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How to Buy a Home

Few people are experienced in buying a home so here is some helpful information you won't find 
anywhere else. You have to realize that every facet of homebuying is geared to get you to buy and close. The real estate agent, mortgage company, title company and insurance carrier do not make money unless you close. Take your time selecting a home. A national study notes that people spend more time picking out a home computer or automobile than they do their biggest financial investment in a home.

Critical Homebuying Research Before You Buy

Research Before You Buy

Resale Estimated Cost of Repairs: generally figure 1/4 of 1% of the sales price for each year age of the property for repair and maintenance.

General Informational

1. Get pre-approved for a sales price range before you start looking but don't share this information without realizing that it may not be confidential. Pre-approved buyers have more clout in the marketplace. Keep your financial condition to yourself until you are ready.

2. Never buy on emotion. Your purchase should be based on sound financial reasons. Many people end up selling their home as they can no longer afford them or found out they were a money-pit. Skyrocketing property taxes and insurance from year to year are forcing many to sell their home. If you are buying on emotions, you don't need an inspection. Your mind is already made up to purchase with the cards stacked against you.

3. Never buy up to your maximum mortgage qualification. The true cost of home ownership is your mortgage payment plus 45% according to Susan Orman, one of the countrys' leading financial experts, to cover the total housing expenses you need

4. Read and understand sales contracts before you sign. If you have a question - ask! Have a real estate attorney review the contract with you if you have questions or do not understand what you are signing.

5. Ask to start the appraisal until after the inspection. That way if the house doesn't work out or can't be negotiated  then you are not out that high fee for computer record comaprisons. The appraisal is done on behalf of the lender; not the buyer. You just get to pay for it.

6. Check the national CLUE database for previous insurance or water claims. Some homes may be uninsurable or subject to higher premiums based on a past claim history. This also helps in seller disclosure.

7. If the property is in Galveston or Brazoria county or southeast Harris County check with the Texas Dept. of Insurance to see if a windstorm construction certificate is on file that is required to obtain windstorm insurance. Many times a year people call to schedule an inspection only to find out there is no windstorm certificate on file which in effect, makes the property uninsurable. Others call to try to get a windstorm certificate after they closed because no one checked. The process of certification starts before the foundation is poured so unless you are willing to tear down the house; you're bascially out of luck. (This includes all 14 first-tier coastal counties in Texas). Note: under the search it may be best to leave out "city" to find the file or a variation of street names or. call them.

8. Check to see if you are in a flood plain or area subject to flooding. It's free!  By all means consider flood insurance in the Gulf Coast region.

9. Before you buy call your real estate inspector and discuss the house. Clean and pretty has nothing to do with structural or mechanical issues. What to avoid or negotiate ahead of time because it will cost you money.

10. Obtain as much information as you can about the property before you sign a contract. If information is not supplied to you from the seller that may be a red-flag. Obtain any permits or call the local city about any previous remodeling projects or significant repairs. Find out who did the remodeling or repairs. Get copies of the contractors contract and invoice for verification.

11. If the foundation has been repaired get copies of the engineering analysis and contractors contract to verify how and where repairs were done. If you can't get copies this may be a red flag.

12. Knock on neighbors doors or call them. You can get neighbors names from the county appraisal district web site and then look up the names in the phone book

13. In every case, get the property inspected from someone you select. The names from a sales agent provided short list should be a big red-flag to you. You need to ask yourself how those names got on that special list. Always look for an inspector that represents buyers but always remember - not all homes can be inspected. Fixer-uppers need a contractor, not inspector, unless you want to pay big bucks. The state does not certify inspectors so the only national certification is being code certified which is different than being a professional member of the model code organization. Professional members are not code certified. They pay dues to join the code council only as a member. Code certified inspectors were subject to intense studies and examinations with continuing education.

14. If you can, have the property inspected before you make your offer or demand a minimum 10-day option period. The less than 10-day option period may prevent you from securing the best inspectors and leaving you less time to make a decision or obtain additional inspections. The best inspectors are usually booked in advance as they mostly work from client referrals.

If the home was built before 1978 you have an automatic minimum 10-day option period as lead-based paint may be present. Use the 10-day option period in all cases whether you think you need them or not. If you don't use all 10-days then it doesn't matter. At least you have them. Never opt for less than a 10-day option period in any deal. There's much work to be done in those 10-days so don't you or others pressure you into making a bad decision.

15. The more credit checks that are done, the lower your credit score. Interest rates and insurance can be affected by your credit score so do all the homework you can beforehand. Each credit checks drops your FICO score.

16. Unless you have sufficient funds do not buy a car, boat or furnishings until after you close. In many cases these purchases have knocked people out of getting mortgage approvals. That's also a signal that you really can't afford it anyway.

17. A sales agents only duty is to enforce and monitor the sales contract. Their duty to the seller is to bring the sale to a successful closing. That's how they get paid - a percentage of the total sales price at closing. The other option is use of a exclusive buyers agent but you need to shop around to make sure that's what you are getting. The real estate sales community is a tightly knit industry and like any industry has its share of good and bad apples. Personal attention is required in lieu of fast-track volume. 

Unless you know who you are dealing with never share confidential information as the sales agent may have a duty to tell the seller that information if it's in the sellers best interest.

Remember: only you can protect yourself and any purchase is your sole decision

Insurance:

Is it Insurable and At What Cost?

Secret Insurance Data on Your Home & You

If a new built home secure and read the builder warranty beforehand. Also read the TRCC Performance Standards.


A Good Inspection Can Help Lower Your Property Taxes....Read on

Used Home Limited Warranties

The real estate salesperson can arrange to provide home warranty insurance on the used homes they list or sell. That sounds good but buyer beware!  These insurance policies do not cover pre-existing problems, structural items of any kind and equipment or appliances near the end of their serviceable life.  There are different policies so compare all of them before you decide. Read the fine print!  see below

Home Warranties (aka: Residential Service Contracts)

Residential Service Contracts - "Home Warranties" do not cover components or systems which do not work or are clearly near the end of their mechanical life. Every approved contract offered in Texas excludes pre-existing problems, and purchasers who try to get pre-existing problems corrected will always end of dissatisfied". source: Texas Real Estate Commssion Advisor July/August 1992.

An property inspection is not a home warranty, expressed or implied, nor were the inspection standards designed for the purposes underwriting, guarantee or warranty. Any claim by a seller or real estate agent should be secured in writing prior to closing. Always insist on a recent and complete seller disclosure form for all resale real estate transactions prior to entering into a contract. The seller disclosure form should be a very important document for you to decide on whether to make an offer or not

Potential Safety Hazards to Avoid in Homebuying