Are you ready to buy a house or condo?
Following are eight steps to prepare for this life change in order of priority. Being prepared paves the way to a seamless transaction.
Home Buyer Preparedness Checklist
1. Do Not Make Any Major Financial Changes
When you are getting ready to buy a home, and especially when you are under contract to buy a home, do not make any major changes in your life that affect your financial standing. Don’t switch jobs or do things that could adversely affect your finances, like opening new credit cards. Especially when in the transaction, do not buy a new car, new appliances, or furniture. Wait until after the transaction has closed before making any major purchases or life changes. A credit check alone can affect your credit score and may cause you to lose a home, even days before closing.
2. Get Pre-Approved
Getting pre-approved from a mortgage broker enables you to determine what your price range is, while taking into account what down payment you can afford. While pre-qualification is a good idea, having pre-approval is a better indication of your intent to buy. Realtors love working with pre-approved individuals because it shows you are more serious about buying. If you need a mortgage broker, contact me for referrals.
Many home buyers will look to the financial institution that they bank with as the first option when looking for a home loan. It is not the only option, and sometimes may not be the best solution. Mortgage brokers often have many more (hundreds) of options for finding loan solutions that can fit your needs and save you money. I recommend my buyers not only talk to their bank, but also to a mortgage broker and credit unions. Make sure that at least one is a local lender, as they can also know about special state and local lending programs that national lenders may not be aware of.
3. Make a “Dream List”
Compose a list of your requirements for the place you want to buy. Divide the list into things that are deal breakers and factors that are more flexible:
- Is the school district a priority over your commute (if you have one)?
- What about walkability score and access to services?
- Or are you looking for a property that is more remote, because you want the acreage?
Having a defined list of “wants” will provide a clear vision of the property you seek and help your broker in searching out the best options for you. Work with your realtor on this list, and understand that often this list will evolve over the time of your search based on market inventory, price of the house, and other market factors. Browsing listings online can also help. Stop by open houses and drive to locations that you see in your online previews to start narrowing down those search parameters. Check out the property during the day and at nighttime, too.
4. Get A Referral And Start Discussions With A Buyer’s Broker
A buyer’s broker will provide you single agency representation. Oregon does allow for “dual agency”, where a seller’s listing broker can write an offer on their seller’s property for you. Remember though, that the listing broker has a contract with that seller and has a fiduciary responsibility to the seller. Working with a buyer’s broker offers you a real estate professional who has your best interests in mind in the transaction, guiding you through negotiations, inspections, and the entire home buying process. A broker can also help you research market conditions so you can understand the cost of homes in the vicinity of where you’d like to buy. Having comparable sales information helps determine how much to offer on a home.
5. Making An Offer
Once you’ve found a house you like, you’ll work with your broker to make an appropriate offer. Familiarize yourself with the process so you know what to expect. A good buyer’s broker can offer you referrals for home inspectors, contractors, or other professional services. Collect three referrals for each service. Home inspectors help identify any underlying issues your home may have, such as problems with the the roof, plumbing, or electrical system. There is an “Inspection Contingency Period” in Oregon real estate transactions. This is usually a period of ten business days to allow for a whole home inspection. The inspection report helps determine if it’s the right home for you and whether you want to negotiate needed repairs and/or a better price.
6. Home Insurance
Homeowner’s insurance is required when you purchase a home. Shop around to find the best rates. Bundling your home, auto, and other insurance can also be a way to save money.
7. Managing A Contingency Purchase
A contingency purchase is when you want to buy, but your purchase is contingent upon the sale of your home. In the low-inventory market we are experiencing in the Portland Metro area, many people who are looking to sell and then buy again are finding it challenging. Offers where there is a contingency of the sale of a home are at a disadvantage when up against offers that don’t have a home to sell. When the client feels comfortable releasing their contingency, and if selling first, then renting until finding a new home is also an option.
8. Organize Your Household Contents
Start sorting your personal effects now. You have more stuff than you realize, guaranteed. Getting started on purging before packing will enable an efficient and less stressful move.
Published October 13, 2020