The Internet can be a great tool to help you find your new dream home, but it should only be one tool in your arsenal; don’t rely solely on the Web to buy your home. A number of problems and misrepresentations can hide behind the Internet, so it’s important to take everything you read with a grain of salt, see the home before you get your hopes up, and enlist the aid of a qualified professional. These are the things you need to consider when you’re using the Internet to buy a home:
Pictures can Misrepresent
One of the most important things to remember if you use the Internet to buy a home is that pictures on the Web can misrepresent a property. Pictures can make a place seem larger, more light-filled and can gloss over any undesirable characteristics. You always have to see a place in person before you can make a decision about whether it’s the right fit for you. Avoid falling in love with a property you haven’t seen; you’ll avoid heartache later.
The Internet can be Inaccurate
Many people use the Internet to do research on comparable properties, closing statistics or other relevant data when purchasing a home. Internet data can help you decide how much to pay for a home, whether you’re getting a good deal, how much you’ll pay in property taxes, or help you research a specific property. But the data you find on the Web may be inaccurate. Outdated and incomplete information on the Web can lead to inaccurate perceptions of the local housing market, or wrong information about the property you’re considering. Use it as a tool, but don’t rely on it solely.
An Experienced Professional is Worth the Cost
Whether you hire an experienced realtor, a closing agent or a real estate attorney to help you navigate your home deal, an experienced professional is worth the cost. No matter how diligent you are, there are things you might miss in a home deal that a professional can spot. This is especially true if you’re buying a home from research on the Web. Make sure you consult an experienced professional before you sign on the dotted line – even if you do all of the footwork yourself on the Internet.
When most people think of home shopping, they think of buying a single-family home, complete with house, driveway, yard and all that goes along with that. But different people have different needs, and single family homes are not a one-size-fits-all solution. People with limited budgets may prefer patio homes or other clustered construction. In the city, the most viable home types may be condominiums or townhomes. These different types of homes also require varying levels of upkeep and maintenance. What type of home is right for you?
Think of condominiums as similar to apartments, but you own them and typically share maintenance of the overall structure with other condominium owners in the building. Condos can be cost-effective because you share maintenance with others, and may have common parking spaces, storage or other amenities allocated to the building. Condos are very common in densely-populated areas, like cities. They’re great as vacation homes, too, because they require very little upkeep and usually cost less than a single-family home.
Townhomes, Row Houses and Patio Homes
Townhomes, row houses and patio homes are all forms of attached housing, where the dwelling typically shares one or more walls with dwellings on either side. Townhomes are traditionally multiple-floor dwellings, and row houses are similar but typically smaller than townhomes. These types of housing are common in densely-populated city settings. Patio homes are a form of cluster home; they often share walls between units but may have their own outdoor space. Patio homes are typically found in suburban settings.
All of these home types are typically more affordable than single-family homes, and typically feature private entrances and other benefits of home ownership. However, some people dislike this type of home because of potential noise transferred between dwellings.
Single Family Homes
Single family homes are detached dwellings that are completely self-contained. When most people think of home ownership or home buying, they think of single-family homes. In some parts of the country, you’ll be hard-pressed to find any other type of home, but in city settings, single families are typically relegated to the suburbs. Single family homes offer privacy and the freedom to do what you like with outdoor space, but also require more upkeep and typically cost more than other home types.
When you decide to buy a home, the home shopping experience can be an exciting time. You may find that you really enjoy browsing listings and visiting homes; you can imagine what life would be like to live in a new home. But you may also feel overwhelmed by the choices or the commitment of buying a home, or decide you hate home shopping. The easiest way to ensure things go smoothly is to thoroughly prepare for your home shopping experience.
Research Home Prices in the Area
Research home prices in the area you’re considering before you start shopping. If the area is expensive and you have a low budget, you may want to look elsewhere. If a neighborhood or region is borderline for your price range, there’s still a chance you could find a deal there, but it will be slim. Be prepared for the home prices you’ll encounter, and know when to give up and look in a different area.
Prepare a Checklist of Things You Want to Remember
Checklists are your friend. Prepare checklists for things you want to remember, so you know you cover them in conversations and when viewing a home. Have a checklist for your call with the realtor so you know you can ask the questions that are important to you. Have a checklist for when you view the home, so you can remember to do things like check the faucets, light switches and windows and ask about amenities.
Set Aside Time for Home Shopping
Build time into your schedule for home shopping. Shopping for a home can take a lot of time, so it’s important to schedule certain periods for looking at listings and doing research. When you reach the end of your scheduled time, stop. Too much looking early in the process can overwhelm you and force you into a home you wouldn’t buy otherwise.
Prepare for the Emotional Onslaught
Buying a home is emotionally taxing. Searching for homes, viewing homes, imagining your life in these places, thinking about the commitment that is home ownership – all of these things carry an emotional burden. Be prepared for unexpected emotions during the home search process. Make sure you have some coping mechanisms available if the process becomes overwhelming, and communicate your needs to the people close to you.
The whole point of assembling an expert real estate team is to cover your bases and make sure everything runs smoothly. However, even experts make mistakes, and ultimately your home purchase is your investment; you’re the one who has to live with it until you sell it. Be an informed buyer, and understand the process well enough to offer input on your deal.
Stay in the loop.
First and foremost, don’t just assume that your real estate team can handle everything without you. Don’t take a back seat on your home purchase. You need to be aware of what’s happening, any deadlines that are approaching and where things stand with your deal. You don’t need to check in with your professionals daily, but stay informed enough that you can recognize when things go off track, and follow up with the people who are supposed to be handling aspects of your deal.
There’s a fine line between being informed and being a nuisance, though, so try to avoid crossing into the realm of counterproductive, overly-obsessive follow up. Be reasonable, and remember that the people you’re dealing with are people, too, with their own schedules and timeframes.
Read a book or do some research on the Web.
Plenty of books exist to help you understand the home buying process, and you can also find great resources on the Web. You don’t need to be an expert, but you should have a basic idea of what to expect, and when to expect it, when you’re buying a home. Take the time to read a book about buying, and follow up with some Web research about any concepts you don’t understand or gaps in your knowledge.
Ask questions if you don’t understand.
Don’t be afraid to ask questions as you go through the home buying process. You should work with professionals who are willing to explain concepts and what’s going on with your deal as you move through the purchasing process. Again, there’s a line between being informed and being counterproductive and actually hurting your deal, but good professionals can keep you informed without reaching that line. You don’t necessarily need to be obsessive about every detail of your deal, but if there’s a concept or deadline that you don’t understand, ask.
Value, cost and price are three entirely different parts of the home-buying equation. They key to getting a home that’s worth what you pay is effectively balancing these three components. If you’re thinking of buying, consider these aspects of each and every home you evaluate.
Value is the subjective part of the home-buying equation. Cost and price are typically fixed numbers, while value is a measure of how much the home is worth to you. You and another buyer could place a completely different value on a home, depending on a number of factors; location, amenities, neighborhood, schools and even maintenance costs.
Ultimately, a home’s value is whatever you decide it is. Just be careful when you’re establishing value to be as objective and clear-headed as possible, and avoid letting emotional motivators influence your sense of value. You could easily overpay for a home if you overvalue it, so try not to exceed the home’s objective worth with your subjective value.
Cost is a factor that sellers typically use in setting the price of a home. Cost is almost an irrelevant part of the buying equation, except that sellers typically assign a worth to the home based on what they originally paid for it. You’re unlikely to find a seller pricing a home below cost, for example. Although cost doesn’t determine current price, it’s helpful to have an idea what a home cost so you can get a sense of where the sellers are coming from in negotiations.
The price is the dollar amount that you pay for the home today. The sellers typically start with an asking price, and you’ll probably put in an offering price that may or may not match the asking price. Make sure you consider the home’s value when you’re thinking about price. The price you pay today will be your cost when you sell the home, so keep that in mind when you’re evaluating a home’s worth and value.
Bidding wars happen in a couple of different ways, depending on the circumstances. No matter how it happens, though, bidding wars mean that the price of a home is driven higher and higher until it has no basis in reality. In a bidding war, the buyer never wins. What can you do?
Agent-driven bidding wars.
One bidding war that most buyers never hear about is the agent-driven bidding war. Sellers agents want to get listings for a chance at getting commission. If one agent goes in suggesting a realistic asking price based on CMA and neighborhood comps, and another agent goes in with a number $50,000 higher but no basis in reality, some sellers would choose the second agent at the hope of getting the extra money for the house.
In reality, the second agent is setting up the seller for failure, because no educated buyer is going to pay a price so far over the comps. These types of bidding wars happen because agents want to get the listing, and it’s called ‘buying a listing.’ A house with an artificially inflated asking price is no prize to potential buyers, and you might just have to pass on the home if sellers believe they can get a higher price than the current market demands for their house.
Buyer-driven bidding wars.
The other type of bidding war, and the one that’s more common from a buyer standpoint, is when multiple buyers want a house and raise their offering price to compete with the other buyers. In this case, too, the price of the home can become artificially inflated, rising far beyond what a reasonable buyer would pay.
Unfortunately, if you find yourself in the middle of a bidding war like this, it’s a good idea to put aside your emotional attachment and look elsewhere for your dream home. Paying an inflated price puts you in the hole to start, and is a bad way to begin new home ownership.
As a home buyer, your focus when you’re shopping for homes is on finding the best home for the value. You want a home that conforms with specific expectations, such as offering the features you want at the price you can pay. Beware the seller that doesn’t want to sell, as they might force you to compromise your expectations.
Can’t versus won’t sell.
Many sellers say they can’t sell a property when the reality is that they won’t sell it. Sellers use any number of criteria to determine whether or not they ‘can’ sell a property, including how much they paid for it, how much they want to get for it and how long they have to sell it. Sellers who owe more than their home is worth, for example, often say that they ‘can’t’ sell. The reality is that they won’t sell for the price that the home is worth, not that they ‘can’t’ sell the home.
How those sales affect you.
Sellers that won’t sell can cause buyers a variety of issues. The biggest problem that sellers who won’t sell typically cause is price. Most sellers will sell if the price is high enough. Unfortunately for buyers, those high prices may be more than the property is worth. Sellers who won’t sell also occasionally settle for sale terms that are unfair to the buyer.
What to do with a seller who won’t sell.
Don’t make yourself crazy buying a home that the seller doesn’t want to sell. Overpaying or taking unfair terms are the two biggest dangers, and those are issues that you have to live with for the life of your loan, or until you can sell the home yourself. Bottom line: don’t bother with a seller who won’t sell. Until the seller is ready to price a home at fair market value, the home likely won’t sell. If some buyer does fall victim to the seller who won’t sell, let it be another buyer living with an overpriced home or poor sale terms for the life of the home ownership.