Buying a house can be a bewildering experience for most people. It’s a complex process involving many disciplines, each with their own unique vocabulary making the process nearly impossible to master.
Here are five, easy-to-execute pieces of advice from my new book Home Buying in 30 Minutes, that will go a long way toward ensuring you get a good deal on your next home.
1. Hire a real estate attorney.
This is an elective expense in some areas and there is a temptation to try to save a few hundred to a thousand dollars by not hiring an experienced real estate attorney. Some people use an attorney friend or relation to represent them in a transaction for free. This is a risky and potentially costly error.
It’s well-known that you have to spend money to make money. Sometimes you also have to spend money to avoid disaster.
U.S. real estate law hasn’t changed appreciably in the last three hundred years so many attorneys wrongly think it’s simple. It might be simple, but it definitely isn’t easy. Representing buyers or sellers in a real estate transaction involves knowledge of real estate law, knowledge of local customs, experience in negotiations and a good deal of diplomacy. Nearly every real estate attorney has a story about a transaction that almost went south because the attorney for the other side was unfamiliar how real estate deals are transacted in their area.
Their value is heightened if you don’t know a real estate agent, mortgage broker or home inspector. A local attorney will know who the best professionals in the area are and can refer you to them. Assembling a dream team of professionals to advocate for you goes will greatly increase the likelihood that you’ll get a good deal on a great property.
2. Hire a real estate agent who has a lot of experience.
You’ll want to work with an agent who has a lot of experience in the area you’re looking in. Experience counts for a lot. They will have a much better understanding of that market and the community than someone who primarily works in another market. A local agent is much more likely to have relationships with other local agents, which can make the deal go more smoothly. Plus, they have a reputation to protect and will be more motivated to make sure you’re a satisfied client.
3. Get pre-approved by a local mortgage broker.
Competition among businesses is always good for consumers. Mortgage brokers have relationships with dozens of lenders, each with many different mortgage programs. A mortgage broker can shop around among hundreds of programs to find the right one for you. A loan officer at your local bank only has a handful of mortgage products. When you get a quote from a mortgage broker, you can be sure you have a competitive rate and you can always call your local lender to see if they can beat the deal you get from the mortgage broker before you lock in your rate.
Mortgage brokers rely on referrals from real estate agents and others for business. They quickly develop (or lose) a reputation for making sure they can close loans on time. Big, national lenders are famous for not closing on time. If a national lender fails to close on time, annoying and inconveniencing everyone involved in the deal, it doesn’t really impact their overall business. Mortgage brokers have more skin in the game and can’t afford to harm their reputation that way, so they work harder to ensure your loan closes on time.
4. Don’t let yourself fall in love with any property.
Remember, buying a home is a business transaction. Try to keep emotion out of it. The time to fall in love with a house is after you buy it and make it your own. Most people can think of a time when they made a decision they regret when they were swept up in emotions. Cooler heads prevail in real estate.
5. Don’t hire the cheapest home inspector.
It is impossible to find and diagnose every problem in a house while walking through it for a few hours. Still, that’s what many people expect of their home inspectors. Look for an experienced local inspector who will spend as much time as it takes to find out everything he/she can and put it into context for to you. Done right, a home inspection can be a fantastic educational experience that should leave you knowing your property much better. In most fields, you get what you pay for and who can afford a cheap inspection?
In the homebuying game, it pays to know the rules.
If you’re cautious about using credit cards, getting a recommendation from your landlord, a utility bill for the past 12 months, or evidence of your paying your insurance premiums are other great ways to prove that you’re responsible about paying your bills on time.
