Shopping Tips for the Home Buyer

Shopping for a house can be exciting. It can also be frustrating and a little intimidating. After all, terms such as buyer's market, conditional offer and encumbrance can confuse anyone. By doing a little planning beforehand and knowing what to look for before you begin house hunting, you can save yourself a lot of time and anxiety in the long run.


Deciding When to Buy

Unless you have to move by a certain date due to a job transfer, most people can choose when they want to move. Factors you will likely have to consider include your financial status, the state of the local real estate market and economy, and even the time of the year.

The first thing you should do once you have decided to buy a home is talk to a reputable real estate sales representative or the loans manager at your bank to determine how much you can afford to pay for a home.

The general rule of thumb is to look for a home where your mortgage debt service ratio (payments for mortgage principal, interest and property taxes) does not exceed 30 percent of your gross family income. As for the down payment, 25 percent of the value of the house is typical. But a number of government financed programs are not available allowing higher ratio loans.

As for the ideal time of the year to buy a home, there is no hard and fast rule, as people buy and sell homes everyday of the year. There is generally more activity during the milder months and when the economy is strong.

When interest rates are low, and people have jobs and are making money, the conditions are bright for buying a home. However, during this "sellers' market", where there are many buyers and fewer homes for sale, homes move quickly and you will likely have to pay a higher price for a home.

On the contrary, when the economy is weak and there is high unemployment, low consumer confidence and people preferring to save rather than spend, there are a lot of homes for sale and fewer people interested in purchasing. The good news is that in this "buyers' market", you should have little difficulty finding a new home as houses stay on the market longer and prices tend to go down.

The key is to assess your local economic conditions. Discuss your personal financial situation and goals with your banker or real estate agent and don't be afraid to ask questions.


Let your Agent Do the Work

As you start thinking about buying a home, you can browse through the classified ads in the real estate sections of your newspaper and visit open houses in neighborhoods you are interest in, even if you are not considering buying for several months.

You can get an idea of what homes are worth and because there is always a real estate representative present at an open house, you can ask questions about prices in general and any other questions you may have concerning the purchase of a home.

Once you become more serious about buying you may want to give your local real estate representative a call. While real estate ads and open houses are useful, there are many other ways buyers and sellers come together.

Many homes are sold by word of mouth and some transactions start and finish with one real estate firm where one agent's new listing is sold to a buyer assisted by another agent in the same office.

As a result many buyers prefer to use the services of a real estate agent because he or she is familiar with the buyer's targeted neighborhood and has access to computerized listings of houses for sale locally and with some larger firms internationally.

The average buyer does not have such resources and especially in a sellers' market, you want to be the first to hear about a new listing and be able to see as many homes as possible.

A real estate representative can also help you narrow your choices for a home based on your affordability level and lifestyle, provide you with information on different neighborhoods, set up and accompany you on tours of open houses, act as your negotiator when it comes time to make an offer, advise you on the condition of the homes you tour, and provide financial and mortgage application assistance.