10 things I wish I knew before buying a house
Buying a house can be confusing, overwhelming and make buyers feel completely broke by the time they get the keys, but being freed from a landlord and throwing away rent payments can also be incredibly liberating. From finding the best agent to making it through a bidding war, here are 10 things homeowners wish they knew about taking the plunge into home ownership.
1. Get pre-approved first.
It might be tempting to start hitting open houses every Sunday, but before beginning your search, get pre-approved for a mortgage. Otherwise, it's possible to fall in love with a place before being prepared to put a serious offer in on it.
"Get a letter stating what you're pre-approved for to present with offers," said New Orleans homeowner Jennifer Gibbs. "I didn't do that and a lot of sellers asked for it."
Ask around for recommendations on trustworthy mortgage brokers, then set up a time to talk with each one. If they won’t provide concrete information about their fees or if they start giving advice before fully understanding your financial situation, keep looking. Ultimately, a good broker will save time and money by researching loan terms and rates from several different lenders.
2. Work with an experienced agent.
Sifting through online listings is a great start, but don’t underestimate the value of working with an experienced agent. They will help navigate the confusing process of buying a home, and once you find a place you love, they can research comparable listings, advise on what your opening offer should be and negotiate on your behalf.
To find the best one, make a short list of possible agents based on word-of-mouth recommendations. Then meet with them to get a feel for their personality and their knowledge on the neighborhoods.
"My agent was a friend of a friend," said Gibbs. "I was a small fish to her and it was obvious I wasn't her priority. She wouldn't return my phone calls and she didn't guide me through the process at all."
New to the home buying process? Stick with a buyer’s agent. They will negotiate, point out any defects with the house that they see and nip potential issues in the bud whenever possible. Plus, the seller nearly always covers the buyer agent’s fee, so it can become practically free.
3. Don’t be turned off by an ugly bathroom.
A funky paint color or questionable design choice can cause a buyer to overlook a home that’s otherwise brimming with potential. Remember, cosmetic changes are easy to make once you are moved in, and pointing out any dated features can actually help in the bidding process.
"Less aesthetic appeal worked to our advantage with our first home purchase," said Daphne, Alabama homeowner Tabitha Northrop, who has been through the home-buying process several times. "We were able to negotiate a lower price for a historic home in a good area with great potential simply because it was overlooked by other buyers."
Instead of focusing on the pink-tiled bathroom or that ugly light fixture, pay more attention to the layout of the property, the views, the amount of sunlight rooms get, ceiling height, outdoor space and location.
4. Find out about the neighbors.
Once you find a home you love, visit the neighbors to make sure it will be a livable situation. It also helps to visit the neighborhood at different times of the day to get a better feel of what life there is really like.
"I drove by the house at all hours of the day, different days of the week," said Gibbs. "I talked to the law enforcement and EMS at the hospital where I work to see if it was a safe neighborhood or not."
5. Be prepared to move fast.
Many properties receive multiple offers after the first open house, so it's possible to miss the chance to throw a bid into the ring. Include a pre-approval letter in the offer so the seller knows it is serious. If there is a lot of interest in the home, write a letter to the seller explaining why you’d be the best next owner — a personal connection can work wonders.
"Writing a letter about ourselves and why we wanted to make a life in a particular home once allowed us to obtain a property from an emotionally-attached seller that previously refused to budge on an above-market price," said Northrop. "It worked for us because we truly wanted to make that particular property our home and attempted to connect with the seller."
6. Be careful about overbidding.
If you plan on financing your home and get caught in a bidding war, beware that overbidding can come back to haunt you.
"Everyone has a comfortable number," said Northrop. "Determine yours and do not exceed it in negotiations."
The bank will require an appraisal of the home and if it comes in under the amount of the loan you need, you might have to make up the difference in order to close the deal. Before you make a bid, research comparable listings or ask your real estate agent for advice. If you have the means, consider increasing your down payment instead of going up higher in price. Cash is king, so putting more money down is usually an effective way to give your offer an edge on the competition.
7. Expect a ton of paperwork.
When applying for a loan, be ready to provide a ton of paperwork, including tax returns, pay stubs and proof of your current assets. "It's like signing away for your first born," said Britt Jagodnik, who owns a home in New York.
It is also not the best time to switch jobs or rack up a lot of debt with any big purchases, since your income and credit will be closely scrutinized.
8. Hire an inspector.
Protect yourself and hire a professional inspector or engineer to look over the home before you sign on the dotted line. Their inspection will help expose potential problems that could cause you a lot of grief and a ton of money down the road.
"A good inspector will attend to seemingly insignificant details," said Northrop. "We once had an inspector uncover the need to turn on a bedroom light switch for a bathroom outlet to work."
9. Expect to feel like you are hemorrhaging money.
It's surprising how quickly costs add up. "Fees for $250 here, $400 there become as commonplace as $4 lattes," said Northrop.
Besides the down payment, there is the deposit, appraisal, inspection, attorney, moving and more expenses beside the buying price. Additionally, most lenders ask that a buyer has enough to cover at least two house payments after closing, which means there needs to be extra money in the bank. Go over all of the closing costs with your attorney to avoid sticker shock.
10. It will feel like it will never happen.
Buying a home is not for the faint of heart. Finding the right place takes time, and once you find it, you can easily get outbid. Just remember that new inventory is always coming onto the market and, eventually, there will be something you love.
A version of this article originally appeared on iVillage.