Step 3 - Shopping for a Home
Now that you know what is on your credit report and set a budget for a new home, now it is time to start looking for that dream home. Very few people find their dream home with the first house they tour. Good realtors give you a list of homes in your area that fit your budget and your wants/needs in a home. They will also be able to give you a personal tour of these homes.
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What type of home are you looking for?
One question you need to answer is what type of home are you looking for? Types of home would include single family homes, condominiums, co-ops and townhouses, depending on your price range and your need for space and property.
Single Family Home: Your ownership includes the house and extends to the limits of the property lines. You can modify or improve the space as you wish, but, all maintenance costs, internal and external, are yours.
Townhouses: A townhouse generally is a home that is attached to one or more other houses and sits on a parcel of land that you own. These type of units are typically referred to as Planned Unit Developments (PUD). As a unit owner you have title to a residential lot
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and the dwelling structure. Common areas are administered, maintained and owned by an owner's association. You may have less exterior maintenance and repairs to be responsible for, but you will be responsible for payment of Home Owner's Association fees.
Condominiums: Your ownership is limited to a single unit and a shared interest in all of the common areas. You may not be responsible for exterior maintenance or repairs, but you pay Condo Association Fees.
Do you prefer a newly built home or a resale home?
You may want the warranties and efficient construction of a newly built home, as well as your ability to customize it for the first time. On the other hand, you may find a good deal on a resale home, which may need a little elbow grease. The choice is up to you.
What are your wants and needs in a house?
How many bedrooms? Garage? Basement? What kind of schools are in the area? To make your search a little easier, we've created a homebuyer's checklist (requires Adobe Reader) to help you keep track of the properties you visit. Print and make copies of this form to take along when you look at new homes. By checking off the specific features of each home you visit, you'll find it easier to compare your choices when it's time to make your final decision.
Will you use a real estate agent, or shop on your own?
Many homebuyers choose to work with a real estate agent or broker to help them find a home. Since finding a home, negotiating the contract and closing the deal is such an important transaction, an experienced agent can provide guidance and help to avoid potential pitfalls. An agent should have a vast knowledge of the real estate market, price trends and neighborhood conditions. The agent will help you shop for your home, tour properties and be your negotiator if bargaining over price is necessary.
If you decide to use a real estate agent, you should take great care in selecting one to meet your needs. You may want to ask family, friends and co-workers for referrals to agents that they recommend.
Making an Offer?
When you become more certain about the type of house and neighborhood you want, you may want to make an offer. Before submitting your offer, consider the following:
- The asking price versus the market value of the house.
- A comparative price analysis of neighboring homes.
- The home's condition and potential renovations or repairs.
- Your price range.
- Negotiable items with the seller such as closing costs, repair work, closing dates, etc.
While bargaining, keep in mind some signs of an overpriced house. With the correct negotiating you may be able to get a lower price:
- The home has been on the market more than four months. If no buyers are interested, the house may cost too much.
- There have been a series of cost reductions. This may indicate that the seller has already cut the price, and may be willing to go lower.
- Your comparative price analysis is drastically different from the selling price. Don't pay more than your neighbor for the same amount of house.
Finally, take your time and enjoy the process. Homeownership is a great accomplishment. The more patience you have throughout this experience, the better chance you will have of finding the right home for you and/or your family.
Proceed to Step 4 - Choosing the Right Home Loan
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