5 Important Things I Learned First-Hand About Buying a House

Posted in Personal Finance by Kevin | Tags: , , , , , , ,

Things Every Home Buyer MUST Keep In Mind

If you follow me on Twitter, you probably know that I am starting Pharmacy School in June in Phoenix, Arizona (actually Glendale, a suburb of the Phoenix). The process of moving out has led me to purchasing a foreclosed house 3 miles from my school. I am currently in escrow and the house will be mine on May 25th.

The process of searching for homes, interacting with real estate agents on both sides, and the entire process has allowed me to gain valuable experience that I can share with you.

1. Don’t Limit Your Options, Stay Flexible about What you want.

When I started house hunting, I had limited myself to a small radius around the university. When I told real estate agents to find me a house, I told them I wanted a 3 bedroom, 2 bathroom house over 1,500 square feet and a lot over 7,000. The semi-experienced real estate agent found a few houses that fit my requirements, but none in my price range or condition.

It was not until I accidentally saw a 2 bedroom 2 bathroom house during one of my house visits that I considered the possibility of getting a larger 2 bedroom house. The next day, my agent found another 5 or 6 houses that fit my description. The last one we saw was the house I purchased- a gorgeous 2 bed 2 bathroom larger than most 3 bedrooms and in better condition than anything I had seen before.

I probably wouldn’t have found a house if I had kept my conditions limited. My agent, who probably isn’t that great, never gave me the idea to decrease my requirements and consider other options.

2. The Banks might be huge corporations, but they will negotiate with you.

The house I purchased was a foreclosure- which a lot of homes nowadays are. There are tens of thousands of foreclosures per bank and its a buyers market- if you have the cash. If you’re buying one of these bank owned properties, you will be dealing directly with the bank’s agents. They might try to coerce you into buying the house for the listed house and above, saying things like, “We are getting lots of offers on this house” or “The bank never budges on its price.”

Always remember that these agents make commission from selling you the house and the more you pay, the more cash they get. Banks are always negotiable. If the house your buying is listed at $200,000, make an offer for $175,000. If they think your offer is reasonable, they will counteroffer, something like $192,000. You can either accept (save $8k) or try to budge the price further.

An honest agent will tell you how much is a reasonable price, so your initial offer doesn’t get refused.

3. Do your OWN research, check Redfin, Trulia, Movoto, Zillow.

The last thing you want to do is overpay, buy the wrong house, or buy a house in a deteriorating neighborhood.

The Internet is full of tons of resources that can help you make your own decisions. Check price trends in the neighborhood your buying your house, similar sales, price per square foot, online appraisals, and anything else you can find.

Don’t let real estate agents trick you into overpaying or quickly closing a deal. Make an informed decision by comparing your findings with their words.

4. Ask for a Preliminary Title Report

All real estate agencies have access to preliminary title reports for any house on the market. These title reports have lien information regarding your house. If you aren’t given one, make sure you find another house or another agent.

If your property has a lien against it, you might be caught with your pockets empty. A lot of houses have mechanic liens- which means the previous owner didn’t pay the mechanic for work done on the house. Mechanic liens are a type of senior liens that don’t get removed with the change of ownership (bank loans do).

Guess who has to pay in this case? You. If you want a clean title.

5. Hire your own inspector, don’t rely on an inspector referred by your real estate agent.

This might not be that obvious, considering that your real estate agent might know the best inspectors, but finding an inspector on your own is not that hard.

An inspector referred by your agent might have some kind of partnership going on with the agency. This means they could overlook some house flaws in order to sell the house to you. The agent will pay off the inspector or give them more commission/leads with the condition that they try to make the property seem better than it is.

You might be buying a great house- but be certain that’s what it is before you spend all your money.

These are a few of the things I learned in my recent home buying experience. Have you recently bought a house? Do you have any experience you want to share?

Join the discussion! Comment below.

5 Comments to “5 Important Things I Learned First-Hand About Buying a House”

  • Great information. We were looking at buying a investment property in the Phoenix area last year and we were advised not to buy any house that had been vacant  for too long as the heat in Phoenix would give it a permanent musty smell inside if the air conditioner hadn’t been running. Real Estate laws vary so much across North America that you really have to have a good agent that you can trust. With our first house our agent didn’t put in a clause that the house had to be empty of all garbage and furniture and when we moved in the basement was full of rubbish that we had to take to the dump.

  • Hello SmarterSpend! Great information–looks like you found a good deal. My husband and I purchased our first home last September, and we couldn’t be happier! We learned a few things as well; get everything in writing from your sellers–our sellers told us that they would fix some things, and we took them at their word…needless to say they are not fixed. Also, Craigslist is a great tool to furnish your new home instead of purchasing lots of new furniture–we recently turned our formal living room into a library (we are both book nuts!) for $400, which includes two wingback reading chairs, new matching slipcovers, an 8 X 10′ rug, painting, and 3 solid wood, matching book cases. What a deal!

  • Wow Amanda! What a great deal! I have actually turned to Craigslist often for buying stuff for the house, but it motivates me to look even further when I hear of great deals like yours! Congratulations on your new home!

  • Great tips =) I’m in the process of looking to buy too.  Too bad there aren’t that many foreclosure properties here up in Vancouver, BC… I would love one!

  • I actually had a relative go to Vancouver for real estate from here in California and he said a good house costs something like 700-800k. Good luck in your search for a great property.

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