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How to buy a home

How to buy a home

Author: Shayne Sowers

Buying a home is expensive. Bad decisions along the way will cost you thousands of dollars, but good decisions will save you thousands of dollars or even put money in your pocket. Here are the six home buying phases and the critical financial decisions you must make at each step.

  1. Choose your real estate agent. Some buyer agents keep the entire commission for themselves. Other agents rebate a portion of the commission back to you, the buyer. Even better, you can use a la carte agents and receive the full 3% commission rebated to you at closing. The buy side commission is 3% of the purchase price. For example, on a $400,000 purchase the buyer agent commission is $12,000. Buyers who choose no rebate are making a big financial mistake. Commission rebates are tax free, and you can spend the money on home repairs, a new car, or you kids' college fund. To learn more about getting the biggest rebate possible, go here.

  2. Find the homes you like. You do not need a real estate agent for this step. Most buyers research home listings online at zillow, realtor.com, or other websites. However, because many agents block their listings from appearing on these sites you will never see all the available listings on any one website. The only way to insure access to 100% of the listings is to register for automated notification of all homes that match your criteria from a member of the local multiple listing system (MLS). You can get this service from most agents or set it up now for free here.

  3. Pick the home you want. After narrowing your interest list to a select few homes, you must hire an agent to take you on a tour. If you intend to capture the full 3% commission rebate, you can view a list of agents who will show you homes on an a la carte basis here. Keep these three tips top of mind when choosing your home: 1) for peace of mind buy a home you can truly afford, 2) to maximize resale buy a home in a good school district, and 3) to avoid surprises always read the seller's disclosure.

  4. Make an offer and negotiate the terms. Before you make an offer, have an agent prepare a comparative market analysis (CMA) for you. The CMA assesses the market value of the home you want to buy. Click here for a list of a la carte agents who will prepare a CMA for you. Without a CMA, you may pay too much. Also, to minimize your out of pocket costs, negotiate a closing cost credit from the seller.

  5. Perform the inspections and satisfy the contract. Definitely get the home inspected. In addition to a general building inspection, consider termite, chimney, radon, pool, and sewer inspections. Leverage issues that the inspectors flag to negotiate repairs or a lower sale price.

  6. Close and move in. There are three things to remember here: 1) always do a walk through before closing to insure the home's condition has not changed, 2) always review the closing statement to check for accuracy, and 3) receiving a huge commision rebate check at closing will put a big smile on your face.

Topics: Buyers