What You Need To Do Before Setting Out to Purchase a New Home

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It is a very exciting time to be buying a home, especially these days when the rates out there are so low that the cost of borrowing money is more than half it was just a few years ago. Couple that with housing prices that have not been this low in decades and rising inventory levels and it is a buyer’s dream scenario you do not want to miss. Here are a few things you should do to prepare for buying a new home:

Know What Your Purchase Power Is

Understanding the scope of your purchasing power is an important part of being able to effectively find a home that is right for you and within your means. Not only will it help to know what your price cap is on homes you can search but it will also be beneficial to have an idea of the type of property you can afford.

Obtain a preapproval from at least one lender, so that you can confidently view homes that are within your reach. It would also be a good idea to meet with your Realtor before seeking preapproval with a lender to determine what you feel your limit is, based on estimated monthly payments, including tax, title, insurance and everything else. Remember, preapproval and prequalification is not the same thing.

Identify the Things That Matter Most

If you can identify exactly the things that matter most to you in the purchase of your property, it will be easier to weed out the ones you come across that do not fit the bill. Though there is always breathing room and the capacity for some flexibility, you should know the basic requirements of you and your family and put them on paper – the “must haves”. Make a separate list of “would like to haves” and finally, compile a list of things that would be a luxury.

Once you have an idea of what you need, want and would love to have, make an appointment with your Realtor to further discuss the things on your list. Since real estate agents deal with potential homebuyers very frequently, they may be able to shed light on some areas you may not have considered. Conversely, they may be able to provide much-needed clarification on things you may not have thought of such as dealing with any unrealistic expectations you may have with your price point, for example.

Decide On a Bottom Line

It is a good idea to know what your bottom line is in terms of both price ceiling and flexibility with amenities and features of the home. For example, if you have listed “swimming pool” as one of your “would like to have” items then be prepared to expect a premium in price to be able to get what you want. How willing are you to forego the pool in exchange for ample living space? Would it be acceptable to have a smaller kitchen so that a home with a pool can be afforded? Knowing where you stand before it comes time to make an offer on a home or property is a good idea because it can save precious time that might otherwise be wasted in back and forth counter-offers. This will also be very useful during the negotiation stage.

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You can never be too prepared before taking a huge step like buying a home and taking just a few precautions and a bit of time before you begin the journey, could likely end up saving you a lot of money, countless headaches and get you in a perfect home within your means.

What Determines the Value of Your Home?

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Basically, a home's worth is determined by its market value. How is "market value" determined? Most often, it's figured by a comparison ("comp") with homes similar to yours in the surrounding area. So, if the homes in your neighborhood average, say, $250,000, then it's likely that the value of your property will fall in the same range. But market value is also determined by a number of factors including the following: 

External Factors 

There can be several external factors influencing the value of your home. One is "curb appeal", or the first impression your property makes upon prospective buyers. A home that's in excellent condition on the outside will make a great first impression; a home in poor repair instantly loses its appeal to buyers. Other factors can include lot size, popularity of an architectural style of property, water/sewage systems, paved roads, sidewalks, etc. 

Internal Factors  

The condition of a home's interior also has a huge influence on prospective buyers. When you've demonstrated "pride of ownership" and kept up the maintenance (quality paint, trim, molding, etc.), a buyer's interest will immediately perk up for the simple reason that they know your care and concern will result in less cost and maintenance for them. Other internal factors include construction quality, condition of appliances, size and number of rooms, heating/cooling type, energy efficiency, etc. 

Supply and Demand 

"Supply and demand" simply refers to the number of homes for sale versus the number of buyers. When there are more homes than there are buyers, prices tend to be lower. When there are a lot of buyers chasing few homes, then prices tend to rise. In effect, supply and demand affects how quickly your home will sell. Location More than likely, you already know the old saying, "There are three main factors in real estate - location, location, location." While that's not the whole story, desirability is a big factor for home buyers. They may want to live in particular school district known for its education excellence…a great and safe neighborhood with rising property values…etc. 

But I Know My Home Is More Valuable Than a Lot of Comparable Homes in My Neighborhood  

Aren't Allowances Made for This? Definitely! Sometimes, it can be difficult to find homes exactly comparable to your own. So, dollar adjustments are made for the differences between your home and comparable properties. 

Where Do I Find Sales Comparison Information? 

The easiest source to access is your Realtor. After all, it's his or her business to know such information! But, there are also other sources you can tap into in order to get a complete picture of your home's value in comparison to others in your neighborhood. Here's an overview of them:

1. ) The Local Assessor's Office  

It's very likely that your local assessor will be able to provide the sales history of a particular house, neighborhood, or style of architecture. Many assessors also provide lists of recent sales which you can browse and compare to the assessment roll. Today, many municipalities provide local sales and assessment information online making it very easy to access. Check with your local government agency to find out if they provide this service. 

2.) Online Private Companies  

You can search for these companies using the Google search engine and the keywords "comparable home sales" or "comparable sales." Some companies offer free information; others charge a nominal fee. If you wish to get more specific, you can Google "real estate database" and type in the name of your particular state to get additional property information. 

3.) Your Local Newspaper  

It's likely that your local newspaper is a great source of specific real estate information. Look for quarterly sales reports in the real estate or business sections.

The Key to Getting the Price You Want (or Close To It) for Your Home 

The key to getting the best value is finding and matching the right buyer to your home. And that's the job of the Realtor! He or she should work hard to qualify those buyers upfront so the right people are viewing your property! In other words, the Realtor should weed out "lookers" and other unsuitable buyers as a first step in working with you. See how I do that for you by calling me today!