Buying a House… Part 3 (You’ve Found “The One”)

You’ve read part 1 and part 2 (if you haven’t click the links and you can!)  You’ve done the house hunt, you’ve seen all (or at least most) of the houses you’ve wanted to see, and you’ve found… THE ONE.  The house that sets your heart a-flutter and creates a maddening urge to nest.  Mazel Tov!  Now what?

Now it’s time to take a serious look at some very important things, not the least of which is the budget.  For most people, buying a home is a very big deal, it’s easy to get emotional about it, but keep in mind buying a home is also one of the largest investments you will make in your life, it’s best to buy wisely.  How?  You start by looking at the numbers.  If you’ve got a savvy agent, and a great lender, you should already know by now the general numbers for your mortgage, down payment and closing costs on the houses you’ve been seeing.  It’s now important to look at the numbers on the house you’ve chosen specifically because it may have some unique factors that were not originally accounted for in the initial estimates.  These things might be Home Owner’s Association fees, taxes (if they are being escrowed), and insurance estimates.* (Did you know the age and condition of the house can affect how much your insurance policy is?!) But whether you do know these numbers already or don’t, now’s the time to really sit down and take a hard look at them because you’re about to write up your offer.

BUT BEFORE YOU DO…. 

You want the facts about pricing!!  Thus, the next set of numbers you will need to see are found on your agent’s comparative market analysis or CMA (see above image).  This is where the buyer’s agent pulls all the homes that have sold in the last 90 to 180 days in the area that are similar to the house you’ve chosen, and gives you their opinion of value.  *It’s important to note that this is an opinion of value and not a substitute for an appraisal or tax assessment.*  There are a lot of factors that go into determining appropriate comparable properties and the reason it’s important to know this information is because it will tell you whether the house is priced right or not.

“But Emerald! I don’t care about the price, I’m going to DIE in this house, I love it!  Why should I care if it’s a little over priced?!”

Believe it or not, I’ve heard this before.  And honestly, it’s a great question! If this is going to be the last house you ever own, ever, and your paying cash, and you don’t care what happens to it after you die, bless your heart, you go right ahead and do what you want!  You’ve earned it!  I’ll still give you my professional opinion regarding pricing, and you can tell me to chew my shoe if you’d like.  I’ll still love you and give you the best possible service.
However, if you are not paying cash, and have a loan on the property, making sure you’re not overpaying is paramount in order to protect your money.  And tellin’ me to chew my shoe about pricing, may not be so wise….  For example, if the house is priced $10,000 over market value and you offer the seller what they are asking, if you get under contract, you may now be running the risk of having appraisal issues.  I’ll explain. Let’s say the sales price on the contract is $300,000, but the appraised value comes in at $290,000, the bank is only going to give you a loan based on the $290,000 appraisal so now you have to figure out where the $10,000 is coming from.  See the problem?  So making educated decisions based on as much good information as you can get, and being smart from the start, is how this game has to be played.  If you don’t, you could lose the house, valuable time, and potentially thousands of dollars.  It’s my job, as your Buyer’s agent, to help prevent that.  By the way, this pricing stuff goes for new construction homes too, but they are their own beast and I’ll write about them later (stay tuned).
The Takeaway:

I know some of  these posts have sounded a lot like a “get a real estate agent!” rant, but it’s because I’m passionate about making sure everyone has a great experience in real estate.  The best way I know to do that is to urge you to surround yourself with experts that not only know their craft, but care deeply about the service they bring you as well as care deeply about your experience.  And, as always, I leave you with the reminder: I LOVE what I do and I LOVE talking about real estate, so if you have questions, please ask.  Questions give me purpose, and they give me more blog topics too!