So you want to buy a house….
…and you don’t know where to start or what to do?
No worries – it’s usually a pretty straightforward process, with people who are paid specifically to help you get what you want. There can be a lot of players, many phone calls to make, and tons of papers to process, but the professionals on your team make this process as simple as possible. So who should be on your team?
- Your Lender – You may think that your real estate agent is the number one person you’d need to start with, but it’s better to start with a bank or mortgage broker. The reason why is simple – you need to know how much house you can afford before you start looking. By working with your Lender first, they will be able to review your income and credit to see how much of a loan you can get, and demonstrate to you how various loans and payments will impact your budget. Don’t be afraid of dealing with the money part – it’s surprising easy, and a good Lender will do all the math for you. Also, don’t be afraid of shopping around – a seemingly small difference in interest rates can effect your budget mightily, and you need to be comfortable with your Lender when talking about money.
- Your Real Estate Agent – Now that you know what you can spend, the fun part starts. Looking at houses is both exciting and exhausting, but with some planning, you can make it easier on yourself. First, make a list of “Must Haves”, “Wants” and “Do Not Wants”. For example, some people really want a full basement for storage or a future renovation – put that as a “Must Have” but leave the whirlpool tub as a “Want”. Don’t think it has to be in real estate terms either – a good real estate agent will be able to figure out how “A quiet place to read” translates into a home layout. Because homes are so personal, communication is key with an agent. If you feel like they’re not listening to you, aren’t answering your questions, or you just get a bad vibe from them, just pull the plug and find another agent. This is an important part of the team, with whom you’ll be discussing personal matters like money and comfort, so it’s very important for it to be someone you’re comfortable with.
- Your Home Inspector – Except for some very rare circumstances, you’ll want to have a good home inspector on your side. What the home inspector does is look through the home you’d like to buy, and investigate the major systems and structures, like the roof, foundation, electrical, plumbing and HVAC. This can be important, since an unethical seller can sometimes cover a major problem, like a quick coat of paint over a patch of crumbling plaster. The home inspector is limited to what can be seen (so they won’t be breaking into walls to check plumbing lines inside) but they generally take several hours to review and test the home’s condition. A good home inspector will do a thorough job, and present you with a multiple page report at the end of it. When calling home inspectors, ask about the time they take, the systems and structures they review, and what kind of report they give. Also, ask for referrals – a good inspector won’t have any problem giving you names and numbers of former clients. Again, communication is important – they will be talking about things you may not know a whole lot about, so make sure you’re comfortable asking questions of them until you understand what they’re saying.
- Your Homeowner’s Insurance Agent – A small part of the team, but an important one none the less. Setting up a homeowner’s policy for your home is a one time thing, but the coverage and cost can have a huge impact on your budget. Some policies cover different things, so make sure you ask about products like flood insurance, which is required for some homes. Reading the policy is like reading a different language, so absolutely ask what yours covers – they may be hidden surprises in the fine print. The insurance industry is competitive – feel free to shop around and see what’s out there. Different companies lump different things together, so have your car insurance and private health insurance information available as well – you can sometimes get great discounts by insuring them all together with the same company.
That is your basic real estate team – it seems like a lot of details and phone calls and paperwork, but having a good team makes the whole process easier. The most important rule is this – make sure you have people you like, so you’re comfortable asking questions and answering their questions. If it’s someone you’re intimidated by, or someone you just plain don’t really like, communication is limited, which leads to frustration and misunderstanding.
So how do you find these people? What questions do you ask? It’s easy – just call a bank or an agent and say “I’m thinking of buying a house.” That’s it. A good professional will talk you through your options, ask the questions they need answers to, and tell you your next steps. If you call someone, and they’re distant or short with you, hang up the phone and call someone else. There is no shortage of real estate professionals out there, and there is no need to waste your time with someone who has lost the passion for helping people find a perfect home. Your Lender or Agent can be a great source of referrals as well – they have worked with a ton of people in the local real estate market, and will be able to refer you to any number of people you need for your team.
Good luck with your home search, and if you have a question about getting started, leave it in the comments, and I’ll see what I can do to help!