Searching for a new home can be one of the most exciting times of your life. It’s a lot like courting – the pursuit, the “getting to know you” period, the proposal (aka “offer”), and the marriage (aka “closing”). If you don’t want your relationship with a new home to crash and burn, you need to know a few things before you fall in love, so you can live happily ever after. Here are 4 good tips for buying a home.
1. Know thy numbers.
You’d be surprised at how many home buyers start their new home pursuit without really knowing what they can or can’t afford. Avoid being disappointed later by getting preapproved for a mortgage before you even get started. And be sure you know the difference between being “pre-qualified” and “pre-approved.” You can be pre-approved only after a lender has reviewed all your financial information and has told you how much the bank is willing to lend to you. Being pre-approved will let sellers know you’re a serious buyer, and it will also prevent you from falling in love with a home that is financially “out of your league.” In the San Mateo area real estate market, we are seeing multiple offers on most homes today, making it critical to know the top amount the bank will loan you just in case you need to bid up to that amount in order to get your new home.
2. Love the neighborhood, not just the house.
It’s easy to get caught up in how perfect a house is and forget that the house is only part of a bigger picture. It won’t matter how awesome the master bathroom is if you discover that the neighborhood just isn’t a good fit for you. Spend as much time researching the neighborhood as you do checking into all the nooks and crannies of the house. Regardless of whether or not you have kids, ask questions about the neighborhood’s school district since that will impact the home’s resale value. Caution here is not to get hung up on a school’s score because they are going away in a year or two. And be sure to drive through the neighborhood at various times of day to make sure you’re not missing any “deal breaker” factors because the time the house is on the market is short so you don’t want any surprises later on.
3. Beware the lure of the lowball offer.
Even though buying a home is a financial decision that involves legal contracts, that doesn’t mean it’s devoid of emotion. If you’re tempted to make a lowball offer on a home just to see what happens, be aware that some sellers will be so offended that they won’t entertain future offers from you. It may be a business deal, but this is still their home – and that’s personal. Make an offer based on the selling price of other homes in the same neighborhood and then determine what the average price per square foot is for that area. Also, make your offer number an odd number instead of a round one. For example, an offer of $952,500 sounds like you put some thought into it based on real calculations, whereas an offer of $950,000 sounds more like a shot in the dark. Be prepared to give the seller your highest and best offer when it is written because you will not get a second chance on it in this market.
4. Get a home inspector’s “blessing.”
Some religions require engaged couples to go through a few premarital counseling sessions before they can be married in their chapel. Likewise, it’s a good idea to seek the counsel of a qualified home inspector before you make things official with a new home, if the seller’s haven’t already done one. If the house has hidden baggage, a good home inspector will find it, which gives you the opportunity to decide if it’s something you’re willing to deal with or not. A pest inspection is also important for a house but not so much with a condo. This is especailly important in our market with so many As-Is offers being made and accepted.
By following a few simple guidelines and leading with your head instead of your heart, your destiny with a new home is much more likely to end with “happily ever after.” Remember this is probably the largest investment you will make in your lifetime, so be wise.