Preparing to Shop for Your New Home
Get Pre-Qualified- Pre-qualification is usually the first step in the home- buying process. Getting pre-qualified is now easier than ever and can often be completed over the phone or online in a matter of minutes. The pre-qualification process will help you to determine the price range of homes you can purchase and approximately what your payments will be. Many sellers require pre-qualification letters, or proof of funds (for cash buyers), before considering an offer and sometimes before allowing a viewing to be scheduled. Should you have credit or income issues, the lender can advise you on what you can do to improve your credit score or repair your credit record. I can assist you with pre-qualification or any questions or concerns you may have with financing.
Determine a Target Price Range- Once you are aware of the amount you pre-qualify for, you can determine the price range you will be comfortable with. How much of a monthly payment can you comfortably afford? Are you willing to make some trade-offs? Remember to include taxes, insurance, Special Improvement Districts (SIDs or LIDs) and any Home Owners’ Associations (HOA) fees. You can use the home price estimator on this web-site to help you determine a target price for your new home.
Dream Home Wish List- Next, you should put together your dream home wish list. What features are an absolute must for your next home? What features would be nice but not absolutely necessary? What features do you absolutely want to avoid? Some criteria to consider might be the number of bedrooms, baths and garages. What type of living areas you would prefer? What features would you like in the kitchen? Are there any special living spaces that would be required, such as an office? What area of town would you like to live in? Would you prefer a single story or a two story home? Would you like a swimming pool or a spa? Do you have any members of your family that have special needs? What schools are available and will they meet your needs? Would you consider a new home, or do you prefer a resale home?
Use a Realtor®- As a buyer it usually costs nothing to hire a real estate professional to help you find and facilitate the purchase your new home. Your Realtor will likely get a portion of the commission the seller pays to his realtor. The listing agent has a legal, ethical, and moral obligation to negotiate the best possible deal for his client (the seller). A buyer should have a professional representing their interest as well. This is also true of new home purchases. The new home sales representative represents the builders' interest. A new home buyer should take a Realtor with them on their first visit. Your Realtor may know of special incentives, financing, or programs that can be brought to your attention to save you money. Also, your Realtor may be familiar with what the builder has been willing to do for buyers in previous transactions. In addition, should an issue ever arise you will have your Realtor’s assistance rather than trying to resolve it alone. Most builders will work hard to accommodate a Realtor’s request in order to ensure a continued working relationship.
Save Money- The costs of buying a home does not begin at the closing table. Costs are developed throughout the home buying process. At every level there are opportunities to save money. The earlier in the home buying process you contact me the more time and money I am able to save you. I know which lenders are actively lending and what the best rates are. I know who is offering special terms. I know what incentives the builders are offering and what special programs are available. I know which homes are selling and at what price. I know where the hot deals are, I know where the growth areas are. I know what first-time buyer programs are available, as well as other incentive programs. I look for every opportunity to save my clients money and get them into the home that best fits their needs.
Additional Information to Consider
Single Story Homes- Single story homes are usually higher in demand than two story or multiple story homes. You will normally pay a much higher price per square foot for single story homes that you will for multiple story homes. Not only are they in higher demand much more land is required to build a single story home for the same square footage as a multiple story home.
Special Improvement Districts- Special Improvement Districts are communities where a special improvement such as, a park, roads, or school were built and the costs are shared by the residents of the community. It is similar to a property tax but once the balance is paid off the tax is gone. When shopping for your new home, you should inquire about, and compare, any SID and LID balances on homes you are considering.
Home Owner Associations- Home Owners’ Associations (HOAs) manage communities (with homeowner input). They develop and enforce the rules of the community. They also charge fees for the services provided for the community, which may include security gates, maintenance, swimming pools (if any), etc. Home Owners’ Associations help ensure a well maintained, orderly, and uniformed community. When you purchase a home that has an HOA you will receive a resale packet including the rules and financial information.
Today’s Market- In today’s market most home sales are controlled by the lenders or the banks. Of 19,607 single family homes, condos and townhomes on the market (MLS) today (January 10, 2012) 8,377 are short sales (which the lender must approve), 6,744 are REOs foreclosed properties (which the lender has already foreclosed on, now owns and controls the sale), and only 4,486 are traditional sales. Approximately 52% of sales are for cash. Many of the cash sales are investors who are confident the Las Vegas market will rebound. Last year (2011) record home sales were recorded. A total of 48,186 single family homes and condos were sold. This beats the previous record set in 2009 (46,879) by 1,307 residences.
Short Sales-Many of the homes on the market today are short sales. Short sales are homes in which the seller owes more than the fair market value on their home. To bring a sale to fruition the lender must be convinced that it is in the lender’s best interest to concede part of the mortgage on the home to make the sale possible. Short sales require time and patience. Most short sales fall apart because the buyer was impatient and could no longer wait or the lender was unwilling to approve a short sale. Short sales are arguably the most non-traditional sale. The lenders, for the most part, are overwhelmed with short sale requests and are generally under staffed. In addition, they are under no obligation to agree to a short sale or even respond to a short sale request. The good news is that a higher percentage of short sales are closing as lenders, buyers, sellers and agents all become more accustomed to what is expected of each party. My office has a dedicated short sale staff to negotiate with lenders and process the required documents to help ensure a successful sale.
REOs- These properties are commonly referred to as foreclosures but in actuality they have already been foreclosed on and are now owned by the lender, Real Estate Owned (REO) by the lender. Contrary to popular belief most banks and lenders (all of them that I am familiar with) do not want to be in the real estate business. The lenders do not want the property. Foreclosure is usually a lender’s last resort. Banks and lenders tend to price foreclosures very efficiently. The nicer REOs will generate multiple competing offers. An REO property is generally much easier to purchase than a short sale, and closing times are very close to a traditional sale. Some government foreclosures require a 48 day escrow.
Traditional Sales- Traditional sales are sales that are not foreclosures or short sales; they do not involve banks or lenders unless the buyer is obtaining a loan. The seller is able to make his/her selling decisions on his/her own. The buyer and seller agree on the price and terms.
New Home Sales- While new homes are generally higher in price than resale homes, REOs, or short sales they do have their benefits and are worth at least taking a look at. Builders know that they have to be competitive or buyers will look elsewhere. With a new home you are generally able to pick your colors, flooring, kitchen packages, and many other upgrades. Builders often offer special interest rates, financing packages, free upgrades, appliances, pay closing costs or offer other combinations of incentives. Most quality builders usually have very good warranties and service after the sale. Also, many buyers like the idea of being the first to live in a home.
Time Frame- Do you have a specific target date that you would like to be in your new home? Different types of sales require different amounts of time. You will want to give yourself enough time to find the right home to meet your wants and needs. You will want to allow time for financing, researching schools and neighborhoods, viewing homes and making an informed decision. Every buyer has different needs and is on a different time frame. It is not only acceptable to start your home search early, it is smart. Remember markets change, prices change and the cost of financing changes.
Due Diligence Period- Once you have found the right home and have entered into a contract to purchase that home, you will have a due diligence period. This period (the length of time is negotiated and is usually about 10 days) gives you the chance to have the home inspected and do whatever other research you would require to feel comfortable with your purchase. You should avail yourself of whatever information and professionals you need to during this period such as accountants, attorneys, appraisers, pool inspectors, etc. to help you make an informed decision. There is information that your Realtor is not able to disclose to you, due to Federal housing laws, so a little research on your part is advisable. I also recommend my clients Google the address of any home they are planning to purchase. Any news worthy event that may influence your buying decision should appear on a Google search.
I would greatly appreciate the opportunity to assist you in the home buying process. I take your wants and needs seriously. I will make your home shopping experience as smooth and stress-free as possible. Buying a home is serious business but it should also be fun and rewarding. I can save you time and money. I look forward to hearing from you.