What to know when buying a house (10 important things to know for the educated home-buyer)
What to know when buying a house (10 important things to know)
If you’re thinking of becoming a homeowner and are wondering what you need to know when buying a house, you might be interested in this list I’ve put together for you based on my many years of experience. I’m Chad Hendrix and I’ve been serving home-buyers and sellers in the Carolinas since 1999. Here is MY top 10 list of things to know when purchasing a home.
1. You need a Realtor
It all starts here. You need a great Realtor working for you as your buyer’s agent if you want to increase your chances of having a successful home-buying experience. Your Buyer’s agent is there to protect you and advise you, to make the process as smooth and stress-free as possible, and ultimately get you to the closing table. People hire attorneys, doctors, accountants, financial advisors, and so forth for a reason. Place them the same importance on finding a great Realtor to represent you in your home purchase journey. Also, do this sooner than later so that you can begin cultivating that relationship and utilizing their knowledge and guidance. It’ll benefit you far more than you realize.
2. Choose your agent wisely
The realtor that you ultimately choose as your buyer's agent can make a huge difference. Realtors come with different levels of experience, work ethic, conflict resolution skills, attention to detail, communication styles, and on and on. Do your homework when choosing a Realtor to represent you and don’t assume they'll all get you the same results or represent you the same. Consider having a discussion with them upfront and asking them about their experience, what areas they serve, what makes them different, what motivates them, etc. Read their reviews if they have any and listen to your gut as well.
3. Get pre-qualified
If you plan on getting a mortgage, speak with a reputable mortgage broker or lender, sooner than later, about getting pre-qualified for a mortgage. I recommend you consider speaking with a local lender based on a recommendation from your Realtor. Speaking with a mortgage broker or lender allows you to get an estimate of what you might be able to borrow and afford based on a credit check and the information you provide about your finances. It will also give you a chance to learn about any special mortgage programs out there available to you. And again, speak with someone sooner than later rather than waiting until you see a home you’d like to buy and then deciding that you’re ready to out to a lender.
4. FREE Buyer Representation?
When you’re looking to purchase a home, having representation in the form of a buyers agent typically doesn’t cost you anything…because buyers agents are almost always paid by the listing firm which offers a certain portion of their fee to the buyer’s agent. Now, with that being said, you, as the buyer-client, are responsible for making sure that your agent gets paid the agreed-upon commission as stated in the buyer-agency agreement that you originally signed with them. So, make sure you have a full understanding of the buyer agency agreement and how your agent earns their commission. But, in most cases, your agent is compensated by the listing firm, thereby making it a no-cost, no-lose benefit to you.
5. More than “hauling and hoping”
The value that a great Buyer’s Agent brings to you extends far beyond their ability to unlock doors and show you homes or ‘Hauling and Hoping’ as we jokingly call it in the real estate world. During the home-buying process, your buyer’s agent will advise you, see things or situations that you can’t see, prepare legal paperwork for you, negotiate various things on your behalf, take on the risk of liability, occasionally put out fires, help you navigate the complicated inspections process, and so much more. So, if you've ever thought that Realtors are only there to show homes, trust me when I tell you that they do so much more beyond that.
6. Listing Agents represent the sellers, not you
If you’ve ever thought that going directly to the listing agent will somehow get you a better deal, help you see the home before others have a chance, or give you some sort of advantage if you want to purchase the home, then I’m here to tell you that’s not the case. Going directly to the listing agent will only put you in a position of having less leverage and negotiating power. Not to mention, you’ll have no one representing YOUR best interests because the listing agent is, by law, representing the sellers of that property, not you. With that being said, they could still Guide you through the process, and do it fairly, while continuing to legally represent the seller. Or, alternatively, represent both parties as a “dual agent”, if both parties agree to that. But, there are risks to both of those options so it’s usually best practice to make sure that you have your own representation and then let your Realtor handle the communication with the listing agent.
7. New Construction representation
If you’re leaning towards purchasing New Construction, It’s still wise to have your own representation. Those nice sales agents in the model home, as wonderful as they can be, are representing the builder, not you. Therefore, if you don’t have your own buyer’s agent then who’s representing Your best interests? The builder typically Offers compensation to your buyer’s agent and won’t otherwise kick it back to you in some form of rebate or discounted price if you don’t have an agent. So, Not utilizing a buyer’s agent when purchasing new construction is kind of pointless you might say. Now, if you ARE going to have a buyer’s agent representing you, make sure you let the builder know up front that you are working with a Realtor. If you don’t, there are some builders that may refuse to compensate your agent later on.
8. Home search websites
This is more of a “did you know” but when you’re searching for homes online, whether it be on our popular Hendrix Properties website, the national portals that we’re all familiar with, or with local real estate websites, you’re actually viewing everything on the market, not just that particular company’s listings. This is due to an agreement called “broker reciprocity”, which allows for the mutual exchange of listing data between real estate companies. So, if you find yourself on a website like Hendrix Properties which arguably has one of the best home searches around, know that you’re actually viewing everything on the market. Also, know that the person you see pictured by any particular listing may not be the listing agent (and in most cases isn’t) but they can still help you.
9. Amazing tax benefits
Those of you who will be first-time home buyers may not know this but when you take out a mortgage to purchase a home, you get amazing tax benefits. This is called the mortgage interest deduction which allows you to reduce your taxable income for the year by the amount of interest you paid on your mortgage. This can result in hundreds or thousands of dollars in net benefit to you. Speak to your tax advisor for more details of course but this is truly a nice benefit.
10. Location, location, location
When searching for a home, do your best to focus on finding a home in a great location even if it means that you have to spend a little bit more or sacrifice certain upgrades. It will be a better investment in the long run and quite possibly a better quality of life. I’m not encouraging you to become house-poor by any means, but if you can swing it, it’s almost always a better strategy in the long run. When you go to sell your home in the future, it will be worth more, will be more desirable to prospective home-buyers, and will be less likely to sit on the market for as long.
I hope you’ve enjoyed my top 10 list of What you should know when buying a house and have learned a few things. If you have any thoughts, or questions, or are looking to purchase a home in the Carolinas, please comment below.