Tips for Buyers

Here are a few things you will want to consider as you prepare to start looking for your home.

1.   How Long do You Plan to be in This Home?

This is one of the most important issues in buying a home for both lifestyle and mortgage considerations.  

If you plan to be in a home only a few years and you like to work on your own home or plan to remodel, getting a home that will provide the most return on your work and investment is important.  Certain home designs and neighborhoods within the same area have better appreciation.

If you plan to be in a home only a few years, getting the right mortgage is also important.  Different loan packages are better for a short term buyer.  

If you plan to be in a home for a long time, pick your home by the neighborhood.  Period.  Your lifestyle, drive time to work, distance from the things you especially like  and schools become the most important aspects of any home you think you will be in for the long haul.  If you want to update the home or add on, go ahead.  Appreciation over the long term will always happen.

Short term is 3-5 years
Medium term is 5-10 years or a few more.
long term is 15 years or more.

Young people tend to be in their first home 3 years.  That's right, 3 years.  Upward mobility is responsible for the very short stay.

Young families with kids tend to be in a home for 5 to 8 years.

Families with kids in their tweens or teens tend to be in a home for 8 to 15 years.

People whose kids are leaving the nest tend to buy a smaller home and stay in it for about 15 + years.

2.   Get Your Loan First

You have probably heard this a hundred times, but, get all of your financing together before you start searching for your home.  That is the first move. 

Every Real Estate Agent or Broker will require that you are pre-qualified or pre-approved for your loan before they can show you homes.  They need to know how to approach making out an offer for you, and, they need to know that you are able to buy the homes they will be showing you.  

We can work with any mortgage brokers, but, we prefer to work with three because they provide the best professional services for our clients.  
We have a hard money lender for special residential investment projects, 
A Home Mortgage lender who has the best rates and offers the best service on home loans, and, actually refunds the premium large lending institutions give her for bringing in good borrowers.
A commercial lender able to finance multi-million dollar commercial projects. 

It is very important to know that you have the best lending working on your behalf.

3.   You Need More than the Down Payment at Closing

When you buy a home, there are more expenses at closing than just the down payment. You will need to have more cash on hand to pay for these additional expenses.  

The down payment, prorated property taxes, one year of Homeowner's Insurance paid in advance, as well as Title Insurance, Title Company fees and Legal fees, are paid at closing. 

Inspection fees and engineering fees, if any, are costs that are typically paid at the time the services are provided prior to closing.   

4.  There are More Monthly costs than just the Mortgage payment.

You will have a monthly mortgage payment which may include the Mortgage, the Property Taxes and Homeowner's Insurance.  The property taxes and insurance  can almost double the Mortgage Payment and, all together the monthly payments are called the PITI, or, the Principal, Interest, Taxes and Insurance in a standard monthly Mortgage payment.

You can elect to pay the taxes yourself at the end of the year instead of including them along with the monthly payment, but, you will get a lower interest rate if you pay your property taxes with the monthly payment.

5.  Do you plan to put 20% Down?, 10%? or 5% or maybe  none at all?

Some buyers choose to pay 20% down to lower their payments, have more money in the house and to avoid paying Private Mortgage Insurance (PMI).  This makes sense if you will still have money to buy furniture, appliances and other items you'll need.

Other loans are also available with 10% down or 5% down.  These loans allow buyers to get into a home without putting as much money down, but, they have Mortgage Insurance included in their payment which can be hundreds of dollars per month.

How much you decide to put down depends upon your cash on hand and the expenses you'll have after purchase.  Sometimes you'll come out ahead putting a smaller amount down and paying the PMI to save your cash for all of that furniture.  A client once told me that he was "literally hemorrhaging money" since closing on his house.  It can be true.  Houses need furniture, appliances, rugs, flowers, and bunk beds...  

6.  Before Closing, Don't open New Loans

To keep your credit rating the very best prior to closing, during the month between signing a contract on a home and the closing, don't take out any new consumer loans, car loans or open an new credit card account.  It will lower your credit rating temporarily which could keep you from getting the house.

7.  Visualize Yourself and your Family in the house

In every home you like, visualize your family living in it.  How does it work for your family?  How does it work for you, cooking eating, watching TV or Skype.  Is there enough room in the laundry room and garage?  Is the yard right? Etc..  How well does it suit your family.  If it works well, put it on the list.  Also visualize your furniture in the house.

8.  Understand the Value Range of the House

We have a variety of tools to help you determine the value range of the home.  The value range goes from the very least amount the seller is likely to accept for the home to the absolute top price you should pay for it.

We will do a neighborhood study to see what homes have been selling for over the past 180 days, over the past 360 days and over the past three years.  This gives us a very good idea of the way the neighborhood has been doing over the most important time period.  What is the rate of appreciation, gentrification or new building.

Next we do a comprehensive comparative market analysis based on comparable homes in the neighborhood and then the larger area for similar homes.  This includes home prices, how long homes are staying on the market and what do the homes look like in comparison to the target home.  

9.  Home Inspections

We always inspect every home, even the new ones.  The only exception is a new home built by a builder who uses one of our approved inspectors to inspect their own homes as they are built.  

Our Preferred inspection company is the Wood Inspection Group.  Their inspectors are simply the best ones in the business due to training and long experience.  Somehow they are able to get into almost every nook and cranny to see what's going on.  

10.  Do not get too worried about paint colors and carpet.  One of the easiest and least expensive parts of a house to change is wall paint.  Carpet is similar.  you can almost paint an entire house for the same price as replacing the counter tops in the kitchen with granite.  

Let the layout and the quality of the building be the most important issues, other than the neighborhood.

11.  It Really Is All About the Location

Location is everything.  How far  are you willing to drive to work or the grocery store you like?  What is going on in and around the neighborhood?  If you buy the very best house, but, it is in the wrong neighborhood, you will never be happy in the house.

As I tell my clients, I can give you location,  price and the  Ah Ha factor... but, you can only pick two....   Location has to be one, you can pick the other.

12.  Foundations in the Dallas Area

Our area has some of the poorest soils for foundations in the US.  It is primarily limestone with a top layer of siliceous clay, both of which can expand tremendously when water is added.  In times of heavy rains, the soils expand.  In drought, the soil shrinks.  The movement causes a foundation to heave upward in periods of rain and to sink down in drought.

To combat this movement, pier and beam homes have to sink the piers down to the bedrock for a stability.  Homes on slab without piers have to have the concrete reinforced with steel under high tension which allows the slab to move as a monolith rather than cracking.  

Even with the best engineered slabs, though, foundation repair is a very common repair in our area.  If a house in Dallas hasn't had foundation repairs, it will... Same with termites.  If a house doesn't have termites.... it will.
Steve Ritchey
Steve Ritchey
Exclusive Buyer Broker