Eight Steps To Purchasing Your Perfect Home
So you’ve decided you want to purchase the perfect home. Some buyers want to immediately start looking at listings and going to open houses, while others simply don’t know where to start. This article explains our eight recommended steps that will help you find and purchase your perfect home.
Step #1 – Get Pre-Approved And Know Your Budget
Most people start their search by talking to a real estate agent. While speaking with an agent is definitely helpful, any good agent will tell their new clients that the first step to purchasing their perfect home is to get in touch with a mortgage broker and get pre-approved. After reviewing your financial information (e.g. tax returns, pay stubs, bank statements, etc.), a mortgage broker will tell you the maximum loan amount for which you qualify. More importantly, a good mortgage broker will also talk to you about your monthly payments and expenses in order to determine how large of a loan you are comfortable with, not just the maximum for which you qualify.
At Esquire Real Estate Brokerage, Inc., there are several mortgage brokers with whom we regularly work and can recommend, depending on your individual circumstances. Some banks or mortgage brokers have access to special programs for which you may qualify depending on your income, profession, downpayment amount, etc. A good real estate agent will find out exactly what you are looking for and will refer you to the mortgage broker that meets your specific financial needs.
Next, you should sit down and identify what you “need” and what you “want” in a perfect home. Note that these are two different lists – “needs” are absolute must-haves, while “wants” are property characteristics that you would like to have but don’t necessarily “need” in your perfect home. For example, you may “need” at least two bedrooms for yourself and your roommate / child / office / guests, while you might “want” a pool but can live without it.
The following questionnaire is a good place to start in identifying your “needs” and “wants” for your perfect home:
- Maximum Purchase Price (See Step #1 Above)
- Minimum Number of Bedrooms
- Minimum Number of Bathrooms
- Minimum Square Footage
- Preferred Property Type (e.g. Single Family Home, Townhome, or Condominium)
- Preferred General Area (e.g. you may want/need to be close to where you work, where relatives live, etc.)
- Other “must-haves” (e.g. pool, large front/back yard, in-unit laundry, attached garage, good school district, etc.)
Step #3 – Identify Desirable Areas That Fit Your Criteria
With the above information, you and/or your real estate agent should be able to identify the area(s) where you can obtain a property within your budget that meets your list of needs and wants. Of course, if one of your “needs” is that the property be in a specific area, then this step is easy – you will just need to ensure that you can afford a property that meets your other “needs” at your budget in that area. If you are not already locked into a specific area, then this step will help tailor your search so that you do not spend time driving around or looking at listings in neighborhoods where you will not be able to afford what you want.
Step #4 – Find The Right Home
Many people are surprised that looking through listings and going to view properties is Step #4, and not Step #1. However, diving in and looking at properties without completing the above steps can lead to wasted time and effort.
Buyers who have completed Steps 1-3 will be able to avoid wasting time looking at properties that don’t suit them, or properties that they can’t afford. The days of driving around looking for open houses are long gone. With the information gleaned through Steps 1-3, you and your agent can filter through listings to identify properties that meet your criteria in your areas of interest. While a good agent will regularly search listings to identify properties that fit your criteria, you can also participate in this step using websites like Redfin and Realtor.
Step #5 – Review The Comps
So you’ve finally reached the point where you have identified a home in the area you want that fits your list of needs and wants. However, before making an offer, it’s important to have an understanding of whether the home is underpriced, fairly priced, or overpriced. Your agent will/should prepare a comparative market analysis to assist you with better understanding how the property is priced. This will help you determine whether you want to make a move on the property, or whether you should pass.
Step #6 – Be Prepared To Make An Aggressive Offer
Assuming you have decided to make an offer, the unfortunate reality for buyers today is that it is a seller’s market. As a result, it’s important to make an aggressive offer, particularly if the property is new to the market. While this certainly includes the purchase price, it also relates to other aspects of the offer. Purchase contracts contain a variety of clauses that can be modified in order to provide the seller with assurances that the deal will close in a timely manner. Moreover, some sellers will want a “leaseback” on the property, so that they can stay in the home after close while they find their replacement home. A good buyer’s agent will be in touch with the listing agent to find out exactly what they are looking for, and will help you modify your offer to make it as attractive as possible.
After your offer is accepted, you will need to move quickly to complete your due diligence and make sure your perfect home is truly “perfect”. As the buyer, your two most important responsibilities will be to (1) coordinate with your mortgage broker and provide all the information they need to obtain full loan approval and (2) coordinate with your agent in conducting physical inspections to make sure the property is in acceptable condition. These are the two most common stumbling blocks to closing escrow, and as a result they require your immediate attention.
In addition to the above, there will be a variety of other documents and disclosures that need to be reviewed and approved in order to close escrow. These include approving the preliminary title report, seller’s disclosures, HOA’s disclosures and documents, appraisal report, natural hazard report, and more. While this may be overwhelming, a competent agent will assist you with reviewing these documents, and will flag any concerning items for you.
The first two weeks of escrow can often be stressful for the buyer – there are piles of paperwork that need to be completed and reviewed, and there are multiple inspections that need to be completed. Keep in mind that you are doing this work for your own protection and to make sure you are truly purchasing the perfect home – not a home that you cannot afford or that will cost you a fortune in repairs down the line.
Step #8 – Celebrate
Step #8 is our favorite. You identified the perfect home, made a strong and smart offer, and made sure the home is right for you during escrow. Congratulations! You have finally earned the right to call the perfect home “yours’.
If you would like to further discuss how Esquire Real Estate Brokerage, Inc. can help you in the Los Angeles real estate market, feel free to give us a call at 213-973-9439 or send us an email at email@example.com