple Listing Services:
  Real Estate Agent have exclusive access to the Multiple Listing Service (MLS). The MLS system also allows a Real Estate Agent to examine all properties for sale and short-list the ones that are right for you. This not only offers more choices but also saves you valuable time and effort.