So you are now about to enter the American dream of home ownership and want to buy a home to live in be it as a newly married couple, an aspiring young single professional or a first time home buyer - investor. What's next? Home buyers are often excited and are all ready without knowing the conditions and pitfalls of a home purchase.
Top of the list #1: Financials
Buyers often underestimate the payments and think that they are all ready to have home ownership. The monthly payment is not just about Principal and Interest. It also includes the Insurance, Tax, Home Owners Association Dues, Maintenance and Utilities. Some people buy their home only to realize they are house poor. ie. After moving into the new house and having paid their down-payment, they now have no money to renovate or buy new furniture etc.
#2: Obtaining the loan
What new home buyers do is often to check the internet, look at the rates, compute the purchase price and down payment and they get all excited about buying. Now the first step is to get pre-approved and that is almost like obtaining a loan with a documented loan, W2s and 1099s have to be submitted along with 1040s. Having just the savings for down payment is insufficient as you still need to prove ability to pay future mortgages. We are talking about traditional loans and not hard money (super high interest rate loans). Also the money for down payment and closing costs have to be in your account for at least 60 days. No big purchases or other credit applications while in escrow as well. Problem is loans often get denied when consumers fail to meet underwriter conditions like failing to meet employment verification or failing to season the down payment for 60 days prior to purchase.
#3: Purchase Process and Contingency
New homes are easy to buy simply by going to the showrooms and signing a contract to buy the home that you like. The pitfall here is many failed to realize that the model home is a very highly upgraded version of what you will actually get. For resale homes, it is important to realize that we have inspection, appraisal and loan contingencies. Due diligence can include the physical structure, termites, permits, history, Sex Offender lists, Schools, City assessment, HOA assessments etc. Do not forget to read HOA meeting minutes in case a pending assessment is coming. Now some home owners elect to simply buy without an inspection. If its trivial like door or wall damage, its ok. It will be catastrophic if later you find out the foundation is sloping or there was a septic/gas tank buried underground.
#4: Inexperienced Agent
An inexperienced listing agent may have passed a ZERO ESCROW FEE advertisement to the seller and having the seller elect Escrow A paying zero fees, however the buyers are unaware they are the only party paying for any escrow fee even though the contract says 1/2 1/2 or each pay their own. There is no free lunch, Zero fee here means costs have been transferred elsewhere. The listing agent and seller may have just teamed up to have the buyer pay all escrow fees. An inexperienced buying agent may not be able to advise the buyer of the conditions in #1 #2 #3 above, leading to costly mistakes in the purchase.
In a nutshell, a buyer needs to be well informed and educated to purchase a home. A seasoned and experienced Real Estate Professional is critical. At STANFLES REALTY, we are a 100% commission brokerage with many professional agents that are experienced and well trained. Our agents earn maximum commissions and are hence dedicated to their relationship and service to our clients. We strive to surpass clients expectations so as to earn future referrals. Our GOLD STANDARD in service is unsurpassed in the industry. Inquire at STANFLES REALTY - 100% Commission Broker.