1. PICK THE BEST PROFESSIONAL TEAM:
Interview mortgage brokers, real estate agents, attorneys, escrow companies, and title insurance companies. A real estate transaction could possibly be your largest transaction ever and most people involved in your transaction will be paid (commission) if your sale completes. Most of the time, the professionals you choose have your best interest in mind, but unfortunately sometimes some people involved in your real estate transaction may have their interest in getting a commission check ahead of your interest in the transaction of the sale or purchase of a home. Therefore, you must hire a professionals that have your interest first and do their due diligence.
2. DO NOT GET EMOTIONAL:
During a home purchase or sale, but especially during a home purchase, buyers occasionally get emotional and do things that may not be in their best interest. For example, sometimes buyers get into bidding wars and pay way over asking price and/or market value. Other times, buyers overlook items on a house that can be detrimental to longevity of home without going back and asking the seller to correct these repairs in fear of losing the home. Make sure you listen to professionals you hire, and really think through the largest transaction you may ever make.
3. HAVE A BACK UP PLAN:
Most home buyers never really look too far in the future and this can be a problem. People’s lives change with family expansion, relocation for career opportunities, and relocation for family or other reasons. Home buyers sometimes overlook the fact that they usually will keep a home for a long period of time before they can sell it at profit or without losing money simply because of transaction fees. It is wise to ballpark 10% for transaction costs in the sale of a home (different depending on the state). In a booming market, a 10% gain can happen in a couple years, but the market is not always booming, and in some occasions the market is depreciating. Without a backup plan, the homeowner may not have the money or ability to sell a home at a loss. Have your broker do a rental analysis (or do it yourself at www.RentOMeter.com) before you purchase a home and see if the home will rent out for at least the amount of your mortgage payment.
4. HIRE CONTRACTORS WISELY:
If you are buying or selling a home you will eventually need a contractor or a specialized technician for some sort of repair. The best way to find a specialist to work on your home is probably from a referral from someone you know. People enjoy sharing good experiences with their friends and family. No matter who you hire, you should first make sure these contractors are licensed and bonded. In most major cities/counties you should be able to call or go online to a governing body in the area to determine if the contractor you are talking to is licensed or if that contractor has any claims on their bonds. You can also read reviews online. The number one rule when choosing a contractor is to try to talk about everything that can come up in your repairs and document everything in the agreement. Lastly, we don’t recommend paying a contractor in advance. Although a lot of contractors will not start a job without an advance, we would try to set up payments in 25% increments, if possible. Lastly, you should try to communicate as much as possible in writing (email is sufficient). A lot of homeowner and contractor disagreements happen because the homeowner and the contractor do not communicate timelines, changes orders, and other important aspects of the transaction.
5. READ ALL YOUR DOCUMENTS:
Make sure you understand what you are getting yourself into. A purchase or sale of a home is complicated and there are several documents you will be given such as: Purchase agreements, loan documents, title documents, land documents, appraisals, inspections, insurance policies, and the list goes on. Some of these agreements can last as long a thirty years or longer therefore understanding what you are signing is very important and if you do not understand something in the documents ask an attorney.