Buying a home is a complicated process, even for those that would consider themselves “seasoned.” However, that’s not to say that there aren’t tricks to make the process a little less stressful. Take a page from my book and implement the ideas I outline below, and you will find that buying a home doesn’t have to be fraught with risk. In fact, these four ideas could very easily reduce your exposure to risk, and even save you a lot of money in the process.
1. Mind Due Diligence When Buying A New Home
Prospective homeowners so inclined to move into a growing community may need to commit to a new build; those homes that are either in the process of being built or have yet to break ground. It’s worth noting, however, that new homes should be subjected to just as many questions as older ones. Never assume new builds won’t coincide with issues of their own. If for nothing else, new homes are just as susceptible to complications as their 50 year old counterparts.
While buying a brand new house may represent the pinnacle of the home buying experience, new construction projects aren’t without a few caveats of their own. All things considered, new isn’t always better.
Be sure to mind due diligence and — above all else — know what you are buying into before you commit to signing a contract. Ask as many questions as you can about the builder you intend to purchase from: Are they reputable? Have they been known to meet deadlines? How much experience do they have in the industry? What’s the quality of their work? And perhaps even more importantly, can you trust them?
But I digress; purchasing a new home shouldn’t elicit fear in those that have never done it. My reservations shouldn’t be mistaken for an indictment on new home purchases, but rather serve as a warning; complacency is dangerous when buying a home — no matter how old it is. All I ask is that you mind due diligence and ask the same questions you would when buying an older home. That said, buying a new house can very easily be one of the most momentous occasions in a person’s life, provided they take the appropriate precautions.
2. Familiarize Yourself With The Hidden Costs
Whether you are purchasing your first home or even selling your fifth, it’s safe to assume there will be hidden costs that have yet to be accounted for. If for nothing else, every real estate transaction is a complicated process; the odds of a hidden cost seeping through the cracks aren’t exactly astronomical. Even the most seasoned investors will occasionally run into costs they weren’t prepared for. The key is to reduce the amount of surprises you encounter at closing, if not eliminate them altogether. In fact, the only surprises you should find yourself confronted with are those that are actually welcomed.
At the very least, buyers and sellers should be aware of the following costs that will most likely accompany a real estate transaction and can add up to thousands of dollars to any deal:
- Closing Costs & Related Fees
- Appraisal
- Home Inspection
- Home Warranty
- HOA and/or Condo Fees
- Maintenance/ Repairs
3. A Truly Gifted Agent Is Worth Their Weight In Gold
The advent of technology has threatened to make the average real estate agent obsolete. There are more than a few services, and even mobile apps, whose sole purpose is to cut out the middleman in a respective deal. However, I maintain that a truly talented real estate agent will always have a place amidst such a complicated process. But I digress; there are those that don’t echo my positive sentiment, and for good reason.
Real estate agents, the ones that really know what they are doing, stand to make a lot of money on a given deal. There are those that feel they make too much, as the average commission in some of the more expensive states is nothing to scoff at. Higher end deals can result in some rather lucrative paydays.
It’s worth noting, however, that a truly great real estate agent is well worth the price they demand. In fact, you could argue that hiring a real estate agent to represent you in a purchase or sale is an investment in and of itself. There is no reason to assume the money you pay upfront won’t come back two fold. An agent’s expertise of a particular region could save you thousands of dollars alone. I see no reason to believe that the right agent won’t save you more on a deal than you end up spending for their services.
While the commission may be a bit intimidating at first glance, I can assure you it’s well worth it — provided you found an agent with your best interests at heart. Not only will they help facilitate a rather complicated process, but they will reduce the risk of making a costly mistake while simultaneously negotiating a better deal on your behalf. That said, don’t make the mistake of thinking you can go about it alone just to save a few bucks. Enlisting the services of a great real estate agent is more than worth the cost of admission.
4. Shop Around For Mortgage Options
Buying a home has become synonymous with today’s largest purchases, but it’s just that: a purchase. Not unlike just about everything else you buy, the average home transaction can be closed in a number of ways. While there are a select few that can actually pay cash, most buyers will need to rely on financing. It’s worth noting, however, that not all mortgage options are created equal; there are certainly better options for those that do their homework. The next time you intend to buy a home, be sure to shop around for the mortgage option that suits your needs best.
If for nothing else, neglecting to shop around could cost you thousands of dollars. Those that take the time to compare interest rates from different lenders could very easily decrease their monthly payments. The difference in just a half of a percentage point could result in thousands of dollars over the course of the loan. I encourage homebuyers to shop around for the best mortgage options made available to them before committing to a purchase. Those that do will either save a lot more money than they expected or find they can afford more home.
Buying a home is a complicated process, and therefore subjected to a myriad of differing opinions. Truth be told, there are countless strategies to implement on your next purchase, but those I outlined above are among the best. Not only can they save you thousands of dollars, but they can also reduce your exposure to unnecessary risk.