Finding the Perfect Home

Deciding on Your Dream Home

While your real estate agent will offer professional assistance, only you can determine your home purchase priorities. Taking the following into account may help in selecting the right home for you.

What features are you looking for?

Do you have the design of a house in mind, such as traditional, southwestern, or modern? What is the least amount of bed and bathrooms you will need? Are amenities such as garage space or pool a priority? Is low-maintenance landscaping a concern?

The price is right…or is it?

Most buyers’ first consideration is price. As you begin to view homes, make sure you can comfortably manage the monthly payments and that you will have enough cash to pay transaction costs and moving expenses.

Location, Location, Location!

Your decision on the neighborhood should depend largely on the size and age of your family, your income, and your personal preferences. Also, how accessible are major roads and highways? Are public services such as street cleaning, garbage collection, police and fire protection without charge? How does the cost of municipal taxes compare to similar municipalities? What is the standing of area schools?

Condition & Comfort

While a thorough home inspection will reveal the home’s integrity, considerations such as a new roof, electrical and plumbing upgrades, and efficiency of heating and cooling systems should weigh significantly in your selection of a property.

Does it Have Resale Potential?

Since most first-time homebuyers expect to purchase a bigger and better home someday, resale value should be an important factor in decision-making. Consider the following purchase and

resale tips before buying:

• It's best to buy a modest home in the nicest neighborhood you can afford, rather than the most expensive home in a modest neighborhood.
• Two-bedroom/one-bath homes usually have less appeal; three and four bedroom houses are most popular among buyers 
• Curb appeal is very high on a buyer’s list. Homes with a charming, well-maintained “street-view” appearance are easiest to resell.

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Making an Offer

How much?

To ensure your offer is based on local market conditions, your agent will provide you with comparable sales information as well as comparable listings. A second criteria is making a sensible offer is determining how fast homes are selling, and whether they are selling for close to the asking prices. In hot markets, otherwise known as a 'seller's market' -- well-priced homes sell for very close to the list price -- usually within five percent. In slower-paced markets where prices are flexible, the gap between the list and sale price could be more than five percent.

Once you make your offer, one of three things will happen:
1) It will be accepted
2) It will be rejected
3) You will receive a counteroffer.

If all goes well and the offer is accepted, you’ll want to then proceed with a Home inspection. If it's rejected, you can still come back with a higher offer if you're really interested in the house. Fortunately, your agent is a professional negotiator and will work earnestly to bargain the deal in your favor.

Contingencies
A contingency is a specified condition that must be met before a contract is legally binding. The two most common contingencies in home purchasing are 1) the house must pass the home inspection, and if not, the contract could become void, and 2) the borrower must obtain specific financing from a lend-ing institution, but if the loan can't be procured, the buyer won't be bound by the contract. Essentially, a contingency protects you, the buyer, from being obligated to purchase a house based solely on an accepted offer.

Earnest money
Once an offer and its contingencies are agreed upon, the next step is to provide earnest money, proving the buyers commitment to purchasing the home. Also known as money given by a buyer to a seller as part of the purchase price, it binds a transaction and assures payment. Your escrow officer at your Title Company usually holds the deposit, and the amount will become part of your down payment.

Withdrawing an offer
Once you make an offer, can you take it back? In most cases the answer is yes, right up until the moment it is accepted, or even in some cases, if you haven't yet been notified of acceptance. However, ask your Realtor for professional advice on this matter.

The Home Inspection

Got Protection?

To protect owners in the event of catastrophe, real estate insurance can be the best buy of a lifetime. There are varied insurance categories associated with home ownership, including these major types:

• Title insurance: Protecting owners in the event that title to the property is found to be invalid, coverage includes two types of policies; "lenders" policies, which protect buyers up to the mortgage value of the property, and "owners” policies, which protects owners up to the purchase price.
• Homeowners' insurance: Required when you take ownership, coverage provides fire, theft and liability protection for the home as well as its contents.
• Flood insurance: Issued by the federal government and generally required only in high-risk flood areas, this insurance provides as much as $250,000 in coverage for a single-family home, plus an added $100,000 for its contents. Your agent will explain which locations require such coverage.

How do you get insurance?
It’s never too soon to shop around and compare insurance quotes. Be sure to ask your agent about limitations, costs, and deductibles, and most importantly, if your homeowner’s insurance plan incorporates a guaranteed replacement cost policy. Since the Insurance company requires a couple of days to secure the policy, you should take care of this during the inspection period.

Your Home Inspection

The AAR Residential Resale Real Estate Purchase Contract is intended to be a binding contract; therefore, the importance of performing your own inspection of a home before you decide to purchase it cannot be understated. Remember that while this is only a precursor to the professional inspection that will soon follow, your personal inspection allows you to pin-point first-hand any potential problem areas that could cause you to change your mind about whether or not you buy the house.

In general, you are looking for such details as: structural cracks; musty smells; rotting floor-boards; roof leaks; peeling paint; cracked windows; broken appliances (including air conditioning and heating units); quality of tile, carpeting, and other flooring material; and/or any aesthetic (such as floor plan convenience, landscaping, or general home maintenance). In particular, you will want to make note of any serious flaws about which you will want to notify the professional home inspector.

Professional Home Inspection

The purchase contract gives you the right to make any inspections of the property/premises for defects of any kind. Buying a home without having it professionally inspected first is about as risky as engaging in a game of Russian roulette.

A professional inspection gives you more detailed information than an appraisal; information you need to make a wise decision. In a home inspection, a qualified inspector takes an in-depth, unbiased look at your potential new home to: (1) evaluate the physical condition (structure, construction, and mechanical systems); (2) identify items that need to be repaired or replaced; and (3) estimate the remaining useful life of the major systems, equipment, structure, and finishes. The inspection gives a detailed report on the condition of the structural components, exterior, roofing, plumbing, electrical, heating, insulation and ventilation, air conditioning, and interiors.

It is your responsibility to be an informed buyer!

Buyer's Reasonable Disapproval

After any/all desired inspections have been performed, your Realtor may ask you to complete an AAR Buyer Inspection Notice and Seller’s Response. You have three options on this form: (1) Premises Accepted- No Repairs Requested; (2) Repairs Requested; or (3) Cancellation.

Remember, a professional home inspection report is not necessarily a “fix-it” list for the seller. However, if you determine repairs are deemed necessary, you and your Realtor should submit all reasonably disapproved items to the seller. The seller has the option to either repair those items or to refuse to do so. If the seller refuses to do so, you may cancel the contract or proceed without any obligation on the part of the seller to make the repairs.

Your Realtor will be your greatest asset in handling all the negotiations for you in regard to reasonably disapproved items.

Home Warranty

Unlike home owner’s insurance, which is only used in the event of a catastrophe such as fire or storm damage, a home warranty is a renewable contract that combines the best characteristics of an insurance policy and a service contract. A home warranty plan covers home owners against unexpected failures of built-in mechanical systems and appliance failures due to normal wear and tear. A home owner need only notify the warranty company of a problem. The warranty company selects a local, licensed and bonded service technician to diagnose and do the repair. The home owner merely pays a small deductible ($35-$50) for the service. The initial policy period is for one year; however, renewals are available. Ask your Realtor for specific information and read the policy for coverage and limitations.