Finding the right house for you--part two

As I mentioned in part one of finding the right home, I aborted my first home search before embarking on a second search three years later when my apartment living situation was too noisy for me to tolerate. I attended a first-time homebuyers seminar, was preapproved for a mortgage, made certain my monthly payments and my total home purchase budget were compatible and prepared to search for a buyer's agent.

There are many ways to search for a buyer's agent. I had the name of one agent just from my first-time homebuyers seminar. There is always the "pick the agent at random" or "oh, let's try the one that sent me a postcard in the mail". I decided to survey people I knew and ask who their agent was. I probably should have asked more questions about style, how comfortable the individual felt with the agent and other pertinent questions. I basically asked if the person liked the agent and what was it he or she liked about the agent. I listened to the answers, listened to the passion of the answers and chose the agent two of my friends used.

The woman was a very nice Century 21 agent, listened to my requirements, talked about how she loved her job (she had been in the business over 15 years and I liked the fact she was experienced) and let her lay things out for me. I told her I was looking for a place within 20 minutes drive to my work (I knew my tolerance for commuting), had two bedrooms (I had only had one-bedroom apartments) and a garage. My agent suggested looking at places with basements rather than none or only a crawlspace since basements have better resale value in the Midwest (they can be refinished, for example). She was mindful of my budget, encouraged me to ask her questions at any time and was quite responsive via phone or e-mail. I did not realize I had to sign an exclusivity contract for six months, but I had no problem with it since we could decide to end it if issues arose.

Once I had a realtor, she sent me MLS listings fitting the budget and other criteria discussed. I was also doing internet searches myself. There were a few places I was interested in seeing and my realtor set up viewing times for places that were agreeable. Be prepared for some less-than-enthusiastic homeowners. I could not view a house because of inflexible owners.

My first tour was an empty 1930s two-bedroom home. Since it was the first one I was seeing, I began to reconsider if I could afford I home I liked. It fit the criteria but the set up was awkward, the bathroom difficult to maneuver, the closet of a "bedroom" a joke and overall had a musty disused smell that I could not dismiss. The second home was in a different community so we drive for a bit before arriving. This was a FSBO listing I found and asked my agent to look into. It was a duplex but zoned so two different people could own each half. What a contrast to the house! It was a 1970s ranch-style home, nothing exciting but it just had a better feel and use of space. The duplex was also unoccupied but it seemed more livable to me. I came away feeling a lot more positive about the place. I ended up looking at one more location, a duplex being turned into a condo but it was a three-bedroom place (no basement) and it was just more house than I felt comfortable with buying.

So, I had been a prospective home buyer for less than a week and I found a home was interested in. After some time to consider and prompted by an offer on the table, my realtor help me set up my offer-to-buy papers for the FSBO duplex, placing a contingency based on the home inspection and using the knowledge she gained of the sellers interest (closing in 35 days with the other offer was attractive), I toured the place one last time to make sure yes I really wanted it and left the paperwork (including earnest money) on the counter.

Two hours later, I had an accepted offer. Color me stunned! It was less than two weeks after I started the process with my realtor that I went from house hunting to offer accepted. This is why my experience is atypical. I only saw three houses, the second one I liked and ended up purchasing in one month after the offer.

Please note I had looked at the houses before Christmas and after Christmas, my realtor called with the news the duplex had an offer on it. I had been thinking quite a lot about the place, what it meant to me, how I really liked it, could I see myself living there and the plans I had. My thoughts kept me up at night, really considering if this was the place for me. Home purchases are not an emotion-free prospect and considering all angles, emotional and financial, are important for a better home purchase.

Part three of finding the right house for you involves the home inspection (and what you can learn about your potential home), plans for your current place and the stuff you need to move and the aftermath of the home purchase.

Finding the right house for you--part one

There are many lists on how to hunt for a house and how much house you can afford. I will take you through my experience that although atypical, helped land me a home that satisfied my budget, my requirements and my priorites.

I first attempted to look for a place to own in 2003, thinking that condos were the best fit for my budget. To learn more about the homebuying process, I attended a first-time homebuyers seminar hosted by my credit union. Using the information from the seminar, I meet with a credit union representative and received a prequalification for $135,000, a lot more than I imagined. I was looking at places around $100,000, contacting a realtor via e-mail and asking about condos in my price range. Then I just realized how overwhelming the amount of debt was and decided homeownership was not for me.

My second attempt at house hunting was driven by my untenable apartment situation. My downstairs neighbor had been replaced by a family that was up until the late hours of the night (usually past 11PM and many times even later) talking loudly, letting their small child run around (sometimes screaming) and just being insensitive to their neighbors. One time, I went downstairs to tell him to turn his television down and he had to turn it down before answering the door! The resident manager sent these insensitive neighbors letters notifying them of the complaints but I never noticed any behavioral changes.

Before my frustration boiled over, I did want to refresh my memory about the homebuying process. So I attended a free first-time homebuyers seminar hosted by my credit union. The seminar included presentations from a realtor, a home inspector and a credit union representative. The importance of a home inspection, the usefulness of a realtor and the variety of programs available for mortgages were among the topics covered. I attended this seminar in November 2005 and was struck by the graph the realtor showed. She said the market was switching to a buyer's market with more homes available, the graph reflecting the greater number of homes available versus buyers compared to even a year before. She also mentioned that November to January were off-season months for house buying. That piqued my interest because I knew I had a limited budget and wanted to minimize competition.

My next step was to learn if the purchase price I was considering was affordable and my financial situation healthy enough for a mortgage. Therefore, I met with one of my credit union's mortgage specialists and went through the mortgage preapproval process. The difference between a preapproval and a prequalification--a preapproval says the financial institution will lend the individual money; the prequalification says the individual is a good prospect for a mortgage. Your buying position is stronger if you are preapproved for a mortgage so I highly recommend having this in hand before looking at houses. The preapproval is good for at least three months so no need to get it renewed immediately. However, if you are just looking into the possibility of buy a home, a prequalification will give you some idea what a financial institution may lend you.

I had a particular payment in mind including taxes, escrow and PMI as I did not have a 20% downpayment. My purchase price and my monthly payment matched up well and there was a first-time home buyers program that would allow me to buy a home with a 3% downpayment. With my preapproval in hand, I approached my next step: finding a buyer's agent.

Part two of finding the right house for you covers how I chose my buyer's agent, what I wanted in a home and how the search started.