Realtors are often asked for home buying tips. Typically what I hear are things like get pre-approved, know how much house you can afford, get a home warranty, and since most folks are working within a seller’s market currently, make sure you put your best offer in right away if you have a house you want to buy. While these aren’t bad tips, I do find them to be a bit generic–particularly for a real estate market like the one we currently have in Dallas and in the DFW area.

I’ve put together a list of home buying tips that are a bit more robust than what you typically hear. This is a bit of a read, but even if you’ve purchased a few houses, I would be willing to bet there’s a thing or two on here you didn’t know that could help you out the next time you’re in the market for a home.

Home Buying Tips

Home Buying Tips for Financing

1) Before shopping around for homes, choose a mortgage broker. Mortgage brokers typically have more mortgage financing options than banks. Your Realtor should be able to recommend suggest some mortgage brokers. Shop around and talk to several of them. Be prepared for them to pull your credit. Mortgage lenders use a range of criteria to determine creditworthiness beyond just the FICO score. You’ll want to find out what this mortgage score is, understand what loan programs you’re eligible for, and understand what interest rates you qualify for. At this point, you can get pre-qualified for a loan or decide to work to improve your credit score. You should also have a better idea of how much home you can afford.

2) Protecting your credit the year before you buy a house is critical. Do not change jobs, open credit accounts, purchase a vehicle, fall behind on your credit accounts, or change bank accounts. Get your accounts cleaned up, and make sure you’re putting money away for a down payment.

3) Make sure you’re saving documents related to your finances. You’re going to be asked for numerous financial documents during the loan underwriting process–some going back two years. Be prepared to provide information showing where your funds have come from and proving that you have a stable income. This means W-2s, paystubs, employment history, creditor account statements, bank account statements, tax returns, and the like. You will need to be able to explain the sources of any major deposits or withdrawals in your bank accounts as well.

4) One mistake that people sometime make is to purchase something for the house before closing like furniture or appliances. Wait until the home transaction closes before you make these types of purchases. It’s important to understand that any purchase you make will be scrutinized until the transaction is complete, and you have the keys in your hands.

Home Buying Tips for Representation

5) Make sure you use a Realtor. As a buyer, in most cases, it doesn’t cost you anything to represented. While you may be comfortable finding homes to look for yourself, Realtors bring a lot of value in terms of making sure that you have the right contract documents, and facilitating the home buying process with your lender and the title company. They also help you with the home negotiation. Interview several. Make sure you understand how to get in contact with them, how they will communicate with you, what their network looks like, and what kind of experience and accolades they have. Realtors have a fiduciary duty to their clients meaning that they have a duty to their clients best interest at all times.

6) Upon choosing your Realtor, ask about a buyer’s representation agreement. This will bind your Realtor to look out for your best interests. You want them working for you. If for some reason down the road you decide the Realtor you’ve selected isn’t the best fit for you and want to make a change, you can typically terminate your representation agreement and work with someone else.

Home Buying Tips for Contract Negotiation

7) When you go to make an offer on a home, make sure you understand market conditions in that specific area that impact pricing. A measure of market conditions is the absorption rate. The absorption rate is basically the rate at which homes are selling. This number is typically what is referenced to classify whether the market is a buyer’s market, a neutral market, or a seller’s market. Avoid getting wrapped up in neighborhood buzz or general discussions about how the market is. You may have a seller’s market in one neighborhood and a buyer’s market 3 blocks away. It’s important to have a Realtor who has an understanding of, not just comps, but effectively utilizing that information to help you understand appropriate price ranges and improve your ability to get the best price possible. If you’re confused about the information your Realtor is sharing with you in regards to pricing, ask questions until you are comfortable that you understand what is being presented. This way you can make your pricing decision with better information.

8) Keep in mind that a contract negotiation should include more than just the price of the home. Items such as earnest money, option money, who pays for title insurance and survey expense are all negotiable items. You should be able to discuss ways to utilize these elements of your contract to help you get the best terms.

9) Make the most of your option period. An option is basically purchasing the right to do something. In the case of buying a home, it gives the purchaser a window of time to have the home inspected, surveyed, to consult with their attorney, or do anything else they need to in order to feel comfortable with completing the purchase. For residential contracts, the option fee is fairly negligible, and the peace of mind it buys is typically well worth the cost. This is a good time to have contractors provide bids for repairs and improvements. If you have questions about your contract, you will want to consult an attorney well before the end of your option period. An attorney can help you understand the nuances of your contract and advise you on items like how you should take title to the home if there are other people purchasing the home with you. You can get out of a contract during the option period, but doing so will result in losing your option money.

10) Take a little time to understand title insurance. It’s money well spent, it’s required by mortgage lenders, and a good title policy can protect you from claims on the title of your property. Make sure you understand what policies the title company offers, and ensure you have coverage that will protect you against any future claims made on the home. Title policies are a one time expense and are part of the home closing process. The cost of title policies are typically similar among title companies. Your mortgage broker or Realtor can likely recommend several title companies.

Other Home Buying Tips

11) Leverage your Realtor for vendor recommendations. Realtors are typically very well networked. Not only can they recommend providers like mortgage brokers, title companies, and insurance agents, they are usually a wealth of knowledge when it comes to other providers like contractors, arborists, landscaping companies, lawn services, cleaning services, and the like.

12) See if your Realtor has connections with a company like Updater to help you coordinate your move. Some services will help you turn off the utilities at your previous residence, turn on utilities at your new home, help with finding moving providers, update your address on your accounts, forward your mail, and even help make updates with the DMV.

13) Take note of the most economical times to make major purchases for the home. For example, many paint stores will run sales during holidays like President’s Day, Memorial Day, July 4th, and Labor Day. There are typically good sales for appliances during Black Friday. There are also frequent furniture sales in January and July.

14) A homestead exemption can help reduce your property tax bill. See if your state has a homestead exemption. If it does, understand the process for filing, whether you are eligible, and whether applying makes sense for you. A tax advisor can help you determine that if you have questions.

15) After you take possession of the home, take a half a day to run to the hardware store and take on a few simple security items. A surprising number of people do not change their locks after they buy a home. Don’t forget to get your locks rekeyed. If you’re on a budget, you can take the door knobs to Home Depot or Lowes and have them rekeyed there. Another simple security upgrade is to replace the screws on their outside door strike plates with 3 inch stainless steel screws. If done correctly, this can make it more difficult for a burglar to kick in a door. I also recommend that my clients consider getting some type of key lock box for outside the house for an extra key rather than hiding the key on the property.