We want to buy a home. How do we start?
Buying a home can be confusing. And, when it’s your first time it can be really overwhelming.
Relax. Take a breath, we are here to help.
Buying a home may be all new to you but a real estate agent has the tools you need. They can eliminate stress and add confidence to your home search. Real estate agents know all about finding the right home and can help direct you on value, mortgages, insurance, settlement, moving. If you can worry about it, a real estate agent can take care of it!
Ready to start? Call or meet our agents today! 419-222-3040
How do I find the “right” real estate agent?
Realize the right agent for you may not be the right one for someone else. So, how do you know who’s right for you?
Do you know anyone who is an agent? Often, people know one or more real estate agents. You can simply call them and tell them you would like see houses. They will be glad to help!
But what if you do not know an agent – or – you do not want to work with the agents you know? Try going to open houses. Open houses are a low pressure, easy way to spend an afternoon and meet several agents. Just talk to them. Tell them you are just getting started looking for a home. Then pick one to call and ask to look at more houses. Remember, it is up to you to pick the agent that feels right to you.
How do I know how much I can pay for a house?
How much can I afford to pay for a house is the big question for many buyers. If you have an amount in mind your agent can give you a payment estimate. If you want to know how much you can borrow you should talk to a lender. Ask your agent for the names of a couple of lenders and give them a call.
The lenders can get you “pre-qualified.” After asking questions about where you work and what you earn, they can tell about what their company probably will lend to you to buy a home. Getting “pre-approved” takes a little longer but is firmer commitment from the lender. This usually depends on confirming your financial information and the value of the home you find. Plus, being pre-qualified or pre-approved makes you look more serious to sellers!
Should I rent or buy?
In our area buying is most often better than renting. Why? It comes down to affordability. Home values make ownership very affordable. That means you can buy more home for less than you would pay for renting. Buying gives you more selection because more homes are for sale than there are for rent.
So, is buying always my best option? Buying is better. It is the single best way for people to save and accumulate value. Renting can be better on a short term or transitional basis. If you know you will need to move again soon, renting may be a better option. Six months, a year or two, it might make more sense to rent. Otherwise think BUY!
How long has it been for sale?
Why ask this question? Buyers usually are concerned about the characteristics of each house. They have an image of their dream house deep in their minds. Each house they visit they judge against this internal ideal house comparing room sizes, wall colors, appliances, yard size and others features. So, why ask about how long it has been for sale? If buyer’s can step away, even momentarily, and stand in the seller’s shoes, they will benefit. Ask yourself now how you would feel if you just put your house on the market last night, today you have five agents showing buyers your home, and tonight you have three offers? Contrast how it feels if you have put your house up for sale and you hear nothing? Days go by – nothing. Frustrating weeks turn into months followed by despair. Suddenly you, as a buyer steps into one of these scenarios. Do you suspect the two sellers might have two different responses to an offer?
What are the taxes?
When you buy a house you become a tax payer, a real estate tax payer. Usually asking about the taxes means, “What is the dollar amount of the taxes?” and often implies, “Why are they so high?” Real estate taxes are calculated on a house by house basis. Each home is taxed a different amount. This is based on two main factors. First is based on a physical description of the property that enables a value to be established. The second factor is determined by the home’s location, its “presiding jurisdiction”. Elements of government like cities, village and townships can LEVY taxes based fractions of cents, called millage. Parks, Public service agencies and Schools districts do this, too. Each of these separate amounts are added together and then multiplied by the property’s value to determine the the tax.
Should I just jump in?
If it has been a year of two since you bought a house, you might be surprised. Things have changed. Like the old saying “it is better to look before you leap”. Since the economic downturn, the financial world has been remade. If you bought you house before 2011 then you may not recognize the process. Before you start looking at houses, or get too deep into a new home search. Call a real estate agent. Set up a time to meet with them. They can give you a quick orientation and update. You can let them know why you want to move. Tell them what you want your move to accomplish. Together you can sketch out a plan to find your dream house. Jump in? Sure, but first remember to look!
What is RESPA?
RESPA is the Real Estate Settlement Procedures Act. It was originally enacted in 1974 and has undergone many revisions since then. In the wake of the Great Recession it has undergone dramatic change. For decades, one of the law’s key elements has been the “Good Faith Estimate” and the “Truth in Lending Statement”. These have been replaced with a three page “Loan Estimate”. This document is initiated by the mortgage loan officer and given to the mortgage applicant at the beginning of the mortgage process. It is intended to inform home buyers of the the costs associated with obtaining a home mortgage. It must give an accurate description of the actual costs the buyer sees at closing, at the end of the process when they are actually buying the home. If the costs at the end do not match the estimates from the start, everything stops, you have to go back to the beginning and start all over again, no excuses, no exceptions!
Can I buy a new home before I sell?
It may not be easy and it may not be for you, but you should be able to buy before you sell. The big question is, “Do you have the stomach for it?” Owning two homes at once can be scary. Many people may find this as being too risky considering the recent market when some homes went unsold for months or even years. The next two critical elements are the equity in your existing home and your credit history. To get financing to buy a new home before you sell you will have to qualify for the combined total of the two mortgages. Are you out of luck if you do not have enough equity in your current home or your credit is not spotless? Not necessarily, but it gets tougher. An experienced real estate agent can help you If you have equity and clean credit. It takes an agent with exceptional creativity and resourcefulness to do it without them. Where there is a will, there is a way!
So, I make an offer, why am I being asked for “Earnest Money?”
Earnest money is a deposit the buyer makes on the home they want to buy. It shows their sincerity and commitment to follow through on the promises they made to the seller in the purchase agreement. The question is how much is enough? As a buyer, what amount should be sufficient to convey to the seller that your offer should be taken seriously? In northwest Ohio a rough “rule of thumb” is about 1% of the proposed purchaser amount. So, you are making an offer to purchase for $100,000.00, what is an appropriate earnest money amount? A thousand dollars, of course. But, $500.00 probably would be okay too and, $2500.00 is probably not going to be much more meaningful. What will raise eyebrows is if you submit an offer with no earnest money. It is true earnest money is not required to make an offer valid. But, an offer lacking any earnest money sends a message of insincerity. Remember, you are trying to convince the sellers you are keen to buy their house and that they should sell it to you for less than they want. Insincerity is not the message you want sent. A lack of earnest money can result in the seller needing a higher purchase amount to convince them to sell. That is the value of being earnest!
What happens to my earnest money if I don’t buy the house?
That can be complicated. First once you give the broker a check for earnest money, the broker will deposit it in a non-interest bearing trust account. The purchase agreement will have specific language addressing how earnest money is handled. You should read this carefully. If you buy the house the earnest money will be applied to the purchase. On the closing statement you will see a credit toward the purchase for an amount equal to the earnest money deposited with your broker. The complications begin if you don’t buy the house.
When a buyer doesn’t buy what happens to the earnest money hinges on the reason(s) why the sale failed to be completed. The earnest money can be returned to the buyer or given to the seller. Usually both the buyer and the seller need to agree, in writing, about who gets the earnest money. If the buyer and seller can not agree, it is possible the earnest money will be stuck in limbo. If the buyers believe they did everything possible to complete the transaction or, as a result of their inspections, have come to believe the home is not in the condition they thought it was when they agreed to buy it, they will believe the money should be returned to them, The catch is the sellers must agree, with the buyers, in writing. If the seller is not convinced, they may ask the buyer to release the earnest money to them. Your purchase agreement will contain specific details about earnest money. The key element being that any earnest money agreement must be in writing.
Why isn’t this more like “House Hunters?”
Well, “House Hunters” is a TV show. It is not reality. It is pretend. I spoke to a relative of one of the agents from a “House Hunters” episode. [SPOILER ALERT: IF YOU ARE A REAL FAN OF THIS SHOW YOU MAY NOT WANT TO READ FURTHER] If you are not familiar with the show it airs on HGTV. It is a great show. The general format for each episode has a real estate agent shows an attractive couple three homes and they pick one to buy (oh, if it were only so easy). Each episode is in a different city. The show has peppy music and fast scene changes of the three homes. the buyers make pithy comments as they work through their decision of which home to buy.
What I was told is this is sort of “re-enacted”. The buyers already have decided on which home they want to buy and the two “runner-up” homes are re-viewed and filmed to make the show. Great and practical for a TV production but, in real life it usually is harder to find the right home. It is not unusual for buyers to look at homes for weeks or months contrary to the way it happens on TV in a day or two. In reality, buyers will likely view 1-2 dozen homes vs. TV where they look at three and pick one. HGTV’s “House Hunters” is fun and entertaining. House Hunting can be fun and exciting but can also be hard work. The key to a successful hunt is your guide. The guide to the “Big Game” in your house hunt is your real estate agent. Trust them and you will feel like the star of your own TV show!