15 Questions Everyone Should Ask Before Buying Their First Home
What is my buying power?
Marina Shevchenko/ShutterstockIt’s extremely important to go into the home buying process with a realistic expectation of your budget. You don’t want to fall in love with a house, only to realize that you can’t actually afford it when it comes time to pay the down payment. Visiting your bank beforehand is a good start, as your bank will be able to tell you if you qualify for a loan and a mortgage. "Most places require 20 percent down in cash," says Mitchell Seligman, a licensed real estate salesperson at Halstead. "Visiting your bank and seeing if you’re pre-approved for a loan is the first step in the process."
Should I use a real estate agent?
Marina Shevchenko/ShutterstockTechnically using an agent to buy a home isn’t required when buying your first home, but it’s definitely someone that you’d want to have on your team to make the already stressful home buying process easier—and the commission comes out of the purchase price, so you don’t pay anything extra. An agent can hook you up with the right mortgage people, guide you into neighborhoods and/or buildings that they know are a good fit, and will help educate you on the property value. They most likely know more than you do about real estate. So should you use an agent? "The answer is definitely yes," says Seligman. "There’s a lot of things you don’t think of as a first time home buyer."
Why should I work with you?
Marina Shevchenko/ShutterstockAssuming you make the wise decision and decide to go with an agent, you should ask your agent why you should work with them. Now it’s their turn to sell themselves to you. They should be able tell you exactly why you should work with them. It’s a relationship, so it’s imperative to make sure that you and your real estate agent are on the same page and work well together. After all, breaking up with your agent mid-house hunting isn’t easy. "It’s important to find an agent that is knowledgeable, that you trust, and can help guide you through the process with specifics," says Seligman.
Can you help me figure out a long-term real estate plan?
Your very first house might not be your forever home. "Most people move every seven years," says Seligman. "Ideally we want to help you find a house that is perfect for every stage of your life." People’s plans change, so don’t expect to stay in one home forever. You might think your single for life, but then fall in love. Or maybe you decide you want another baby thus need to move into a bigger home.
How long have you been working in this market?
Marina Shevchenko/ShutterstockDon’t automatically say no to a real estate agent because of their age. Some younger and newer real estate agents may know the market extremely well, and some older ones might not. Regardless of age and experience, knowing your agent’s house history is very important before agreeing to work with them. You should be able to trust that your agent will give you the best advice about the housing market that you’re looking in. Don’t miss these 22 secrets your real estate agent won’t tell you.
How familiar are you with the area?
Marina Shevchenko/Shutterstock"Location is everything when it comes to buying a house," says Seligman. "Your agent should be able to educate you on the different areas and direct you to the right neighborhoods that meet your needs." For example, if you have kids, your agent should probably show you areas with better school systems. They should also be able to tell you the property value of the homes you are looking at. If your agent is familiar with the areas that you’re looking in, he or she can show you the better available options and maybe even recommend some places that you didn’t think of.
Why is the house on the market?
Found your perfect first home? You should definitely know why the house is being sold in the first place though. And no, contrary to what some may believe, this question isn’t too intrusive. If the home has something wrong with it, say walls that are deteriorating or the owners think it’s haunted, you deserve to know. "By asking this question, you get to better understand the seller’s motivation and you’ll learn a lot about the house," says Seligman. Is the seller moving for a new job or do they just want to downsize? This question can also help you figure out if you’ll be able to get a better deal.
Is now the right time for me to buy?
OK, so this question doesn’t really mean is it the right time to buy in terms of the market being right, because the market is always fluctuating and you can never actually really time it. (Obviously you don’t want to buy a home when prices are at an all-time home.) This question is more so asking if it’s the right time to buy in consideration with your current life. Maybe it makes more sense for you to rent for a year before buying to save up until you can put down more money on a fabulous home.
Should I buy a fixer upper?
If the thought of renovating your first home is enough to scare the pants off of you, then no, you most likely shouldn’t buy a fixer upper. And if you don’t have the extra time or money to invest in your first home, then you probably shouldn’t buy a fixer upper either. While the lower price point has a high appeal, people tend to forget the time, work, effort, and money that goes into renovating a home. But if you’re looking to customize your entire place and maybe don’t mind spending a few extra months living elsewhere, a fixer upper might be just what you’re looking for. This simple home remodeling checklist will help you get started.
What documents will I need?
Buying a home isn’t as easy as signing a couple of papers. It actually involves a ton of different documents and is a pretty lengthy approval process. Making sure you have the required documents ready and on hand will help streamline the procedure. Typical needed documents include:
- several years of tax returns
- proof of income
- bank statements
- credit reports
- reference letters both personal and professional
What is a realistic offer?
Marina Shevchenko/ShutterstockThe house buying process involves price negotiation and there are certain rules that should be followed when giving an offer. For instance, if a house has an asking price of $1,000,000, you shouldn’t offer $500,000. "If a home is priced properly, a realistic offer should within 5 percent of asking price. No more than 10 percent less," advises Seligman. And properly is a key word here. If your broker knows what they’re doing, they should be able to tell you if you’re being ripped off. "The agreed upon price is a meeting of the minds between the buyer and the seller," he adds.
What happens after I make the offer?
Marina Shevchenko/ShutterstockCongratulations! You just made an offer on your dream house, so now is it time to move in? Well not exactly. Just because you made an offer doesn’t mean the house is officially yours. "After the offer comes the negotiation process," says Seligman. While the negotiation should be fairly quick, nothing is set in stone until the papers are signed. Once the offer is accepted and agreed upon by both parties, you move on to the home inspection.
How does the home inspection work?
The home inspection typically comes after an offer is made. Home inspections are done by home inspectors who go into your potential new house and well, inspect. They look at the entire property from top to bottom, so the roofing, walls, electrical wiring, etc., and then provide both parties detailed reports of what they find. Tip from a home inspector: always read the full report, not just the summary. "This is a very important question to ask," says Seligman. "The home inspection is necessary because you want to uncover all the problems before signing the documents and buying the home." You may want to renegotiate your offer, depending on what the home inspection found, before you sign a contract.
When is the closing date?
Closing dates are about one to two months after you have a signed contract. This gives the banks time to process the mortgage, the seller time to find a new place to live, and you time to start packing.
Do you know of any moving companies?
Woo, so you’ve officially purchased your very first home! Now comes the fun, or not so fun part, boxing up all your things and moving into your new digs. Your agent might know of great moving companies that offer deals to new homeowners, so don’t forget to ask this question. Some moving companies will even lower the price if both the seller and buyer agree to use the same company.