Whether you’re a first time buyer or a veteran of the real estate game, buying

a home can be a mammoth process. It’s an emotional time often accompanied with

difficult choices. Those same difficult choices are tied directly to costs and

your ultimate return and happiness.

Finding the right home for your family’s needs is hard, but managing to avoid

paying too much is a another mastery of skills entirely. The following will

show you not only how to make sure you’ve found the right house, but also how

to negotiate the right price.

• Know what you’re shopping for before you start -

This first step is understanding what you are seeking. Your family has certain

needs which must be fulfilled. Also there are many desires which may or may not

ultimately be fulfilled. Take an unemotional look into those needs and desires.

Do you choose a three-bedroom home with room for your family to grow or the one

with a large back yard, perfect for entertaining? Is having a large kitchen

more important than having an extra room?

Two lists should be created - a wish list (your desires) and a reality list (your

needs). The reality list consists of those items which your family really needs.

They are “non-negotiables”. On the other hand, the wish list contains those items

which would be nice to have. Prioritize the lists and the goal is clear - your

next home needs to have most, if not all, of your reality list items and

hopefully a few of the top wish list items. These lists will keep your efforts

channeling in the proper direction.

• Shop for a mortgage before you shop for a home -

Getting a loan pre-approval is the smart way to shop for a home. It tells the

sellers that you’re a serious prospect and you’ll know in advance the maximum

mortgage you can afford. Make sure you get a commitment in writing.

It’s easier than ever to qualify for a home loan. Lenders have modified

qualification rules and created programs designed to help people even if they

have problems in their credit and employment histories. Many programs

dramatically reduce down payments, so if money’s tight now you can still make

that purchase.

First-time home buyers can benefit from the many lender programs that now exist.

Reduced down payment is an example of such programs.

• Pick the right real estate professional -

From finding the right home to selecting a lender to meet your financial needs

to getting proper property inspections to negotiating the best deal, it can be

taxing for even the hardiest of souls. You need the right Realtor on your side.

The right real estate professional must have the high level of care, skill and

due diligence to ensure your best interests are at heart. They also have a team

of other professionals to put at your disposal - lenders, lawyers, home

inspectors, movers, etc.

Most sellers you encounter will have a team in their corner. Having a

professional on your team is the best way to make sure you get the best deal

possible.

• Make sure your agent knows what you are looking for -

Once you have a clear understanding of your reality and wish lists make sure

your agent has those same lists. This communication is critical.

Otherwise you’ll both waste your time looking at home you’re really not

interested in and you could possibly miss out on the one that truly meets your

needs and desires. Your shared goal is to find a place that meets your needs:

your agent will then try to satisfy as many of your desires as possible.

A good agent will ask you many questions about what you’re looking for and what

you can afford. And then they’ll listen carefully to your answers.

• Yes, that too... location, location, location -

The desirability and resale of your home-to-be depend on location more than any

other single factor. The simple truth is - the value of your home is affected

by the homes that surround it.

Assuming you’ve already considered the items that make up a desirable home and

community - character, quality of schools, access to work and services,

recreational facilities, entertainment, etc. - there are several elements that

combine to make a good location.

Your first consideration is the neighborhood. Every neighborhood has its own

unique character; you need to make sure you’d be comfortable in the one you’re

thinking of living in. Take a long walk and observe carefully. Do people take

care of their yards and homes? Are the yards fenced? Do children play in the

streets? Talk to the neighbors and ask questions that give you a better feel

for the area. Be careful not to appear judgmental - you might be talking to a

future neighbor.

If the neighborhood is to your satisfaction, look at homes on the market in the

area. Extremely large homes surrounding smaller ones tend to appreciate less

than a large home among other large homes. Conversely, the smallest home in a

neighborhood tends to be “pulled up” by the other homes on the block. However,

it might take longer to sell that smaller home when the time comes because many

people are unwilling to pay extra for the neighborhood.

The outer edge of a neighborhood is usually not good for resale value. There are

noticeable dividing lines between unlike neighborhood. It could be a difference

in architectural styles, home size, property use or something else. Look at a

home in the middle of a community of similar homes; it will hold its value better.

An exception to this rule is a home on the edge of a neighborhood bounded by

woods, park land, a golf course or other open space. Natural boundaries appeal to

most buyers and these “edge” homes can actually command a higher price. The

exception is when there’s an unpleasant use planned for the open space. An open

field with a babbling brook is nice; a new freeway, strip mall, or warehouse is

not.

Other things that can negatively affect property values are traffic, sounds,

smells, etc. Be sure to give the neighborhood a long, hard look. Preview the area

at various hours of the day. The home you’re interested in may be perfect, but if

the neighborhood has problems, your investment won’t be worth as much when the

time comes to sell.

*Use your real estate professional to narrow the prospect list -

A good agent brings to the table an in-depth knowledge of the current housing

inventory in the area and continually updates that knowledge by touring homes as

they are placed on the market. This is to your advantage. Trying to personally

see every available home that might fit your needs would be an overwhelming

process . If you are thoroughly communicating your needs and desires to your

agent, then your agent can help you narrow down the list of prospective homes to

those that best suit your family. This will save you much time and energy.

When the time comes to settle on one home, you can do it with the confidence

that you’ve made a well-informed choice.

• Show a little interest in everything you see -

As you tour the homes on your short list, find something to admire in each one.

If you don’t show any interest until you’ve finally fallen in love with a home,

then you’ve put yourself at a competitive disadvantage. Never let anyone know

how badly you want a home - it will cost you money!

• Shop with your head, not your heart -

Don’t forget the purpose of your reality and wish lists. Shopping for a home is

an emotional process. Your heart will cost you money; using your head will save

it.

• Don’t ignore red flags when evaluating a home’s pluses and minuses -

When evaluating the advantages and drawbacks of a particular property, be sure

you know the difference between acceptable and unacceptable problems.

Some issues - peeling paint, worn carpeting, ugly wallpaper - are cosmetic and

can easily be remedied. In fact, you can use these “problems” during

negotiations to lower the asking price; after all, you’ll need to spend money

to bring the house up to date. Make note of what you see that can be used to

your advantage. Although hold back from nit-picking. If taken to extremes, you

could end up alienating the seller and creating a hostile atmosphere.

Other problems may be warnings to walk away. Major foundation cracks, evidence

of previous water damage, signs of serious dry rot or termite damage, antiquated

electrical systems or plumbing - any one of these may cause to reconsider your

interest.

Don’t let a house’s positive attributes blind you to very real problems. If you

do, the chances are good that you’ll end up spending much more than you ever

expected down the line.

• Hire a professional home inspector -

Failing to do so, made the biggest home buying mistakes list.

Spending a few hundred dollars for a professional home inspection may be the

best investment you’ll ever make. A professional inspector brings experience in

examining a great many homes, good evaluation standards and an unbiased

perspective. And a written report can be an excellent negotiating tool.

A Typical Inspection Looks at:

• Foundation (slab, crawlspace, basement, etc)

• Electrical, heating and plumbing systems

• Floors, walls and ceilings

• Attic

• Roof

• Siding and trim

• Porches, patios and decks

• Garage

• Property drainage

Make sure you accompany your inspector on the tour. You’ll learn a lot about

the home you’re thinking of buying.

Once you have your evaluation, the decision to proceed is yours. A home

inspector only gives you a professional opinion of the home’s condition, not

advice as to whether or not you should buy.

*Not all fixer-uppers are good buys -

You may be the type who looks at a home in need of significant work as a

challenge and an opportunity to make money. Many people have bought fixer-

uppers at below market rates, invested a little sweat equity or a little more

money on renovations, then eventually put it back on the market at a profit.

But if it isn’t priced low enough, you won’t recoup your investment of time,

trouble and expense. Before you proceed , do a careful evaluation of what

you’ll have to invest and consult you real estate professional to learn what

you can reasonably expect to make when you put the home back on the market.

And be sure to include the unexpected. There’s no such thing as a “sure thing”.

• Choose a home with an eye toward future needs -

Buying a home is a large investment. If you can stretch a little today to buy

a home that you can grow in - whether it’s having a child, running a home-based

business, or having room to build an addition - do it. In the long run, it will

probably be less expensive than moving up to a marginally larger home when the

need does arise.

• Clarify who your agent is -

Make sure you know who the agent you’re talking to represents. All agents have

the responsibility to be open and honest with you and to let you know who they

represent - the buyer, seller or both. On-site agents of new communities most

often represent the seller (new home builder), not you.

• Ask for a written comparative analysis -

One way to ensure that you don’t offer too much for a home is to ask your

agent to prepare a written comparative market analysis. A CMA will show you

the sale prices of comparable homes in the neighborhood. It also lists the

asking prices of other homes in the area currently on the market.

You may find that the asking price is above what comparable homes in the

neighborhood are actually asking for. Or you might even find another home in

the area that’s a better choice. When you make an offer, you can use the CMA

as evidence to show the seller why you believe your offer is reasonable.

• Learn as much as you can about the seller -

It’s true what they say... Knowledge is power. The reason behind a sale can

often be used to your competitive advantage during negotiations. For example,

a seller whose company has transferred him to another city is probably more

motivated to sell than someone who is still looking for a new home.

Other signs of a motivated seller include a vacant house, or a house that’s

been on the market for several months with several reductions in the asking

price.

• Keep your own situation to yourself -

Information can be used against you as well. How much you’re willing to spend,

the size of mortgage you can afford, your move-in deadlines - it all can be

used to extract more money out of your pocket. Be sure to tell your agent

everything they need to know to be effective on your behalf, such as, how

much you have for a down payment, the size of the mortgage you can afford,

etc. However, keep your personal circumstances and timeline to yourself.

• Use time to your advantage -

Just as you have a time frame in which you wish to buy, seller almost

certainly has a deadline of his own. If you can learn the seller’s deadline,

it’s another piece of information that can be used to negotiate a better deal.

• Check your emotions at the door during negotiations -

One of the costliest mistakes you can make is letting the sellers know how

much you love their home. Once you’ve let it slip, you can forget about

negotiating the price; the other side knows how motivated you are. In fact,

a seller may see it as an opportunity to squeeze a little more money out of

you even when you’ve made a good offer to start.

No matter how wonderful a home is, no matter how much you want it, keep it to

yourself.

• Don’t be afraid to negotiate -

You may be the type who prefers a hard-and-fast price tag on everything. “I

don’t like to haggle” is your approach. But negotiation is the key to getting

a good deal. If your goal is to get the best home possible for the least amount

of money, then you had better be prepared to play the negotiating game.

• Stay out of bidding wars -

Sometimes the seller’s agent will try to scare a hesitant buyer with the threat

of another serious potential buyer. Don’t fall into this trap, it will only

cost you money.

If there is another buyer, then the seller’s agent will try to get a bidding

war going. In these situations, whoever wins also loses because the buyer ends

up overpaying.

If there isn’t another buyer, there’s a good chance that the seller’s agent

will come back with “the other deal” fell through. Be sure to let the other

side know that you might be interested if that happens before you walk away.

• Know your hidden costs -

There’s more to buying a home than the mortgage. Don’t forget to factor in

mortgage insurance, appraisal fees, inspection fees, title insurance and every

other dollar you’ll have to spend in order to know what you’re really paying

for your home. With the help of a good agent, you should identify all of the

costs.