1. Be picky, but don't be unrealistic. There is no perfect home.

2. Do your homework before you start looking. Decide specifically what features you want in a home and which are most important to you.

3. Get your finances in order. Review your credit report and be sure you have enough money to cover your downpayment and your closing costs.

4. Don't wait to get a loan. Talk to a lender and get prequalified for a mortgage before you start looking.

5. Don't ask too many people for opinions. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion.

6. Decide when you could movie. When is your lease up? Are you allowed to sublet? How tight is the rental market in your area?

7. Think long-term. Are you looking for a starter house with the idea of moving up in a few years or do you hope to stay in this home longer? This decision may dictate what type of home you¿ll buy as well as the type of mortgage terms that suit you best.

8. Don't let yourself be ¿house poor¿. If you max yourself out to buy the biggest home you can afford, you¿ll have no money left for maintenance or decoration or to save money for other financial goals.

9. Don't be na¯ve. Insist on a home inspection and, if possible, get a warranty from the seller to cover defects within one year.

10. Get help. Consider hiring a REALTOR^¯ as a buyer¿s representative. Unlike a listing agent, whose first duty is to the seller, a buyer¿s representative is working only for you. And often, buyer¿s reps are paid out of the seller¿s commission payment.

 

 

 

1. Find a real estate professional who's simpatico. Homebuying is not only a big financial commitment, but also an emotional one. It's critical that the practitioner you choose is both skilled and a good fit with your personality.

2. Remember, there's no "right" time to buy, any more than there's a right time to sell. If you find a home now, don't try to second-guess the interest rates or the housing market by waiting. Changes don't usually occur fast enough to make that much difference in price, and a good home won't stay on the market long.

3. Don't ask for too many opinions. It's natural to want reassurance for such a big decision, but too many ideas will make it much harder to make a decision.

4. Accept that no house is ever perfect. Focus in on the things that are most important to you and let the minor ones go.

5. Don't try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to "win" by getting an extra-low price may lose you the home you love.

6. Remember your home doesn't exist in a vacuum. Don't get so caught up in the physical aspects of the house itself (room size, kitchen) that you forget such issues as amenities, noise level, etc., that have a big impact on what it's like to live in your new home.

7. Don't wait until you've found a home and made an offer to get approved for a mortgage, investigate insurance availability, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers.

8. Factor in maintenance and repair costs in your post-homebuying budget. Even if you buy a new home, there will be some costs. Don't leave yourself short and let your home deteriorate.

9. Accept that a little buyer's remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big commitment, but it also yields big benefits.

10. Choose a home first because you love it; then think about appreciation. While U.S. homes have appreciated an average of 5.4 percent annually from 1998 to 2002, a home's most important role is as a comfortable, safe place to live.

 

 

 

No home is flawless, but certain physical problems can be expensive. Watch for:

1. Water leaks. Look for stains on ceilings and near the baseboards, especially in basements or attics.
   
   

2. Shifting foundations. Look for large cracks along the home¿s foundation.
   
   

3. Drainage. Look for standing water, either around the foundation of the home of in the yard.
   
   

4. Termites. Look for weakened or grooved wood, especially near ground level.
   
   

5. Worn roofs. Look for broken or missing copings and buckled shingles as well as water spots on ceilings.
   
   

6. Inadequate wiring. Look for antiquated fuse boxes, extension cords (indicating insufficient outlets), and outlets without a place to plug in the grounding prong.
   
   

7. Plumbing problems. Very low water pressure, banging in pipes.

 

 

 

1. What are your qualifications? Are you a member of the American Association of Home Inspectors?
   
   

2. Do you have a current license? Inspectors are not required to be licensed in every state.
   
   

3. How many inspections of properties such as this do you do each year?
   
   

4. Do you have a list of past clients I can contact?
   
   

5. Do you carry professional errors and omission insurance? May I have a copy of the policy?
   
   

6. Do you provide any guarantees of your work?
   
   

7. What specifically will the inspection cover?
   
   

8. What type of report will I receive after the inspection?
   
   

9. How long will the inspection take and how long will it take to receive the report?
   
   

10. How much will the inspection cost?

Portions adapted from Real Estate Checklists and Systems and used with permission (www.realestatechecklists.com).

 

• Siding: Look for dents or buckling

• Foundations: Look for cracks or water seepage

• Exterior Brick: Look for cracked bricks or mortar pulling away from bricks

• Insulation: Look for condition, adequate rating for climate

• Doors and Windows: Look for loose or tight fits, condition of locks, condition of weatherstripping

• Roof: Look for age, conditions of flashing, pooling water, buckled shingles, or loose gutters and downspouts

• Ceilings, walls, and moldings: Look for loose pieces, drywall that is pulling away

• Porch/Deck: Loose railings or step, rot

• Electrical: Look for condition of fuse box/circuit breakers, number of outlets in each room

• Plumbing: Look for poor water pressure, banging pipes, rust spots or corrosion that indicate leaks, sufficient insulation

• Water Heater: Look for age, size adequate for house, speed of recovery, energy rating

• Furnace/Air Conditioning: Look for age, energy rating; Furnaces are rated by annual fuel utilization efficiency; the higher the rating, the lower your fuel costs. However, other factors such as payback period and other operating costs, such as electricity to operate motors.

• Garage: Look for exterior in good repair; condition of floor¿cracks, stains, etc.; condition of door mechanism

• Basement: Look for water leakage, musty smell

• Attic: Look for adequate ventilation, water leaks from roof

• Septic Tanks (if applicable): Adequate absorption field capacity for the percolation rate in your area and the size of your family

• Driveways/Sidewalks: Look for cracks, heaving pavement, crumbling near edges, stains

 

 

 

Be sure you find a loan that fits your needs with these comprehensive questions.

1. What are the most popular mortgage loans you offer?
   
   

2. Which type of mortgage plan do you think would be best for us? Why?
   
   

3. Are your rates, terms, fees, and closing costs negotiable?
   
   

4. Will I have to buy private mortgage insurance? If so how much will it cost and how long will it be required? NOTE: Private mortgage insurance usually is required if you make less than a 20 percent downpayment, but most lenders will let you discontinue the policy when you¿ve acquired a certain amount of equity by paying down the loan.
   
   

5. Who will service the loan? Your bank or another company?
   
   

6. What escrow requirements do you have?
   
   

7. How long is your loan lock-in period (the time that the quoted interest rate will be honored)? Will I be able to obtain a lower rate if they drop during this period?
   
   

8. How long will the loan approval process take?
   
   

9. How long will it take to close the loan?
   
   

10. Are there any charges or penalties for prepaying the loan?

Used with permission from Real Estate Checklists & Systems (http://www.realestatechecklists.com).

 

 

 

 

1. W-2 forms or business tax return forms if you¿re self-employed for the last two or three years for every person signing the loan.
   
   

2. Copies of one or more months of pay stubs from every person signing the loan.
   
   

3. Copies of two to four months of bank or credit union statements for both checking and savings accounts.
   
   

4. Copies of personal tax forms for the last two to three years.
   
   

5. Copies of brokerage account statements for two to four months, as well as a list of any other major assets of value, e.g., a boat, RV, or stocks or bonds not held in a brokerage account.
   
   

6. Copies of your most recent 401(k) or other retirement account statement.
   
   

7. Documentation to verify additional income, such as child support, pension, etc.
   
   

8. Account numbers of all your credit cards and the amounts of any outstanding balances.
   
   

9. Lender, loan number, and amount owed on other installment loans¿student loans, car loans, etc.
   
   

10. Addresses where you lived for the last five to seven years, with names of landlords, if appropriate.

 

 

 

 

1. Look for exclusions to coverage. For example, most insurance policies do not cover flood or earthquake damage as a standard item. These coverages must be bought separately.
   
   

2. Look for dollar limitations on claims. Even if you are covered for a risk, there may a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.
   
   

3. Understand replacement cost. If your home is destroyed you¿ll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you¿ll only receive $150,000.
   
   

4. Understand actual cash value. If you choose not to replace your home when it¿s destroyed, you¿ll receive replacement cost, less depreciation. This is called actual cash value.
   
   

5. Understand liability. Generally your homeowners insurance covers you for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that it¿s sufficient if you have significant assets.
   
   

 

1. Raise your deductible. If you can afford to pay more toward a loss that occurs, your premiums will be lower.
   
   

2. Buy your homeowners and auto policies from the same company. You¿ll usually qualify for a discount. But make sure that the savings really yields the lowest price.
   
   

3. Make your home less susceptible to damage. Keep roofs and drains in good repair. Retrofit your house to protect against natural disasters common to your area.
   
   

4. Keep your home safer. Install smoke detectors, burglar alarms, and dead-bolt locks. All of these will usually qualify for a discount.
   
   

5. Be sure you insure your house for the correct amount. Remember, you¿re covering replacement cost, not market value.
   
   

6. Ask about other discounts. For example, retirees who are home more than working people may qualify for a discount on theft insurance.
   
   

7. Stay with the same insurer. Especially in today¿s tight insurance market, your current vendor is more likely to give you a good price.
   
   

8. See if you belong to any groups¿associations, alumni groups¿that offer lower insurance rates.
   
   

9. Review your policy limits and the value of your home and possessions annually. Some items depreciate and may not need as much coverage.
   
   

10. See if there¿s a government-backed insurance plan. In some high-risk areas, such as the coasts, federal or state governments may back plans to lower rates. Ask your agent.
    
    

 

 

1. It protects your ownership right to your home both from fraudulent claims against your ownership and from mistakes made in earlier sales, such as mistake in the spelling of a person¿s name or an inaccurate description of the property.

2. It¿s a one-time cost usually based on the price of the property.

3. It¿s usually paid for by the sellers.

4. There are both lender title policies, which protect the lender, and owner title policies, which protect you. The lender will probably require a lender policy.

5. Discounts on premiums are sometimes available if the home has been bought within only a few years since not as much work is required to check the title. Ask the title company if this discount is available.

 

 

Be sure that:

• Repairs you¿ve requested have been made. Obtain copies of paid bills and any related warranties.
  
  

• All items that were included in the sale price¿draperies, lighting fixtures¿are still there.
  
  

• Screens and storm windows are in place or stored.
  
  

• All appliances are operating.
  
  

• Intercom, doorbell, and alarm are operational.
  
  

• Hot water heater is working.
  
  

• HVAC is working.
  
  

• No plants or shrubs have been removied from the yard.
  
  

• Garage door opener and other remotes are available.
  
  

• Instruction books and warranties on appliances and fixtures are there.
  
  

• All personal items of the sellers and all debris have been removied.

 

 

 

The lender must disclose a good faith estimate of all settlement costs. A check to cover your closing costs will probably have to be a cashier¿s check. The title company or other entity conducting the closing will tell you the required amount for:

• Downpayment

• Loan origination fees

• Points, or loan discount fees, you pay to receive a lower interest rate

• Appraisal fee

• Credit report

• Private mortgage insurance premium

• Insurance escrow for homeowners insurance, if being paid as part of the mortgage

• Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and insurance in escrow accounts as they are paid with the mortgage, then pay the insurance or taxes for you.

• Deed recording fees

• Title insurance policy premiums

• Survey

• Inspection fees¿building inspection, termites, etc.

• Notary fees

• Prorations for your share of costs, such as utility bills and property taxes

A Note About Prorations: Because such costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers before they movied. Proration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance. For example, the gas company usually sends a bill each month for the gas used during the previous month. But assume you buy the home on the 6^th of the month. You would owe the gas company for only the days from the 6^th to the end for the month. The seller would owe for the first five days. The bill would be prorated for the number of days in the month, and then each person would be responsible for the days of his or her ownership.

 

 

 

• The Real Estate Settlement Procedures Act (RESPA) statement. This form, sometimes called a HUD 1 statement, itemizes all the costs associated with the closing. You¿ll need this for income tax purposes and when you sell the home.
  
  

• The Truth in Lending Statement summarizes the terms of your mortgage loan.
  
  

• The mortgage and the note (two pieces of paper) spell out the legal terms of your mortgage obligation and the agreed-upon repayment terms.
  
  

• The deed transfers ownership of the property to you.
  
  

• Affidavits swearing to various statements by either party. For example, the sellers will often sign an affidavit stating that they have not incurred any liens on the property.
  
  

• Riders are amendments to the sales contract that affect your rights. For example, if you buy a condominium, you may have a rider outline the condo association¿s rules and restrictions.
  
  

• Insurance policies provide a record and proof of your coverage.

 

 

 

1. Develop a master ¿to do¿ list so you won¿t forget something critical.
   
   

2. Sort and get rid of things you no longer want or need. Have a garage sale, donate to a charity, or recycle.
   
   

3. Don¿t throw out everything. If your inclination is to just toss it, ask yourself how frequently you use an item and how you¿d feel if you no longer had it.
   
   

4. Pack like items together. Put toys with toys, kitchen utensils with kitchen utensils.
   
   

5. Decide what if anything you plan to movie yourself. Precious items, such as family photos, valuable breakables, or must-haves during the movie, should probably stay with you.
   
   

6. Use the right box for the item. Loose items encourage breakage.
   
   

7. Put heavy items in small boxes so they¿re easier to lift. Keep weight under 50 lbs. if possible.
   
   

8. Don¿t over-pack boxes and increase the chances they will break.
   
   

9. Wrap every fragile item separately and pad bottom and sides of boxes.
   
   

10. Label every box on all sides. You never know how they¿ll be stacked and you don¿t want to have to movie other boxes aside to find out what¿s there.
    
    

11. Use color-coded labels to indicate which room each item should go in. Color-code a floor plan for your new house to help moviers.
    
    

12. Keep your moving documents together, including phone numbers, driver¿s name, and van number. Also keep your address book handy.
    
    

13. Back up your computer files before moving your computer.
    
    

14. Inspect each box and all furniture for damage as soon as it arrives.
    
    

15. Remember, most moviers won¿t take plants.

 

 

It¿s important to understand what legal responsibilities your real estate salesperson has to you and to other parties in the transactions. Ask your salesperson to explain what type of agency relationship you have with him or her and with the brokerage company.

1. Seller's representative (also known as a listing agent or seller's agent). A seller's agent is hired by and represents the seller. All fiduciary duties are owed to the seller. The agency relationship usually is created by a listing contract.

2. Subagent. A subagent owes the same fiduciary duties to the agent's principal as the agent does. Subagency usually arises when a cooperating sales associate from another brokerage, who is not representing the buyer as a buyer¿s representative or operating in a nonagency relationship, shows property to a buyer. In such a case, the subagent works with the buyer as a customer but owes fiduciary duties to the listing broker and the seller. Although a subagent cannot assist the buyer in any way that would be detrimental to the seller, a buyer-customer can expect to be treated honestly by the subagent. It is important that subagents fully explain their duties to buyers.

3. Buyer's representative (also known as a buyer¿s agent). A real estate licensee who is hired by prospective buyers to represent them in a real estate transaction. The buyer's rep works in the buyer's best interest throughout the transaction and owes fiduciary duties to the buyer. The buyer can pay the licensee directly through a negotiated fee, or the buyer's rep may be paid by the seller or by a commission split with the listing broker.

4. Disclosed dual agent. Dual agency is a relationship in which the brokerage firm represents both the buyer and the seller in the same real estate transaction. Dual agency relationships do not carry with them all of the traditional fiduciary duties to the clients. Instead, dual agents owe limited fiduciary duties. Because of the potential for conflicts of interest in a dual-agency relationship, it's vital that all parties give their informed consent. In many states, this consent must be in writing. Disclosed dual agency, in which both the buyer and the seller are told that the agent is representing both of them, is legal in most states.

5. Designated agent (also called, among other things, appointed agency). This is a brokerage practice that allows the managing broker to designate which licensees in the brokerage will act as an agent of the seller and which will act as an agent of the buyer. Designated agency avoids the problem of creating a dual-agency relationship for licensees at the brokerage. The designated agents give their clients full representation, with all of the attendant fiduciary duties. The broker still has the responsibility of supervising both groups of licensees.

6. Nonagency relationship (called, among other things, a transaction broker or facilitator). Some states permit a real estate licensee to have a type of nonagency relationship with a consumer. These relationships vary considerably from state to state, both as to the duties owed to the consumer and the name used to describe them. Very generally, the duties owed to the consumer in a nonagency relationship are less than the complete, traditional fiduciary duties of an agency relationship.

 

 

 

Reprinted from REALTOR^® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS^®

Copyright 2005. All rights reserved.

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