Top 3 Challenges of Buying a Home and How To Overcome Them
Buying a home can present its fair share of challenges and obstacles – especially for first timers. Fortunately, you are not the first person to run into these home buying roadblocks and you certainly won’t be the last. So before you set out on your next home buying venture, get a grip on the potential roadblocks you could be facing, and arm yourself with the knowledge and ability to easily overcome them.
There’s no denying it, buying (or selling) a home is a process. It can be stressful, time intensive, and downright exhausting. Having a good understanding of what challenges you will be up against and understanding how to overcome them will not only make your life easier, it will get you to your goal a lot faster and you’ll be in your new home in no time.
A good Realtor will make your home buying experience as streamlined as possible with advice, resources and options. But at the end of the day, remember that YOU are the one buying a home and YOU have the final decision.
Obstacle 1 – Finding the Perfect Home
Finding the perfect home is broken down into 2 distinct parts.
The first part, aka ground zero, is determining what it is you want. I’ve found taking the time to stop, ask yourself a few questions, and writing it down is the best way to find out what’s really important to you in a home.
Start by getting a blank piece of paper, then draw a line down the middle to make two separate columns. Title one column, “Must Have” and the second column “Would Like to Have”.
Just as the titles indicate, under the Must Have’s section, put down items in your home search that are absolutely 100% Non-negotiable. These are deal breakers and things you cannot live without or look past.
In the Would Like to Have column, put all the features and descriptions of a home that would be great to have, but if the house was perfect otherwise, you would be fine without.
Having this defined is important not only for you, but for your Realtor. When you give your agent a list of 15 criteria without any reference to their importance, it’s a recipe for slowing down the process. By knowing what items are non-negotiable, your agent won’t spend time looking into and showing these properties to you and will have a better idea of what is really important to you.
The second part in finding the perfect home is the execution. Now that you are armed with your list of properties, it’s time to find it. Searching on public access websites (Zillow, Trulia, etc) are simple, but lack the tools needed to really hone in to the right properties. A realtors MLS database access is going to prove to be a much more powerful, accurate system for locating properties. Ask your realtor to set you up for MLS email notifications on your given criteria.
Now you would think that this “house-hunting” part would be easier today than ever. With the internet buyers can find properties, view pictures, details with a few clicks. 2 hours and 150 properties later you feel like you’ve seen it all. However with this ease of access, there’s an issue I’ve noticed and it goes something like this:
You look at all the properties in your price range and area. Some of them have new granite that you really want, others have a nice pool that you would love. A few are nice cul-de-sac lots with extra-large yards, and there was a few with completely renovated bathrooms that would be great to have. So, all these items are on your want list and they all seem to be available, why shouldn’t you have all these features??
Well, you can have all those features, but if you put ALL those features onto one house, your price range just went up by $75,000, and that house that you have put together in your mind may not exist (in your budget). Careful not to fall into this trap or you might be stuck looking for this perfect house that was never built. Once you are armed with your list and know what’s available (and realistic) in your budget, you can move forward with the confidence of locating a home with everything you need and more.
Obstacle 2- Finances
When shopping for homes, it’s pretty easy to be pulled into a “home search bender”. You spend countless hours online, browsing, searching and discovering homes that you’d love to live in. The price starts moving up, seeing how just a little extra money gets you something even better than you imagined. And then, maybe just a little more money….and a little more…
This is fun to do, no doubt, but now I have to be the responsible one and remind you that while sometimes we drift upwards into fantasy-land, you will be paying a mortgage with very real money. Before you start home shopping, you really need to take care of the groundwork and get your finances in order.
Getting your financing in order means knowing:
-How much you can afford
-How much your payments will be
-What loan programs are available
-What other costs are associated with buying a home
-Is your credit in good shape?
The most disappointing thing for anyone is to find a home you love just to find out you can’t afford it, or not be able to make an offer because you don’t have financing yet and someone else already bought it. By taking care of this up front you will be set up for success. Last minute surprises are NOT a good thing in Real Estate!
Also remember, the amount you can qualify for doesn’t mean that is what you should spend. Spend what is comfortable to you and fits within your budget and goals.
A note about credit – it’s a common response for home buyers who say they have not spoken with a lender yet because “they don’t want to ding their credit”. I totally understand, and we’ve been conditioned to think this way. However, most people who are cautious to keep their credit score intact do so in order to make large purchase such as a home or car. This is the reason you have such good credit, and there is usually little harm in having it checked by a lender at this point. In fact, credit bureaus allow a grace period for checks when shopping for a home loan (30-60 days), so whether you have your credit ran by 5 different lenders or just 1 in your grace period, the impact is minimal.
Passing Contract Milestones
A purchase contract for a home is a very time oriented contract. It provides specific instructions for both Buyer, Seller to complete in determined amounts of times. Once you get a contract on a property, there are a few hurdles left before you can move into your dream home:
Passing inspections – When you buy a home you will have an inspection period for roughly 10 days to inspect, research and do your due diligence on a property to make sure it’s structurally sound and in the condition you expect. If a deal is going to fall out, this is where it will happen 80% of the time, so this is the biggest hurdle you will face while under contract.
How to clear this hurdle – prepare yourself, every home is going to have “issues”. New homes, big homes, small homes, old homes, it doesn’t matter. If you discover something about that home that you didn’t know don’t run for the hills right away. You have options, and try not to be too emotional about the issue. Think and proceed logically. You can ask for the sellers to fix it, ask for compensation, or leave the deal if you just cannot find a workable solution.
Passing appraisal – Assuming you are obtaining a loan, you will be required to have an appraisal on your property. The bank wants to make sure it’s worth what you are paying for it. Since this is not done until after inspections, and you typically pay up front for this, you want to make sure it comes back approved, or else you could risk losing the house.
How to clear this hurdle – Unfortunately there is not a TON you can do to make sure a property appraises as a buyer. The secret to this is making sure you do your homework up front and make sure you are not overpaying for a property. Have your realtor run comps and show you the property is worth the price before making an offer and you won’t have any issues with an appraisal. If an appraisal does come in too low, you may cancel, try and negotiate the lower price with the seller, or pay the difference out of your own pocket – a last resort if you REALLY want the home.
Final loan approval – the green light to finalize the transaction. All the months of research, house hunting, paperwork, and negotiations have lead up to the final few days. Receiving a final approval for your loan is certainly cause for celebration, but don’t let it be ruined by any last minute surprises.
How to clear this hurdle – Be timely with your lender requests for documents or signatures. The loan is the longest process of buying a home, and by delaying the lenders needs you risk a timely closing. DON”T mess with your credit, change jobs, buy a car, or do anything else that can mess with your income, debts, or credit while in the home buying process. Your credit and information will be confirmed just prior to closing, and if anything major has changed, you could kill the deal last minute. Once you close on the house, you can go buck wild and max out your credit cards on new furniture!
OK maybe you don’t actually want to do that, but you get the point – Don’t mess with these things until after closing!