By Angie Mager
If you're interested in buying a home, our magazine and website is the #1 source of central Indiana homes for sale by owner. If you haven't checked out our new website, ByOwnerPros.com, do so today. We've received lots of compliments about how easy it is to search and navigate. Home tours now have up to 20 photos. Every now and then we do get questions from potential buyers however we don't reach them as well as we do sellers so this month we're devoting this space to tips for by-owner shoppers.
Most importantly, you should get pre-approved for a mortgage and let sellers know that you are pre-approved when you make an appointment to see their home. Doing so in advance will assure you don't waste your time and the sellers' time looking at homes you can't afford. Another benefit is that this process will let you know the status of your credit. If there are mistakes or blemishes in your credit record, you may have time to start correcting these issues.
As lenders adapt to a changing mortgage environment, generally loans are getting harder to get and approval is taking longer. We recommend getting at least three quotes from lenders - ask for a "Good Faith Estimate" of costs. According to Jeff Moore of Simple Home Loans, it shouldn't take a lender more than three days to provide this. Since lenders will pull your credit report, many people are afraid that having multiple credit inquiries made will lower their credit score. Usually true, but you will not be penalized if you are getting multiple inquiries for the purpose of obtaining a home mortgage as long as they are done within two weeks. So make sure you plan accordingly.
Good financial planning and a budget will help you decide what you can afford. For most people, this is not as much as a lender tells you they will lend you. Don't forget to allow enough room in your budget for utilities, transportation, home maintenance and repair costs that can vary from house to house. Taxes and homeowner's insurance are usually paid along with your mortgage payment and held in escrow. Taxes can greatly affect your mortgage payment so be sure to ask the seller what the tax payments are.
The next step is to do your research and prioritize your wants and needs in a home. Decide what you must have in a home and what you'd like to have but can sacrifice if you need to. Some common attributes to consider:
- Location
- School System
- Price
- Square Footage
- Number of Bedrooms/Bathrooms
- Size of Garage
- Basement - Finished or Unfinished
- Lot Size
- Neighborhood Amenities
- Style of Home (Ranch or 2-Story)
- Condition of Home
- Age of Home
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After you've been pre-approved and decide on your wish list, then it's ready to make appointments to see homes that match your requirements. Be sure to check out www.ByOwnerPros.com on a regular basis for updated listings. Make an appointment convenient to both parties. Be sure to keep their phone number in case you need to change or cancel the appointment and give them yours for the same reason. Arrive on time. Take your shoes off when touring the home (or at least offer to). It's a common courtesy in most areas.
Often, by-owner transactions are much friendlier and easier than homes with multiple realtors and brokers involved.
You may know within minutes if you're not interested. If this is the case, you probably won't want to take much time there, but if asked, honest feedback is usually appreciated. If you are interested then it's appropriate to request a longer second showing. Also, ask them for the disclosures - a required form disclosing what they know about the condition of the home. If they do not have one, ask them to obtain one before the second appointment. If the price seems high, it's quite appropriate to ask them how they came up with the price.
When you're ready to make an offer, you'll probably want to negotiate verbally before putting in on paper. You are not legally under contract until the agreement is signed by both the buyer and seller. Some people find making offers and negotiating easier to do on the telephone. Be prepared to give your seller time to think about your offer. Some important items you need to be prepared to negotiate are:
- Price
- Earnest Money Deposit (1% of purchase price is typical.)
- Closing Date
- Possession Date
- Title Company Closing Fee (typically paid by buyer)
- Inspections (typically paid by buyer)
- Personal property included such as appliances.
- Seller concessions typically paid by buyer
Your lender, home inspector and appraiser, title company, and home insurance professionals are great sources for information and advice. Be sure to acquire the materials they need and meet their deadlines for a smooth closing.
Happy Shopping!
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