The 5 steps to buying a house
If you’re really prepared to put in the time to learn about real estate and make sound decisions, I want to help you out today. Buying a home isn’t ALWAYS a bad investment. It’s just a bad investment if you FEEL like you should be doing it without considering if you really should.
Step 1: Obtain your credit score and report If you’re ludicrously wealthy and plan to buy a house in full with cash, you can just skip this part (and also, you must be a student of mine!). However, if you’re within the majority of people who don’t have the funds to do that, you’re going to need to get a mortgage. And to get a mortgage, you’re going to need to get your credit score and report. Credit score versus credit report
Though your credit score and credit report have a lot in common, you need to know that they are NOT the same thing.
Many people conflate the two, and though they are very similar in a lot of respects, they’ll tell you different information.
Here’s a description of both as well as how exactly you can obtain them: Credit report
This is an all-inclusive report detailing your credit history. It’ll include information such as your:
Loan history Accounts opened and closed Payment history Credit balance
You’re entitled to a free credit report each year, per the Fair Credit Reporting Act. Credit score
Your credit score is an actual number — the same number that renters and lenders will utilize in order to assess how safe it is to have you as a customer.
Step 2: Meet with a Realtor Much like a good lender, a good Realtor will be an agent who is going to represent you and your interests. Unfortunately, there are a lot of real estate agents out there who just want to make a buck and keep their companies afloat. This means it’s going to be a little bit of work on your part to find a trustworthy real estate agent — but it’s absolutely worth it. In general, there are two types of real estate agencies out there: Seller’s agency. These agencies represent the person selling the actual house. They are there to protect the interests of only the seller. Needless to say, you’re not looking for a seller’s agent. Buyer’s agency. Like the seller’s agent but … well, for buyers. These agencies represent you and want to protect your interests. You want to find a buyer’s agent. Go check your state board of Realtors in order to find a reputable buyer’s agent. They’ll be able to connect you with someone who’ll be able to find you a good house at a solid price point. You can find your state board’s information through Google or this website here. For the most part, you won’t have to pay for the buyer’s agent service — but this changes from place to place. Just make sure you do your research. NOTE: Never sign a buyer’s agency contract! According to Owen, “a good buyer’s agent is forming a long-term relationship with you and shouldn’t need a contract to keep you with them.” Once you find a good real estate agent, you’ll be able to start looking for houses. Luckily, it’s a buyer’s market out there. As a result, there are a huge variety of places you can start looking for homes, such as: Newspaper ads. Yeah, yeah. I know. “Get with the times!” Fact is, the way your parents found and bought a house is still in use and you can find plenty of good information on open houses in newspapers. The internet. Websites like Realtor.com or Zillow.com will be able to provide you with solid home listings in your town. Ask your Realtor. Once you find your Realtor, they will be able to set you up with some private open houses. Neighbors. If you like your neighborhood or know which one you like, go ask people if any houses are for sale. It’s also worthwhile to meet people before you’re stuck living near them for years. Action item: Find a Realtor Contact your state board of Realtors and ask them to put you in contact with a good buyer’s agent in your area. Be sure to treat all agents with respect. Even when you’re looking at houses with another agent showing you the listing, make it clear with them that you are working through your very own buyer’s agent. This just makes the whole process much more transparent and thus easier for everyone involved. When you find the house you want, it’s time for …
Step 3: Find a direct lender Much like a good lender, a good Realtor will be an agent who is going to represent you and your interests. Unfortunately, there are a lot of real estate agents out there who just want to make a buck and keep their companies afloat. This means it’s going to be a little bit of work on your part to find a trustworthy real estate agent — but it’s absolutely worth it. In general, there are two types of real estate agencies out there: Seller’s agency. These agencies represent the person selling the actual house. They are there to protect the interests of only the seller. Needless to say, you’re not looking for a seller’s agent. Buyer’s agency. Like the seller’s agent but … well, for buyers. These agencies represent you and want to protect your interests. You want to find a buyer’s agent. Go check your state board of Realtors in order to find a reputable buyer’s agent. They’ll be able to connect you with someone who’ll be able to find you a good house at a solid price point. You can find your state board’s information through Google or this website here. For the most part, you won’t have to pay for the buyer’s agent service — but this changes from place to place. Just make sure you do your research. NOTE: Never sign a buyer’s agency contract! According to Owen, “a good buyer’s agent is forming a long-term relationship with you and shouldn’t need a contract to keep you with them.” Once you find a good real estate agent, you’ll be able to start looking for houses. Luckily, it’s a buyer’s market out there. As a result, there are a huge variety of places you can start looking for homes, such as: Newspaper ads. Yeah, yeah. I know. “Get with the times!” Fact is, the way your parents found and bought a house is still in use and you can find plenty of good information on open houses in newspapers. The internet. Websites like Realtor.com or Zillow.com will be able to provide you with solid home listings in your town. Ask your Realtor. Once you find your Realtor, they will be able to set you up with some private open houses. Neighbors. If you like your neighborhood or know which one you like, go ask people if any houses are for sale. It’s also worthwhile to meet people before you’re stuck living near them for years. Action item: Find a Realtor Contact your state board of Realtors and ask them to put you in contact with a good buyer’s agent in your area. Be sure to treat all agents with respect. Even when you’re looking at houses with another agent showing you the listing, make it clear with them that you are working through your very own buyer’s agent. This just makes the whole process much more transparent and thus easier for everyone involved. When you find the house you want, it’s time for …
Step 4: Make an offer When you find a house that you like and want to make an offer, your next step to buying the house is to find out what the property is actually worth. Though it might be tempting (read: incredibly stupid) to just throw out a ballpark number, do the smart thing and research the ever loving crap out of this house!
To do that, I suggest a number of tactics:
Hire an outside property inspector. These inspectors are third-party professionals who will go through your home and examine it for structural flaws, damages, and repair suggestions. When they’re finished, they’ll provide you a full report of the house and you can use this as leverage in your negotiations.
They’re allowed to go through the house as long as you ask the real estate agent for permission so be sure to do so. Here’s an incredibly handy tool from CertifiedHomeInspector.org to help you find one in your area. Ask your lender for a home appraisal. When your loan is approved, you’ll be able to attain an appraisal from your lender on the house. That means that your lender will take into account a number of factors regarding the house including: price of houses surrounding it, number of rooms, how large it is, whether or not it has a swimming pool, etc.
Depending on where you are, the appraisal might take a little while — though no more than one to four weeks. The appraisal will not only give you a good idea of what a fair asking price for the house is, but it will also protect your lender from overpaying for a house. Look at things other than money. Remember: There’s much more to life than money — and that sentiment is very true when it comes to buying a house. When you’re negotiating, remember that you can always ask for other perks such as a washer and dryer, a sprinkler system, or even things like new windows or paint. You don’t have to just focus on money.
Step 5: Move in! There you have it. The 5 steps you need to take in order to buy a house. After you move in and get settled, start basking in the fact that you’ve finally reached the American Dream®…
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