8 Things You Need To Know About Buying A Home
Buying a home or investing in real estate is one of the most expensive and life-altering decisions most people make. Since it's not a topic that's heavily touched upon in school, most people end up "winging it" and learning on the fly.
Sure, that's one way to approach it. A better way is to get familiar with important concepts and practices that can help you make sound buying decisions and avoid costly mistakes.
As a real estate agent, investor, and coach, I've been through countless transactions with clients. My goal is always to provide a framework for buyers to make smart, strategic purchases.
Here are my eight best pieces of advice for buyers:
1. Get educated on the homebuying process
No matter how you slice it, buying a house is a complex process. There are a lot of moving parts — from submitting an offer and obtaining a mortgage to securing homeowners insurance and closing on the property.
More often than not, I see buyers jump into it all without understanding the process at a high level. While no one expects you to know all of the ins and outs, it's beneficial to be aware of the major milestones and key players involved in a transaction.
2. Develop a real estate plan
I've seen people spend more time mapping out their weekly meal plans than their real estate objectives. Buying a piece of property impacts many aspects of your future and it's worth taking the time to investigate loan programs and neighborhoods, and to learn about the full spectrum of housing options.
Do you love post it notes, folders, and to-do lists? If you're an organized person who likes to plan, now is your time to shine. Having a high-level roadmap gives you direction and keeps you focused on your goals. It always helps to write down what you want to accomplish, the steps it will take to get there, and to come up with a realistic timeline to make it all happen.
3. Vet and hire experts
As a buyer, you are only as strong as your weakest link and you want to build a winning team of experts to guide and advocate on your behalf.
I would estimate that some of my real estate transactions have over 100 people involved. A lot are administrative personnel working behind the scenes, but a few are heavy hitters — there are realtors, loan officers, attorneys, escrow and title agents, just to name a few.
Note: just because your friend has a real estate license and makes you laugh at brunch, doesn't mean she should be advising you in one of the biggest financial and emotional decisions to date. Build your team wisely.
4. Explore your housing options
A single-family home is still the American dream for many of us. But, it's not your only option. It's worth considering other housing types, like a condo/townhouse or a multi-family property. There are significant differences in these home styles and unless you weigh out the pros and cons, you may miss a golden opportunity.
5. Scrutinize your finances
Trying to keep up with the Joneses is a real thing in our culture. It's not uncommon for people, and especially young buyers, to stretch beyond their financial means in order to purchase a home. This can become a slippery slope. There's no need to set yourself up for failure and unnecessary stress by putting yourself in a position where it's going to be hard to make ends meet.
Even though a bank may pre-approve you for a high loan amount, it doesn't mean you need to max out your budget. By carefully scrutinizing your expenses, you may realize that you should be both spending and borrowing less.
6. Focus on value as much as location
We've all heard the expression that real estate is all about "location, location, location." I couldn't agree more that the geographical area where you buy has a huge impact on your lifestyle and your investing strategy, but I would also argue that finding a good value for your dollar is just as important.
The biggest mistake I see home shoppers make is getting distracted by shiny objects, like stainless steel appliances and quartz countertops. Don't buy a house because it has nice barn doors. You can add these trendy décor accents into a space. Instead, you want to analyze the things that you can't easily change — overall square footage, the plot the house sits on, and the neighborhood.
Don't forget to take a deeper look and assess the big ticket items like roofs, plumbing, electrical. Although not nearly as sexy as a dual shower head, this is where your money is actually going.
7. Advocate for yourself
Caveat emptor — meaning "buyer beware" — was once a popular term used in the real estate industry to stress that the buyer alone is responsible for checking the quality and suitability of a home before the purchase is made. Over the years, laws have tightened up to protect consumers. Naturally, this makes it easier to point blame when things go wrong. Trust me, in my earlier days investing in real estate I was guilty of this myself. The blame game isn't good for anyone and having that mindset is useless.
Know that as a buyer, you are your best advocate and you are accountable for the decisions that you make. Do your research and take advantage of your due diligence period to ensure you are confident in your real estate endeavors.
8. Remember: You are in control
In this crazy hot market, it's easy to get carried away in the drama of multi-bidding wars and spending more than you can afford. There's no doubt that you have to be aggressive and proactive these days, but not to the point of losing control. Remember, you are in the driver's seat.
Having a plan, knowing the process, building a good team, analyzing your finances, and doing your research will help during times of chaos.