Home Buying Tips For house hunters

Know what the house is worth
The only way to know how much a house is worth is to find out the sale price of similar houses in the area.

One way to obtain property values is to visit  domania.com which offers free tools to give you property values. Look at properties with the same number of bedrooms, bathrooms and square footage, and then draw comparisons.

After you determine what the house is worth, if you are using a realtor get them to find out the difference between the average list price and the average sale price of homes in your area.

Case in point: Let's say that the average listing price of homes in your area is $106,000 and the average selling price is $100,000. You can see that homes are selling for approximately 6% lower than the average listing price. Because of that, you can feel comfortable offering 6% less than the asking price of the home that you are interested in.

Then evaluate the homes in your category. Drive by the recently purchased properties. Look at the neighborhoods, the roof, the landscaping and the exterior paint.

Do these homes' conditions make them more or less valuable than the house you want?

Get pre-approved for a mortgage                               Apply Now

It takes about 24 to 72 hours to get pre-approved for a mortgage. Many real estate brokers will not work with you if you are not pre approved.

Advantages of pre-approval:

Real estate agents work harder for you because they see you as a serious buyer. 
You know how much house you can afford.
It removes one of the stresses of buying a home
Examine the seller's situation

Your want to find motivated sellers who may be willing to accept a lower price.

Questions to ask:

  • Why are you selling?
  • How quickly do you need to close? People who have to sell fast are more willing to negotiate.  They may be settling an estate, transferring jobs, getting divorced or have already purchased a new home and paying for 2 houses.
  • How long has the house been on the market?
  • Is the current list price the original list price?
  • Have there been price reductions?
  • How long ago was the last price reduction made?
  • Have there been any offers on the house?
  • If so, why were they rejected?

Don't forget: A seller who has lived in a home for only a few years may insist on his asking price because they have little equity.  But a long-term homeowner whose house has appreciated for decades may not worry about a few thousand dollars.

Require contingencies in the contract
These are escape clauses that let you back out of the deal without incurring a penalty or losing your deposit if something goes wrong with the deal.

Include contingencies in the contract that call off the deal if:

  • You cannot obtain a mortgage. Financing can fall through for many reasons. You don't want to lose your deposit if you aren't approved for a mortgage.

  • Defects are detected in a home inspection. Do not rely on seller disclosure statements to evaluate property condition. Hire your own inspector to point out potential problems that require costly repairs down the road. Cost: $200 and up.

    Make sure that the home inspector is a member of the American Society of Home Inspectors. You also want to be sure he has errors-and-omission insurance, in case he overlooks something that pops up later, and that he allows you to accompany him on the inspection.

  • Expensive problems such as cracks in the foundation and roof problems may mean you should consider another home.

  • Problems emerge during your walk-through inspection. A walkthrough should take place after the sellers have moved out and 24 hours before closing, It gives you time to look for and, if necessary, negotiate that repairs be made for small, last-minute damages.

  • Key fixtures and appliances aren't part of the deal. This includes doorknobs, ceiling fans, dishwashers, etc.
Make as large of a down payment as possible

The larger your down payment, the less you'll have to borrow and the more equity you'll have in your home. Besides, if you put down less, lenders will require you to purchase private mortgage insurance (PMI) to secure the loan.  As a general rule, the more you put down the lower your rate will be.

For a $200,000 house, PMI can add from 0.5% to 1.25% of the total loan amount at the closing, plus as much as a $500 to $1,000 a year.

Avoid a cash crunch at closing
  • Ask the seller to pay for some or all closing costs. They may agree, especially if you're paying the asking price for the house.

  • Get a seller concession. This will help you write off your closing costs on your taxes.

    How it works: If you agree to a price of $100,000 for a house and figure your closing costs will be 6% of that amount, ask the seller if he or she will accept $106,000 for the house, then give you back $6,000 to pay for closing when the sale takes place.

    This allows you to fold your closing costs, which are not tax-deductible, into your mortgage, which is tax-deductible. While your monthly mortgage payments will be slightly higher, it saves you money in the long run.

    To get a seller's concession, the house has to appraise for the higher value, in this case $106,000.

Lower your homeowners insurance costs

You'll need to either produce a paid policy at closing or pay your premium at close.

How to reduce your costs:

  • Buy home and auto insurance policies from the same company. Some companies will take 5% to 15% off your premium if you buy two or more policies from them.

  • Insure your house, but not the land. If your land isn't at risk from theft, fire, or other dangers covered by your policy, consider excluding its value in deciding how much insurance to buy.

Get an insurance quote








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