How to Buy a Home: 7 Tips and Tricks from Real Estate Insiders

No matter if you’re in a buyer’s or seller’s market, there are a few critical steps you can take to make a smarter purchase. Since buying a home is likely the biggest single investment you will ever make, being prepared will help you make a better purchase. Here are our best tips to buying a home.

Know your buying power

What is your buying power? It is the combination of your credit-worthiness and how much you can realistically pay for a home.

First, you need to understand the hidden costs of buying a home. You will need to save not only for the down payment of your home — which is typically between 10% – 20% of the offer price — but also for any additional transaction fees, such as transfer tax, PMI, title insurance, and legal fees.

Then you need to know what you can realistically afford each month to understand how much house you can buy. Your mortgage rate will depend on your creditworthiness — if you have a high credit score, your lender will likely approve you for a lower mortgage rate, which can save you thousands of dollars per year in interest.

How much of your budget should go to your monthly home costs? According to SmartAssets, you can use the 36% rule as a rough guideline. This means that your monthly obligation shouldn’t be more than 36% of your monthly gross income.

A loan professional can help you figure out how much house you can afford.

Fix your credit with the help of a loan professional

According to CreditKarma, a good credit score is usually 720 or above. You want to clean up your credit as soon as you can, and definitely before you go to a lender for a loan preapproval.

When you apply for your loan pre-approval, you don’t want to have anything to hide on your application. So don’t lower your credit score by doing anything that will originate more inquiries into your credit. For example, don’t open any new credit cards. Also, don’t omit any debts or loans when you apply. If the loan officer discovers them in the application process, they may deny you a pre-approval.

Get a loan professional to check your credit score for you. A professional can give you a clearer idea if your score is in the ‘good’ range, or if you need to do some credit cleanup before getting a mortgage preapproval.

Work with a knowledgeable buyer’s agent

Do you understand what kind of market you are buying into? Even within a city’s limits, there can be micro markets that are increasing or decreasing in value.

That’s why it’s important to hire a highly competent real estate agent who knows the specific market. You want to make sure that the professional who you’re working with really understands what the market is like and will help you find the home that you desire.

How can you tell if your agent knows the market? See if they can provide you with a buyer’s market analysis.

A buyer’s market analysis report outlines which neighborhoods are still up and coming — with potential for increased property value — versus those that have peaked with inflated home prices. Having this analysis at your fingertips will help you know if a home’s list price is above comparable properties so you don’t overpay for a home.

Don’t try to time the market…

Even in a hot market, there’s never a perfect time to buy a home. It can take a while to know exactly what you like, and you may have to look at 10 or more homes before you can recognize what suits your lifestyle best. While you’re shopping, take photos of your favorite properties and the details that you liked the best so that you can remember what you liked.

Another good reason to slow down the buying process: you might find a better deal if you do. Investigate expired listings. Expired listings may have gone off the market because they didn’t get any offers at the listed price, so you may be able to underbid the original listing price. It’s not likely worth your time to look at FSBO (for sale by owner) listings, though. Since they are not represented by a professional, they are often overpriced.

When you start shopping, have a one-hour initial consultation with your realtor. Give them every single detail that you know about your lifestyle, buying power, needs, wants and desires for your home. The more detail you can provide, the easier it will be for them to help you find your future home. Your agent may also know of exclusive listings not available to the general public.

… But make the offer as soon as you find the right home

If you love it, make the offer. Otherwise, that dream home may disappear faster than you think, especially if you’re buying in a hot market.

Your buying agent should contact the listing agent before you submit an offer so that they can decide what’s important to include in the offer. If you’re serious about it, you want to increase the chances that your offer is accepted.

Show that you’re serious about the purchase by creating a buyer’s offer packet. It should include your lender’s preapproval letter, a screenshot of your down payment money in your bank account, and comps that support the rationalization of the offer you are presenting.

Get a home inspection

Once you’re in the negotiation process, it’s essential that you get a third-party inspector to run a thorough home inspection. The inspector will be looking for major structural issues, including problems with the foundation, plumbing, and electrical systems. Your inspector should be extra picky, pointing out the most minor faults.

Make sure to have the inspection conducted before it is too late to back out of a deal. If there are any major structural issues, you may be able to make the seller repair them as a contingency to solidifying your offer. Minor issues that you can repair on your own may be points for negotiating a lower offer.

Protect your credit before you close

Don’t raise any red flags with your creditworthiness in the weeks before closing. Any one of these moves could mean that you’re denied the loan and the deal falls through — even if you’ve already been preapproved!

  • Keep your spending to a minimum and don’t make any major purchases before closing — that includes buying furniture, or a car, truck, or van, or any excessive charges on your credit card.
  • Keep your bank accounts stable. Don’t change banks, spend any of the money you have set aside for closing, or make any large deposits to your accounts without checking with your loan officer first.
  • Keep your employment situation stable — do not change jobs, quit your job, or become self-employed. Any sudden change in your income can have that preapproval offer rescinded.
  • Do not cosign a loan for anyone. It will open an inquiry into your credit and add to your debt, which could raise your mortgage rate and cost you thousands of dollars over the life of the loan.

Looking for a home in our area? Let us help you find the home of your dreams. We’re well versed in the our local real estate market, and we can provide you with a buyer’s market analysis to help you find the right neighborhood for you. Contact one of our trusted agents today.

 

 

The Home Equity Playbook

What is Home Equity?

Home equity seems to be a very simple calculation — the total amount of mortgages owed subtracted from the current market value of a home. Here is a simple example:

Current Home Market Value  $325,000

Existing Mortgage                                       $225,000

Homeowner Equity                                     $100,000

One side of the equation is well defined, and it is found on the monthly mortgage statement, the loan balance. The other side is less obvious — the current market value of the property. The most accurate measurement of market value requires a comparative market analysis from a real estate professional.

Putting Home Equity to Work

Home equity represents the largest single asset of millions of people, and because it represents so much of an individual’s net worth, it must be treated with respect. Home equity is not a liquid asset until a property is sold, or it is borrowed against.

There are two types of loans that tap into homeowner equity as collateral.

Home Equity Loans

 Many home equity plans set a fixed period during which the person can borrow money, such as 10 years. At the end of this “draw period,” the person may be allowed to renew the credit line. If the plan does not allow renewals, the homeowner will not be able to borrow additional money once the period has ended. Some plans may call for payment in full of any outstanding balance at the end of the period. Others may allow repayment over a fixed period, for example, of 10 years.

A home equity loan, sometimes called a second mortgage, usually has a fixed rate and a set time to pay it back, generally with equal monthly payments.

Home Equity Line of Credit

 A home equity line of credit is similar to a credit card. The lender sets a maximum amount you can borrow, and you can draw money as you need it, though many home equity lines of credit require an initial draw. The interest rate varies daily, and is usually prime plus a set number, but the required payment is usually interest only. Once the loan has been paid down, the payment is reduced, and it can be paid off and initiated as many times as a homeowner requires.

How Much Equity can be Accessed?

Since the financial institution is lending money and using a home as collateral, they will typically loan 80% of the home’s equity. The bank does not want to take the risk that if the house price drops, they would be carrying a loan for more than its market value.

Here are some good ways to use money from a home equity.

  1. Invest in Your Home

Among the very best returns on your investment (ROI) include kitchen and bathroom remodels, adding square footage or an extra bath, enhancing curb appeal and repairing/keeping the existing structure sound.

 

  1. Invest in your Children’s Education.  Using your home equity to finance a child’s higher education may be the greatest pay off of all.

 

  1. Supplement Retirement Needs

At retirement, when monthly income is reduced, a home equity loan could pay for a dream vacation or an unexpected major expense.

 

  1. Augment the Impending Sale of a Home

If you’re planning to sell soon, a home equity line of credit may be the best way to finance improvements to maximize your selling price.

On the flip side, avoid buying luxury items, assets that depreciate like cars and boats, don’t make investments in financial markets, and do not pay routine monthly bills. You should treat a home equity loan as an investment and not as extra cash when making financial decisions.

We Are Happy to Assist You

If you would like an assessment of the market value of your home and the current equity you can access, give us a call for a comparative market analysis.

 

Choosing A REALTOR® You Can Trust

When it comes to shopping for a home, especially if you are buying for the first time, having an agent on your side is extremely helpful.  But if you have never bought a house before, you may have no idea where to begin finding a REALTOR® that you can really trust to help you with this important decision.

If you open the phone book you will see a long list of names, and very little help to figure out which one to call.  There are a few ways you can narrow down the field of real estate agents to find someone you can trust.

Ask Your Friends And Family

To find a real estate agent you can trust, start with the people you trust—your family and friends.  Of course, the best people to ask are those who have bought a home recently, as the experience they had will still be fresh in their memory.  Ask them how happy they were with the service they received, and if they would recommend you hire the same agent.

Ask Others In The Field

Another source of good referrals is through some of the people you may know who work in related fields, such as mortgage brokers and insurance agents.  They often know many different agents and work with them regularly.  Ask them to provide you with a few names of the people they would trust most with their own home-buying process.

Meet With The Possible Agents

When you have created a short list of possible agents to hire, call a few of them and make an appointment.  Sit down and discuss your home buying plans with them.  Ask them about what sort of services they provide as well as things like their commission structure.  Treat this interview the same way you would in hiring any other professional to handle important business for you.  A good REALTOR® will be happy to answer your questions openly and honestly.

Take the time to meet with several agents before you decide who you would like to represent your interests.  That way you can compare the different experiences and see who you feel most comfortable with.  The agent’s experiences in real estate, their dedication to their clients and, of course, the rapport you develop with them are all important considerations.  Remember, you are looking for someone you can really trust.

Your REALTOR® is your home-buying partner and needs to be someone who is there for you and knows all the ins and outs of home buying.  Take your time and choose the right person for the job.

 

A Tremendous Milestone!

We had the 40th anniversary of our company on July 16th.
It was quite a celebration with the majority of our salespeople and staff present.  Members of the San Antonio Economic Development were present and San Antonio Chamber Of Commerce Ambassadors were present and conducted a terrific ceremony and ribbon cutting.
I hope you will give me just a minute to indulge myself.  I started the company on July 16, 2019 with one part time salesperson and interest rates at 17.5%.  I must have had rocks in my head. By the way, the part time salesperson left after about 30 days, so I was the one and only salesperson, the trash dumper, the light bulb changer, the book keeper, and everything else that had to be done.
In that 40 years, we have accumulated a terrific sales staff of about 40 real estate professionals and I and our sales professionals are lucky to have the greatest office manager on the face of the earth, and a fabulous part time admin person. They allow us to do hat we do best – help our clients and consumers.  By the way, not only do our agents help client after client with their real estate needs,  but they are just really nice people.  I love working alongside all of our agents, and judging by the answers to the surveys we receive back with clients answers to our customer service surveys, the general public loves working with them too.
We have grown into having a very busy Commercial Department and Property management Department in additions to of course having an always thriving residential business.
I love our company!! If you have a real estate need or referral that we can help, I believe that you or your referral will come to love our company too.  You are your referral will be using the services of a company that has been the winner of the prestigious Quality Service Pinnacle Award every year since 2002.
Thank you for permitting me to talk about what we have accomplished since July 16th, 1979.

A Nice Home Or A Nice Neighborhood: Which Matters More?

When you start shopping for a home, you probably have a very specific image of what you would like that home to look like.  You probably also see the perfect neighborhood surrounding that perfect home.  Every buyer sets out with an image of the house they want to own, but in reality compromises are often necessary in order to stay within your budget.

Compromising On The House

There may be certain things that are non-negotiable when it comes to your new home, such as the number of bedrooms or a two-car garage.  But as you take a look at the homes that are within your budget, you may discover that it is not likely you will get everything on your wish list.  But the great thing about owning a home is that you have the power to remodel it at any time.  Once you are in your new home, you can renovate or even add on if necessary to create the home you really want.  And if you have managed to stay below your budget, you will even have the extra money each month to make some of those changes.

Compromising On The Neighborhood

So you’ve found the house of your dreams, but the neighborhood isn’t precisely what you were hoping for.  Too much traffic, some houses that are becoming run down, or many other issues can mar the area your house is in.  In most cases, you will have to accept that you cannot change the neighborhood, and this means that you have to decide if the problems are things you can live with or not.

In some cases, buying in a run-down neighborhood can be a strategic move.  If many people are buying up the houses and improving them, then your home might one day be worth a lot more.  However, you must realize that this is a risk and it might not work out that way.

Another thing to bear in mind is that if you choose to buy the nicest house in the neighborhood, you may have trouble selling it down the line.  If other houses in the area are available for less, why would anyone buy your expensive house to get into the area?

So Which Matters More?

In the long run, when it comes down to choosing between the right house and the right neighborhood, you should choose the right neighborhood.  While you can change your house for the better, you can’t count on your neighborhood changing; in fact, it might get worse.  So choose the best neighborhood you can afford even if the house there isn’t perfect.

 

Top Ten Home Showing Tips

Showing your home is essential in the real estate business.  After all, who would purchase a property sight unseen?  When a potential buyer stops in, here are ten recommended tips to follow when showing your home:

Tip # 1: Welcome Your Buyers

If you are still living in the home while it’s being shown, graciously greet your potential home buyers and invite them to look around.  Make sure that you instruct them to take their time and to ask any questions that they may have.  It may be a good idea if you leave the home for a short time to allow the buyer to look without feeling restricted by your presence.  A potential buyer is less likely to voice any concerns in front of the current owner, which is why it’s better to leave your buyers with the REALTOR® and announce that you will be returning in 30 minutes.  This should allow plenty of time for your potential buyer to speak candidly with the REALTOR®.

Tip # 2: Be Flexible

Many home buyers are on a tight schedule, whether it be work, school or other commitments.  Time is tough to come by, so try to be flexible about allowing potential buyers to tour your home.  If you are still living on the premises, it’s especially important that you be ready for last-minute visits.

Tip # 3: Climate Control

When a buyer comes into your home, they do not want to feel cold in the winter or overly stuffy in the summer.  If you know that your REALTOR® is bringing a potential buyer to tour the home, make sure that the temperature is comfortable.  Otherwise, your buyer may not spend as much time in the home as necessary in order to form an accurate opinion.  The last thing you want is a buyer who’s in a hurry to leave.

Tip # 4: Quick Cleaning

If you have enough time before the buyer shows up, run the vacuum over the floors and make sure that any clutter is cleaned up.  A clean home appears larger, while a cluttered one gives the appearance of being too small.  If you really want to impress your potential buyers, place a plate of freshly baked cookies on the dining room table.  When they walk into your home, they will be greeted by the wonderful smell.

Tip # 5: Animal Control

If you have pets, remove them from the home temporarily or place them in a contained space, such as a kennel, exercise pen or carrier.  This will allow buyers to tour the home without being distracted by a nervous animal which could result in a nervous buyer.

Tip # 6: Light The Way

Your home should appear open and bright, even if it’s a winter day, so open the curtains and turn on the lights throughout the home.  Buyers will not likely be drawn to a dark, dimly-lit house.

Tip # 7: Educate Your Buyers

When someone is looking for a home, they are looking for more than the perfect floor plan.  If you have recently had the home appraised or inspected, place copies of each report on the dining room table.  Purchasing a home is a big step, and buyers will be drawn to a home that has everything out on the table, so to speak.

Tip # 8: Communicate With Your REALTOR®

If you want certain aspects to be pointed out during the home tour, tell your REALTOR® what they are.  For instance, good neighbors are a big plus to any home, but it’s not something that potential home buyers will see simply by looking at the rooms in your house.  If you have wonderful neighbors, ask your REALTOR® to point this out.  If you live in a family-oriented neighborhood, let it be known.

Tip # 9: Curb Appeal

An important part of showing your home is making sure that the outside looks just as appealing as the inside.  When a potential buyer drives up, you want them to be eager to see what else is in store for them.  You can do this by paying close attention to your curb appeal.  In addition to having a freshly cut lawn and properly maintained flower beds (if applicable), the outside of your home should be free of any clutter and any shrubs should be groomed.

Tip # 10: Ask For Feedback

Once the potential buyer has completed their tour, invite their feedback by placing comment cards in the home.  The information provided could be potentially helpful during your next home showing, and it will make the potential buyer feel as though you value their opinion.

Don’t Get Burned – Get a Home Inspection to Save Money on Your Next Purchase

Okay, you made one of the most important decisions in your life: you’re buying a home! You found your ideal home. It’s in your desired neighborhood, close to everything you love, you dig its design and feel, and you’re ready to finalize the deal.

But, whoa … wait a minute! Buying a home isn’t like buying a toaster. If you discover something’s wrong with your new home, you can’t return it for a refund or an even exchange. You’re stuck with your buying decision. Purchasing a home is an important investment and should be treated as such. Therefore, before finalizing anything, your “ideal” home needs an inspection to protect you from throwing your hard-earned money into a money pit.

A home inspection is a professional visual examination of the home’s roof, plumbing, heating and cooling system, electrical systems, and foundation.

There are really two types of home of inspections. There is a general home inspection and a specialized inspection. Most general inspections cost between $267 and $370. The cost of the specialized inspection varies from type to type. If the inspector recommends a specialized inspection, take that advice because buying a home is the single most important investment you’ll make and you want extra assurance that you’re making a wise investment.

By having your prospective new home inspected, you can:

  • Negotiate with the home seller and get the home sale-ready at no cost to you
  • Prevent your insurance rates from rising
  • Opt-out of the purchase before you make a costly mistake
  • Save money in the short and long run

How Much Money Can a Home Inspection Save You?

A home inspection helps to find potential expenses beyond the sales price, which puts homebuyers in a powerful position for negotiation. If there are any issues discovered during the home inspection, buyers can stipulate that the sellers either repair them before closing or help cover the costs in some other way. If the sellers do not want to front the money to complete the repairs, buyers could negotiate a drop in the overall sales price of the home!

Perhaps even more importantly, a home inspection buys you peace of mind. Your first days and months in a new home will set the tone for your life there, and you don’t want to taint that time with worries about hidden problems and potential money pits.

To help you understand how much money a home inspection can save you, here are some numbers from HomeAdvisor to drive the point home … so to speak.

Roof – Roofing problems are one of the most common issues found by home inspections. Roof repair can range between $316 and $1046, but to replace a roof entirely can cost between $4,660 and $8,950.

Plumbing – Don’t underestimate the plumbing. Small leaks can cause damage that costs between $1,041 and $3,488 to repair. Your home inspector will look for visible problems with the plumbing such as leaky faucets, water stains around sinks and the shower, and noisy pipes. Stains on walls, ceilings, and warped floors show plumbing problems.

Heating and Cooling – Ensuring the home’s heating and cooling system is working properly is very important. Your home inspector will make you aware of any problems with the existing system and let know you whether the system is past its prime and needs replacing. You don’t want to throw down $3,919 to replace an aged furnace. Nor do you want to spend $5,238 replacing an ill-working air conditioner. Replacing and repairing a water heater gets pricey too. Wouldn’t you rather use your savings for a vacation?

Electrical Systems – When thinking of the electrical system, no problem is better than even a small problem. Electrical problems might seem small, but they can blossom into thousand-dollar catastrophes. Make sure your home inspector examines the electric meter, wires, circuit breaker, switches, and the GCFI outlets and electrical outlets.

Foundation – If your home inspector sees that the house is sinking, that means water is seeping into the foundation; cracks in walls, sticking windows, and sagging floor also indicate foundational problems. The foundation is so important that if the general inspection report shows foundation problems, lenders will not lend money on the home until those issues are solved. Foundation repairs can reach as high as $5,880 to repair.

As you can see, a small investment of a few hundred dollars for a general home inspection can save you tons of money and future headaches. To save even more money, you might consider investing in a specialized home inspection as well. A specialized inspection gets down to the nitty-gritty of all the trouble spots the general home inspection might have located.

How Much Money Can a Specialized Inspection Save You?

A general home inspection can trigger a need for a specialized inspection because the general home inspector spotted something off about the roof, sewer system, the heating and cooling system, and the foundation. If humidity is high where you’re buying your home, a pest inspection is recommended. Usually, a pest inspection will check for mold as well as pests. Most homebuyers have a Radon test done to ensure air quality.

Roof – Roof specialists examine the chimney and the flashing surrounding it. They also look at the level of wear and tear of the roof. They can tell you how long the roof will last before a new one is needed. They’ll inspect the downspouts and gutters. The average cost of a roof inspection is about $223. Most roof inspections will cost between $121 and $324.

Sewer System – Making sure your sewer system has no problems should happen before the closing because what might look like a small problem can turn into a large problem in the future. If any issues pop up, you can negotiate with the seller about needed repairs or replacements before closing. Cost of inspection will vary; on the low side, it might cost you around $95, and on the high side, it might cost you $790. Compare these numbers to repairing a septic tank, which can cost, on average, $1,435 (though it could reach as high as $4,459), and you can see that the cost of an inspection is worth it when you catch the problem before you buy.

Heating and Cooling System – A HVAC specialist will check the ducts for blockage and for consistent maintenance of the unit. The repairs needed might be small or they might be big, but this small investment will save you headaches and lots of money down the road.

Foundation – A foundation specialist will pinpoint the exact problem with the foundation. The specialist will look at the grade or slope of the home. The ground should slope away from the home in all directions a half inch per foot. Most homeowners have spent between $1,763 and $5,880 to repair their foundation. And the average cost to re-slope a lawn is at $1,705. Most homeowners paid between $933 and $2,558 to re-slope their lawn.

Pest Inspection – Termites eat a home’s wood structure from inside out and can cause thousands of dollars worth of damage to your home. Other pests can turn your dream home into a nightmare. Depending on the humidity of where you live, you should a pest/termite inspection every two years or so. You can start with your potential new home. Most inspections are extensive and cost between $109 and $281. The good news is that most pest management company will guarantee the past inspection if bugs show up.

Radon Test – Radon is a naturally occurring invisible odorless gas that is the second leading cause of cancer. A radon test is a good test to have done as a good habit. The cost of radon test is low and its cost varies from state to state. Here’smore information about Radon.

Steps You Can Take to Save Money Using a Home Inspection

To help yourself save with a home inspection, you will need to:

Attend the inspection – Attending the inspection is important because it’s an opportunity for you to ask questions.

Check utilities – Checking utilities let’s know the energy efficiency of your potential home.

Hire a Qualified Home Inspector – We can recommend bona-fide home inspectors to you. You can compare our recommendation with all inspectors who belong to the American Society of Home Inspectors. While the decision of who you work with is always yours, we can educate you so that you make a wise homebuying decision.