If you’re in the market for a new home, congratulations! Buying a house is a huge milestone. But before you start house hunting, there are a few things you should do to make sure everything goes smoothly in the process. Here are 5 things to do before making an offer on a house:
1. Research, research, research
First, you should start with research. As real estate professionals, we research and analyze all the data we have to make the most informed decision possible. This step can be time-consuming and sometimes it will be difficult to find the accurate data that you need to answer some questions. While researching make sure to check the following:
- If the area is on the rise or decline
- Look at recent sale prices of similar properties in the same area
- Check how long the property has been on the market in the local area
- Research utility costs or estimates
- Confirm the annual property taxes
- Research schools in the area
- Learn more about the neighborhood (transportation, activities, facilities, and others)
Also, while looking up the home’s history, look at how many days the property has been on the market, if it’s been on the market in previous years, and whether the house was under contract and came back on the market. Such activity could indicate a challenge with the home or frustration the Seller may be experiencing. You should also check the price of the property to see if there have been reductions recently or not. It’s always better to know these types of things beforehand than find out too late.
2. Get pre-qualified or pre-approved for a mortgage
As a serious homebuyer, you should probably start your process in a lender’s office before going to an open house. By meeting with a mortgage lender, you’ll know how much you’ll be able to borrow and what kind of property this amount can get you – this can help save you time so you don’t go to properties that are outside of your consideration. Most sellers also expect buyers to have a pre-approval letter from their lender. Therefore, getting pre-qualified or pre-approved for a mortgage loan will give you a better idea of how much you can afford to offer on a house, as well as put you in a stronger position when competing against other buyers.
3. Check your finances and create a budget
This one seems fairly obvious but you’d be surprised how many people don’t properly budget for this expense before making an offer on a house. Creating a budget will indicate how much you can comfortably afford to spend each month, taking into account things like mortgage payments, taxes, insurance, and other associated costs. Keep in mind that property taxes may change each year so you’ll need to add a bit of margin to be ready for such increases.
You should also check if you’re buying from a community that is part of the homeowners association that may have dues or other fees. You’ll need to know how these are assessed and when they are due. Other fees could include costs of insurance, utilities, and upkeep. Ask your seller how much they are currently paying for insurance and consider the cost of maintaining certain utilities while keeping in mind the costs of any upgrades that the property needs to be liveable. By adding these together, you can compare the overall costs of purchasing this home. This will help you determine what price range you should be looking at and ensure that you’re sticking to your budget.
4. Do multiple walkthroughs and a professional home inspection
Once you’ve found a house you’re interested in, we recommend doing multiple walkthroughs. This will help you get a feel for the property and spot any potential problems. Remember, these walkthroughs alone aren’t enough. While allowing your real estate agent or someone else to handle the home inspection may be easier, hiring a professional inspector is a must. This professional inspection process typically takes 2-3 hours depending on the size of the home. Once the inspection is complete, you’ll receive an inspection report that includes an assessment of the building’s foundation, plumbing, heating, and electrical systems, and others. This will give you a fundamental assessment of the condition of the home and any problems that need to be resolved before moving to the property.
5. Think about your daily life and future plans
Long-term thinking is important when it comes to buying a house. Things like your commute, how close the house is to amenities, and your future plans could impact how you select your dream home. Ask yourself: Are you thinking of getting married and having kids? Do you want to live in a city? Do I need to be close to my job? By answering these types of questions you’ll get an idea of whether this house fits your future plans or not. If you’re unsure if a certain neighborhood will meet your needs down the road, it might be best to wait to select a different property.
It’s important to be patient and do your research before buying a house. Like most other big life decisions, the home buying process isn’t always straightforward or easy. But, by researching the market and understanding your budget you could avoid issues in the future. If you need further information or advice about buying a home, make sure to sign up for our newsletter or join our Thursday Office Hours Group. We’ll be happy to help!