Are you looking to buy a new house? Have you thought about selling your home? Or maybe you would like to do both? It’s natural to have questions about the process of buying and selling a home because it is one of the most important purchases you will ever make. Questions such as which should you do first, buy or sell? And when should you list your house? Are commonplace. Whether you’re buying or selling a house (or both!), here are some important things to look out for.

If You’re Buying a House

Whether it’s your first or your fourth, buying a house is one of the most exciting purchases you’ll ever make. There is nothing quite like that new beginning feeling. There is also nothing quite as formidable as making the biggest purchase of your life. So, what are some common things to watch for and questions people have about buying a home?

Can you buy a home if you don’t have a down payment?

The good news is, yes, there are government-backed loans that make it possible, the bad news is, your choices are limited. It may also cost you more in the long run than your down payment saving counterpart. Why? Because loans that offer 100% financing with no down payment will usually, require an annual fee or mortgage insurance.

While a standard down payment is about 20%, there are many other loans such as FHA that require significantly less (3.5%). But, there aren’t many loans that offer 100% financing with no money down and what is available is backed by the government to make it less risky for the lender and still affordable for the homeowner. The two contenders are:

• USDA home loan – A popular zero money down loan choice due to its lenient credit requirements. It was created to encourage homeownership in rural communities. Therefore, there are geographical requirements that need to be met (rural), and there is an income limit for eligibility.

• VA home loan – If you have at least two years of former military experience or are currently serving (and have done so for 90 days), you qualify for this 100% financing loan. VA loans are desirable because they have low rates, usually lower than conventional loans and they don’t require a monthly mortgage insurance fee like other loans.

If you aren’t eligible for either of these mortgage loans, don’t lose heart. A mortgage specialist can help you find the best way to finance your home, and sometimes have ways to get around down payment requirements by utilizing gifts, grants and second mortgages as funds for a down payment.

Make Sure Your Credit Is in Order

Would you like to make your home purchase smoother and less expensive? Get your credit in order first. If buying a home is even potentially on your radar in the next year or so, take the time to pull your credit reports and clean them up. The reason for this is that the better credit you have, the more likely you will be approved and the less interest you will have to pay.

The first step is to go to annualcreditreport.com and pull your free annual report from the three major bureaus. Spend the evening pouring over them and ensure the information is accurate. It is essential that you dispute any inaccuracies you find. An error could be anything from a debt that isn’t yours, an incorrect late payment entry, a wrong amount or a debt that has been paid (and yet reported as delinquent), etc.

You can dispute an item on your credit report online, via letter or with the guidance of a reputable credit counseling agency. Each time an incorrect item is removed or corrected on your report, the bureau will send you a corrected copy. It won’t happen overnight, and it will take consistency and patience, but it’s worth it.

If the thought of improving your credit is intimidating, you don’t have to do it alone. We and other reputable credit counseling establishments like us have helped many people successfully improve their credit and go on to become flourishing homeowners.

Get Preapproval Before You Look

Imagine putting all of your precious time and effort into finding your dream home only to discover that the bank won’t lend you the amount you need. To say you would be disheartened is an understatement. Fortunately, there is a way to avoid this disappointment, and that’s by getting pre-approved before you go house hunting.

Preapproval should not be confused with a prequalification. While a preapproval is an in-depth look at your financial history, complete with submitting financial documentation, credit check and a firm answer as to how much a bank will loan you, a prequalification is a simple, general overview of what a bank may lend you.

Usually, a financial institution will prequalify you first, and after you prequalify, move onto the more in-depth step of a preapproval. Always get a pre-approval before looking, so you know exactly how much house you can afford.

Be patient and wait for lower interest rates (and shop around!)

Why do lower interest rates matter? Well, simply put, you will save thousands upon thousands of dollars by financing at a lower interest rate. Let’s look at an example below.

A $250,000, 30-year mortgage loan with an interest rate of 5.0% will cost you $233,139.46 in interest over the life of the loan. Ouch! That’s a lot of money!

But, if you get a better interest rate, say a $250,000, 30-year mortgage loan with an interest rate of 3.75% you will pay $166,804.03 in interest over the life of the loan. Still a lot of money, but you saved $66,335.43.

Keep a Level Head When Choosing a Home

When looking for a home, be sure to look beyond the superficial. It’s easy to get swept up in emotion over a beautiful home, which may lead you to gloss over critical flaws.

Some things to look for:

• Uneven, extremely creaky, or bouncing floors. There may be a structural concern.
• Look for exterior tilting or cracks in the foundation.
• Look for leaking roofs and water damage around vents and evaporative coolers.
• Inspect any fresh paint or newly replaced drywall with a critical eye.
• Make sure you can run the sinks and tubs for a long while to ensure proper drainage.
• Run the bathtub and sink at the same time and flush all the toilets to look for plumbing problems.
• Look under the sinks for water leaks.
• Run the heating and cooling system to ensure working order
• Beware air fresheners, baked cookies, and music. Any time a seller is using scent or sound to set the mood, it creates a pleasant ambiance, and that’s nice, but be aware that it could also be used to cover something, such as a musty smell or traffic noise.

In addition to these things, proceed with caution if there are areas they won’t let you see and never accept incentives to waive inspections. In addition to a general inspection, if you have concerns about something, in particular, hire a specialist to look it over. This is the most important purchase you will ever make, be sure to do your due diligence.

If You’re Selling a House

Let’s face it, selling a house is hard work. Tidying up the landscape, fixing repairs and keeping the house clean between each showing is no picnic. If you want a fast, smooth transaction, that’s at (or close to) asking price, here are some important things to remember.

Become familiar with your local market

Before you list your home, it’s important to do your research. Some of the information you want to know is, what comparable homes in your area have sold for (average price per square foot) and what the sale-to-list ratio is to determine if homes are selling for more or less than asking price in your local market.

You can easily find resources online to determine these values, but you likely won’t have to because an excellent real estate agent will already have the tools at their disposal to readily give you this information.

Be realistic about the price and leave room for negotiation

Now that you’re familiar with your local market and have researched comparable homes in your area, and what they’ve sold for, it’s time to figure out your listing price. First, you need to know your bottom line, what is the minimum net profit that you need or are willing to take?

Listing price is an art and a science because you want to get the best price, but you also want to price it low enough to appear at or slightly under market value to gain a lot of interest and multiple competitive offers, in the hopes that it will drive the price up. Making a listing price that is too high may increase the time you are on the market, and lead to a perception of decreased value.

If you decide that you want to go for the gold and list your home at its top-of-the-line price, that’s fine, but stay open to negotiations and be prepared to make price reductions on your listing so that it doesn’t stay on the market too long. Houses that are on the market for longer than 180 days sell for almost 9.8% less than asking price

Don’t skimp on the photos

The very first place people go when they decide to buy a house is online. And what is the first thing that catches their eye? That’s right, pictures! Amazing pictures are your most powerful tool to get people interested in coming to see your home. Buyers need to be wowed enough to make a jump.

To take a stellar picture, it needs to be clear and crisp with a lot of natural light. Find the best angle to capture the room both aesthetically and to show size. Keep your rooms clean, uncluttered and decorated simply. Some light staging with flowers and mood setting decor is also a nice touch.

Don’t hide significant problems

Let’s be honest, every house has something that needs to be fixed. Rather than being the guy who covers it with paint and sleeps with one eye open at night, be the guy that fixes it. If you don’t have money to fix it, be honest and forthcoming about the problem. After all, aside from the ethical standpoint, you could be sued for not disclosing certain things and it will likely come out during inspection anyway.

Speaking of inspections, in an effort to prevent being blind-sided by a buyer’s inspection, some sellers are choosing to run their own pre-sale inspections to determine what needs to be addressed before the house even goes on the market. If you have the means to do this, it’s a good idea that may save you some trouble down the road.

Prepare your home for sale

This is the most straightforward concept with the toughest execution. Keep your house clean, decluttered, smelling good and ready at a moment’s notice. Simple right? Unless of course, you have kids, pets, a significant other or like to live in your house…

While it’s a pain to keep things pristine, it’s an integral part of the process because you will never get the chance to make another first impression. So, before you list, minimize your “stuff” by getting rid of it or putting it into storage if you have to. The simpler and more organized you keep things, the easier it will be to clean up at a moment’s notice.

After you have decluttered, give your house a good scrubbing and slap a fresh coat of paint on in the rooms that need it and you’re good to go!

Buying and Selling a House at the Same Time

Buying or selling a home is complicated enough but doing both at the same time requires some additional special consideration!

Let’s start with:

Should I buy or sell first?

If you have a choice, selling your home first is always the best idea. Selling first ensures you never have to make two mortgage payments. You also won’t be stuck without a place to live due to mistiming, and if you sell at a profit, you can free up enough cash to pay down debt and have a down payment for that new home you want to buy.

The biggest downside to selling your home first is that you’ll have to move twice, but there are ways around that.

One way is to add a rent-back provision, meaning, you sell your home, and then become a tenant in your home for a specified time while you look for a new house. While convenient, this may reduce the number of people interested in your home, because some people want or need to move in right away.

If you have found your dream home and can’t resist putting in an offer before your house sells, your best bet is to put your proposal in with a contingency that it is upon selling your home within a specific timeframe. The downside to this is that the seller may reject your offer, especially if
there are similar offers without contingencies on the table.

If you do choose to try and buy and sell at the same time, make sure you have a backup plan for a place to stay, in case the timing of both transactions doesn’t perfectly line up. Make arrangements with a family member, save money for a hotel or arrange for a short-term rental just in case.

The best thing you can do in any situation is to get a good agent.

A good agent is invaluable to the process of buying or selling any home. They have the knowledge, resources, connections, and tools at their disposal that the general public just doesn’t have.

How do you know if you’ve found a good agent?

You know you’ve found a good real estate agent if they are proactive, and take the time to ask questions and listen to your answers. They should be responsive and available to answer your calls and questions without making you feel like you’re bothering them. A good agent will always make sure that you have been preapproved before taking you out to look at houses and will be proactive in finding listings that meet your criteria.

Your agent shouldn’t be afraid to be honest with you, even if it’s something you don’t want to hear, and they shouldn’t be afraid to negotiate on your behalf. They will happily show you their license and credentials when asked.

If you find a real estate agent that meets these standards, keep them at all costs because they will be the biggest asset you have during this intense process of buying and selling your home.

As with all things, we wish you the very best luck on your journey and hope you have found this information helpful. If you need counseling to improve your credit to buy a home, we offer a free phone consultation with an accredited counselor at (877) 789-4172.