Buyer & Seller Tips

Tips on Buying a House

Getting Started

Before you start looking for a home you should ask yourself a few questions:

Where do you want to live? Do you want to be close to schools, shopping, work, or something else?
What kind of house would you like (need)? Are you looking for a particular style? How many bedrooms and bathrooms do you want? Do you want a yard?
How much house can you afford? Have you consulted a Realtor or mortgage lender to determine the size of the mortgage you would qualify for?

Here are a few tips to help you get organized:

Pull a credit report on yourself and make sure the information is accurate. If you find any errors take steps to correct them immediately.
Browse through real estate advertisements in the newspaper and Homes magazines. This will give you a good feel for the types of homes that are on the market and what they cost.
In many communities, Realtors may have television programs or interactive phone systems which will allow you to find out information.
Visit open houses on the weekend. It doesn't cost anything to look, and looking at a few different homes might give you some ideas for things you'd like in a house but haven't considered.
Start saving money - you'll need to have cash on hand for a down payment and closing costs.
Don't incur any additional debt. Pay down your credit cards - and don't apply for any new ones. Don't make any major purchases on credit - buy the furniture or car later.
Contact a Realtor. Your Realtor can help you determine how much you can afford, and they can provide you with information on homes that may interest you. The Realtor will also help you complete all of the necessary forms when it comes time to make an offer.

How much house can you afford?

Simply put, you can afford a house that costs as much as the largest monthly mortgage payment you qualify for.
A quick way to estimate the size of mortgage you qualify for is to take your gross monthly income (that's before taxes and other deductions) and multiply it by .28. This works out to just over 1/4 of your gross income.
Mortgage companies use something called qualifying ratios to determine how much they'll lend you. Most mortgage companies use either a 28/36 ratio or a 25/33 ratio. The first number in each pair is the percentage of your gross income that the lender would consider acceptable as a monthly mortgage payment (i.e. if you make $3,000 per month, 28% of that is $840 per month).
The second number in each pair is used when all debt payments are considered, not just the mortgage. (i.e. if you make $3,000 per month, but also have a $250 a month car payment, 36% of $3,000 is $1,080, minus the $250 car payment equals $830).
As you can see, in this example the numbers work out to be almost the same. Obviously if you have more debt you would qualify for less.

Why you should work with a REALTOR

Working with a professional Realtor to buy your home is a good idea for several reasons:

They'll analyze your financial situation to help you determine how much you can afford.
They're familiar with the process of buying a home and can explain things to you.
They can easily access information on all properties listed for sale by Realtors in your area.
They can set up appointments for you to see homes that interest you.
They'll help you complete all the necessary paperwork when it comes time to make an offer.
They'll help you arrange financing.
They'll be there at closing to answer your questions and make sure everything runs smooth.

Choosing a REALTOR

Searching for your dream home can be a time consuming experience. Working with a professional Realtor will make the process much more efficient.

Since most people spend a fair amount of time with their Realtor, it's important to choose a Realtor you feel comfortable with, and one who is responsive to your needs. The following questions will help you decide if a particular Realtor is right for you:

Do they return your phone calls?
Do they ask you questions to determine what you want/need in a house?
Do they perform a financial analysis to help you determine how much you can afford?
Do they explain things clearly?
Do they suggest financing methods?
Do they seem knowledgeable about the community?
Do you feel comfortable spending time with them?

If the answer to most of these questions is "Yes" - you've found yourself a great Realtor.

If you find yourself answering "no" to many of these questions, or to any individual questions that are important to you, you should keep looking until you find a Realtor you feel comfortable with.

Seller Tips

Pricing a Home

If you're planning on selling a house, you'll have to decide what price you're going to ask for the home. This is one of the most important and difficult decisions you'll have to make. Buyers select by comparison shopping, so your home will have to have a fair market price in order for it to sell. A real estate professional can help you determine the market value of your home while still obtaining the top-dollar price for your piece of property.

Some of the things to consider when choosing your home price are:

What is the age & condition of your home?
Does it need updating?
What have similar homes in your area sold for?
Have homes in your area been increasing or decreasing in value?
Are there a lot of homes for sale in your area?

Remember, your home is only worth what someone is willing to pay for it. By working with a qualified real estate professional, you can ensure that your property will receive the needed exposure to attract interested parties who are willing to make an offer.

Making Your Home Look Its Best

When you're selling your home you'll want to put forth the very best product. Buyers aren't coming for just a quick look but for a careful inspection. Keep the exterior neat by painting the trim, clipping the hedges, mowing, edging, and weeding the lawn and you may even want to plant a few flowers.

Inside you'll want to lighten up the darker corners, perhaps add some fresh paint and put the clutter away to give the rooms an open feeling. Make sure there are no "stale" odors in the home. This can be especially important for remote areas such as a basement or attic. On the day of your open house, you may want to consider baking some cookies or bring in some fragrant fresh flowers. This will add a cheery and pleasant scent to your home. These little things just may help you sell your home a bit more quickly.

Marketing Your Home

When selling your home, you must realize that it is unlikely that the right buyer will simply walk through your door on their own. Generally, you have to bring your home to the buyer, and that means counting on a real estate professional to put forth a successful marketing campaign.

You'll want an agent who will make the best use of television and newspaper advertising, and one who uses state-of-the-art techniques such as an interactive voice-response system, a front end MLS system and the internet. And, you'll want to have a number of open houses to expose your property to a wide variety of "window shoppers." Make sure your agent is trained not only in the financial aspect of a real estate transaction, but the marketing aspect as well.

An Offer!

When you have a home for sale, eventually a prospective buyer will "make an offer." As the seller, you basically have three options: you can accept the offer, reject the offer or give a counter offer. A counter offer usually will encourage a buyer to continue their negotiations.

You may also receive multiple offers. You may prefer to take slightly less for your property from someone who is willing to pay cash, versus someone who needs to sell their current home first. Contingencies, move-in dates, and financing are all things to consider when weighing an offer. If things seem a bit overwhelming, rely on your experienced real estate professional, who can go over the various points with you, and help you choose the best offer.

The Closing

Once you've accepted an offer on your property there are a number of details that still need to be finished.

There will probably be an inspection of your home by a professional who will determine the condition and integrity of your property for the buyer.
The buyer's mortgage company may chose to send out an appraiser who will assure the lender of your property's worth.
The title company will warranty that there are no liens or existing encumbrances which would inhibit a transfer of title to the buyer.
Either you or the buyer may chose to be represented by an attorney. First time sellers and buyers often feel more comfortable to have the paper work reviewed prior to signing. Rest assured that you can always rely on your real estate professional to make sure the entire home selling process proceeds smoothly.