Complete Guide To Buying

The guide to homebuying prepares you for each step of buying a home and helps you plan a successful search. After some preparation you'll know the market, discover what you want and know what to look for in that dream home. Click a step to learn more.

Know the Market
If you understand current market conditions, you'll position yourself better as a buyer. It helps to know if you're in a "seller's market" - where housing demand is high and supply is low - or a "buyer's market" - where housing demand is low and supply is high. In a seller's market, you may have to make a full-price offer or higher just to beat the competition. In a buyer's market, you'll have more room to negotiate.

You can get a sense of the market from benchmarks published by local or state realty boards:

• Median home price
  The median home price gives you the midpoint in the range of sales prices for a specific period. Compare over the past several years to see whether prices are rising or falling in the overall market and specific areas.
• Number of home sales
  The number of home sales indicates the number of homes sold in a specific period. Compare over the past several years to see whether this number is rising or falling. Generally, the more active the market, the higher the number of homes sold.
• Average days on the market
  The average days on the market measures the length of time most homes were for sale before purchase. Compare over the past several years to see whether this number is rising or falling. If the average is high, it can mean a slow buyer's market or indicate a neighborhood where houses are hard to resell.

Consider the local job market, too. You can expect a more competitive real estate market if area employers are creating more jobs, especially higher-paying jobs. If friends and coworkers have bought recently, ask them about their experiences.

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Focus the Search
You can reduce the time of the house hunting process if you set your priorities. Before you start your search, decide what you need, what you'd like and what you don't want. Then you (and your agent, if you use one.) can sort through home listings more efficiently.

Ask yourself:

• Do you want a single-family home, a condominium or a townhouse ?
  A single-family home gives you more ownership, but more responsibility too. A condominium or townhouse may include services and amenities, but requires you to help pay community costs and make community decisions. Think about the pros and cons before you decide.
• Do you want to buy new or resale?
  With a new home, new construction and materials may decrease maintenance costs, but you may have fewer choices in terms of style and neighborhood. With a resale, you generally pay less to live in a more established neighborhood, but may have higher maintenance costs. Think about the pros and cons before you decide.
• What kind of neighborhood do you want to live in?
  Think about neighborhood qualities that matter to you, such as good schools and convenient shopping.
• What's your price range?
  Sit down with your agent to calculate how much you can afford prior to discussing an offer.

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Visit Homes
You can expect to spend a few days to a few months shopping for a home, depending on how well the available homes match your needs. This can be a frustrating experience or a very fulfilling one depending on the current market conditions and your expectations.

When visiting homes:

• Look beyond listing language
  That "cozy" bungalow may be incredibly small. Pay attention to practical details such as square footage, lot size, average utility bills and annual property taxes.
• Find your own agent or represent yourself
  If you're not already working with an agent, listing agents may try to convince you to work with them. Because a listing agent is contractually bound to the seller of the home, this may not be in your best interest. Learn how agency works in your state so you can make an informed choice. You may want to consider working with a different agent or working alone.
• Think twice about fixer-uppers If you are a first-time buyer, look carefully at properties that need work and think about what it will really cost. You may want to opt for a house that needs cosmetic fixes, not major remodeling that will consume the time you intended to use getting squared away and relaxing.
• Take notes
  Get a 3-ring binder to hold paper copies of listings, and make your notes on each listing as you visit that house. That way you'll have the listing ready at a glance.
• Take a checklist
  Create a checklist of what you're looking for in a home. Take it with you when you talk to each listing agent and visit each home, then keep it with your listing information. Take notes on what you may notice as "problem spots" that may affect the offer you submit. You may also want to find out as much as you can about the sellers motivation, too.

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Compare and Contrast
Before you rush into an offer you can't refuse, take several hours to compare the properties you've seen against market conditions, comparable properties, your priority list and your listing notes. This is the foundation of your buying decision and, later, your offer.

• Market conditions
  Which homes on your list are in buyer's markets, seller's markets or stable markets? Home prices always reflect market dynamics; for example, a high-demand seller's market usually commands higher prices.
• Comparable properties
  How do the homes that interest you stack up against other homes in the area? Most real estate offices can prepare a comparative market analysis (CMA) for you. A CMA examines similar area homes that have sold in the past six months or are currently for sale, and compares their prices and other attributes.
• Priorities
  Which homes best match the qualities you want? Rank your priorities in order of importance so you can weigh the pros and cons when you make your decision.
• Listing notes
  Reread the notes you took while visiting each home and look for qualities that match your priorities. Think hard about inconsistencies that matter. Some tradeoffs will be unavoidable.

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Make a Choice
No matter what your situation, take the time to really think about which home is best for you. Use the information you've collected to compare your first choice with other options. Although it may be tempting to move quickly, you'll want to cover all the bases before you commit to a purchase to avoid buyer's remorse.

• Weigh the pros and cons
  House No. 1 may have all the features you want but the price is high and the seller is unmotivated. House No. 2 may need significant cosmetic work, but has all the other features you want, including the right price. Expect to go back and forth while you're debating your choice.
• Resale - "Buy to live and live to sell"
  this is an old real estate adage. You may think you're going to be in your new home for the duration of the mortgage, but chances are you're not. Give sufficient weight to the home's potential resale value, and make sure you have all the facts. A planned expressway a block away could drastically change your home's resale value 20 years from now.
• Affordability
  Make sure that your choice is within your price range that won't over extend your bank account or affect your standard of living unless prepared to do so. Be sure that you can obtain financing.
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