Overview – Smart Home Buying

At best, buying a home is a complicated process. At worst, it can be an emotional and financial nightmare! Not only do you have to find the right house, you have to verify its condition, negotiate a good price and favorable terms, pay for it, take title, move in, all the while ensuring you are buying a home that you will be able to resell when the time comes.  Here are some things to think about during the process:

Budget

  • How much can you comfortably afford and still have enough money to keep the lights on, fund your retirement, and put your kids through college?
  • Is the figure above based on one income or two?
  • What will happen if either you or your spouse loses your job?
  • Is the home you want available in your price range?
  • How much more will you have to spend to get everything you want?
  • What are the right compromises to make?

Neighborhood

  • Is the home you like in an area where home values are appreciating or depreciating?
  • Are there good schools in the area?
  • How is crime in the area?
  • Are the homes in the area owner occupied or tenant occupied?
  • How does the house fit into the neighborhood?
  • Is it over-improved?
  • Is it a smaller home surrounded by larger homes or vice versa?
  • Can the neighborhood support any improvements you make to the property?
  • Would lots of people like to live in that neighborhood or did you fall in love with a nice house in an undesirable neighborhood?

Property Condition

  • Have you received and reviewed all the relevant disclosures relating to the property?
  • Is there a foundation problem?
  • Has the home ever had a foundation repair?
  • Is there a warranty that is transferable?
  • How will a foundation repair affect the future value of the home?
  • How is the quality of the construction?
  • Is it a solid home built to last or is it a pig wearing lipstick?
  • Is the floor plan livable?
  • Can many different types of families live there?
  • Is there a lot of wasted space?
  • Is it energy efficient?
  • If the home needs updating, can you buy it cheap enough to justify the expense?
  • Is the size and shape of the lot sufficient not only for your purposes, but for future buyers?
  • What repairs has the seller made?
  • If the home needs a new roof, for example, does the homeowner have the cash or equity in the home to make the repair if the insurance company rejects the claim?

Price

  • Have you received and reviewed a CMA?
  • Is the home priced too high?   Too low?
  • Has the home increased or decreased in value over the past several years?
  • What are the trends in the neighborhood?
  • Is this home in line with those trends?
  • If it is priced higher than the market, why?
  • If it is priced lower than the market, why?
  • How many times has the house changed hands?
  • What is the TAV?  Too high?

Negotiations

  • Why is the home being sold?
  • When does the seller need to move and is there any flexibility in that date?
  • Is the seller under financial distress?
  • Is the home in pre-foreclosure?  A short sale?  Bank owned?
  • Are there any obvious repairs that need to be negotiated in advance of the inspection?
  • How much do you like this home?
  • How many other homes have you seen that suit your needs?
  • How soon do you need to move?
  • Do you have a lock that is going to expire?
  • Does the current homeowner have an FHA mortgage to pay off?
  • Is their loan assumable with qualifying?
  • How much is the seller’s payoff?
  • How much equity does the seller have in the home?
  • Who is paying closing costs?  Which ones?
  • Should you get a home warranty?  What coverages?

Sales Contract

  • Who writes the sales contract?
  • Do the terms of the contract favor the buyer or the seller?
  • Do you need a lawyer?
  • What contingencies do you need?

Repairs

  • What repairs may your lender require?
  • What repairs may your insurance company require?
  • Is the house insurable?
  • When should you ask the seller to make the repair?
  • When should you ask for a repair allowance?
  • What if the seller refuses to make repairs?
  • How do you know if the seller completed the agreed upon repairs?
  • Were the repairs completed by a qualified professional?
  • Are the repairs completed to your satisfaction?
  • What does the CLUE report show?

Financing

  • Should you use a bank or a broker?
  • Is your lender giving you good advice?
  • Is your lender telling you the truth?
  • What is the best loan for you?
  • How do loans compare in upfront cost?  Long term cost?  Closing costs?
  • Can your lender deliver what they promise?
  • Will your lender deliver or bait and switch at the last minute?
  • What do you do if your lender fails to perform?
  • What do you do if you don’t qualify?
  • How do you get your earnest money back if you don’t qualify?
  • What about your option fee?
  • What lender docs do you need to review in advance?
  • Do you need an appraisal?
  • What if the house doesn’t appraise?

Closing

  • Which title company should be used?
  • Do you need a title policy and who pays for it?
  • Do you need a lawyer to review your loan docs?
  • Do you need a lawyer to attend closing?
  • What if your loan isn’t ready on time?
  • What if the sale of your current house (if you own one) falls through?
  • Is the HUD statement accurate?  Are you being overcharged?  Undercharged?
  • Is there a survey you can use or do you need a new one?
  • What if the current survey is rejected by the title company?
  • What if there are liens against the property?
  • What if title contingencies can’t be cleared?

Taking possession

  • When do you get the keys?
  • When does the seller move out?
  • What if the seller leaves the house in bad condition?
  • What if the seller refuses to leave?
  • How do you take care of the house?
  • Do you need to file for exemptions?