How to be a Smart Home Shopper

1. If you are financing your home, get preapproved before you go home shopping.

     A. By knowing the loan amount you can reasonably obtain, you avoid wasting time, previewing homes
         outside your ideal price range.


     B. You should know the terms of your loan. For example do you have a fixed, or variable interest rate?
      What will your interest rate be? Do you have to pay mortgage insurance, in addition to hazard
     insurance?  Do you have a prepayment penalty? Do you have a balloon payment? Fees associated with
      home loans can add up quickly. Avoid bad surprises by informing yourself, ahead of time. Give yourself
      the advantage.  Shop around for the best terms.

2. Find out what closing costs are associated with your home purchase.

     Your mortgage company will most likely expect property tax, hazard insurance, mortgage insurance,
     trash, and sewer fees to be pre-paid.  Those costs are part of your closing costs. These costs are in
     addition to your down payment. These costs are called re-occurring costs.

     In addition to the re-occurring costs, there are one time transfer costs associated with the  purchase of
    your home. Typical  one time closing costs include, but are not limited to the following:

1. Transfer tax.
2. Title insurance
3. Escrow fee
4. Home Owner Association transfer fees
5. Mortgage processing fees.
6. Wiring fees

7. Recording fees
8. Broker fees

     These costs can be negotiated, between the seller, and buyer. But, they should be negotiated
     at time of writing contract. The more knowledgeable you are, the stronger negotiator you will be.

3. It is a beneficial to have a buyers agent.

     The buyer has the right to ask for his own agent. A buyer's agent owes their primary obligation to the
     buyer. Whereas, the listing agent has a primary duty to the seller.   Having your own agent helps to
     prevent conflicts of interest.  Every buyer should have their own agent.  Your agent should give you a
     professional opinion of the listed price based on camparable sales in the neighborhood.

4.  Review comparable home sales before writing an offer.

     The buyers agent should prepare a BPO, for the buyer.  A BPO is an acronym for "Broker's Professional
     Opinion". This report is also commonly called a "Comparables Report", or a CMA.  This report shows the
     average price per square foot, of the homes in the neighborhood. This report also helps the buyer in the
     offer process. The buyer should be aware if they are making a high, or low offer.

5. Get a professional home inspection.

     Every buyer should invest in a professional home inspection.  A thorough home inspector can warn a
     buyer if a home is in need of major,  and/or minor repairs. A good home inspector can detect issues with
    the foundation, leaks, water damage, roof, air conditioning, and pool problems.  A home buyer should be
    aware of necessary repairs before finalizing a sale.

6. Understand the different types of sales available.

A. Traditional sales. The time frame is negotiated directly with a private person. This type of sale can  
    usually close quickly. The buyer retains all rights regarding property condition disclosures. However,  
    agent and client have greater responsibility to discuss pricing, before ordering appraisal. And, the buyers
    agent must review preliminary report for possible liens, judgements, etc, that could potentially stop the      sale.

B. Short Sales. The time frame can be lengthy. The agents must research all liens, and question
    seller's .ability/willingness to pay off subordinate liens. Sale is negotiated between private parties. But,
    mortgage company has to agree to terms.

C. Bank owned homes. These homes are also commonly called 'REO's'.  Buyer usually submits electronic  
     bid. Buyer must be willing to relinquish rights to receive "Seller's property report". Buyer has to agree to
    accept house 'as is'/ Usually, the title has been cleared, and all judgements and liens have been paid off. In
    current market, home has been inspected for compliance with government loans.

D. Auction sales. Paid by cashier check . Home may not be available for inspection. Home may be occupied.
    Buyer should be aware of auctioneer fees. Buyers should be aware of super liens.  Buyer does not receive
    property disclosures. Buyer receives no title insurance. Buyer may have to evict previous owner, or tenant.