How to find and buy a home with confidence and less stress.
In the following article, I’ll show you some of my favorite tips for buying a home in Las Vegas. It’s not always as simple as it seems and I hate to see people make simple mistakes that cost them time and money. So I took some time to write this so you can be informed on the process before you buy a home!
Power Tip #1: Use a real estate agent. Get all the benefits. For little to no cost.
Why not go it alone?
The reason most people use for not using an agent is that they believe they can negotiate a discount since the seller is not paying for a buyer’s commission. The reality is the buyer’s commission is just paid to the seller’s agent now. There’s no incentive for the seller to discount your purchase price, and you’re responsible for preparing and coordinating all the paperwork your agent would have handled.
What should I expect to pay for an agent?
Agents on average charge between 0 to $500 for their transaction fee. A transaction fee is charged by their own company to cover their insurance and legal paperwork involved on the back end.
If your agent has a transaction fee, it is normally charged with closing costs at the end of escrow. This means you should not pay up front for this fee and you should run away if someone tries to make you pay an up front fee to work with them on buying a home.
You should shop for an agent.
I personally do not charge a fee and pay my company out of any commission I receive. I recommend shopping around for agents and not just sticking to the first one you meet. Sometimes an agent is more experienced and friendly and you just feel very comfortable working with them more. It may be worth the fee to work with them.
When making an offer, you can also ask the seller to pay for some of your closing costs as well, which can cover your fee!
What can a competent agent do for me?
A competent agent will be able to:
- Access more homes on the market
- Schedule appointments easily for multiple showings
- Research market data accurately
- Draft all the paperwork
- Guide you through the entire process
- Connect you with other professionals in the industry that you may need:
- Inspectors
- Loan officers
- Escrow/Title companies
- Home warranty companies
- Repair people
- and more!
For your reference, here is my list of maintenance/repair people I like to use:
- Maintenance and Repair People
Power Tip #2: Check out what’s out there before deciding what you want.
Why not jump the gun?
Some people buy a home in an area just because they’re used to it or someone else told them it’s good. The truth is, people rarely explore all areas of town and don’t always know what’s available. It’s common to experience buyer’s remorse if you commit to a home too early without knowing all your options.
What should I do?
Find out what’s available before deciding what you want. Drive around your city before deciding where to buy. Ask your agent for recommended areas to check out based on your needs. Do research on crime rates in different areas. The more research you do, the more confident you’ll feel with your decisions and the less likely you’ll feel buyer’s remorse after the sale.
The worst thing that can happen is buying a home for hundreds of thousands of dollars, getting a mortgage, and discovering that you would have rather bought in a different area of town for the same price range. Don’t let that happen to you!
Power Tip #3: Bring your “wallet” when you go shopping
Why should I not go shopping as soon as I like?
If you see a home you like, and make an offer, your offer isn’t considered unless you can prove you have the money. When you make an offer on a home, the seller doesn’t just take your word for it that you have the money, even if you are well qualified to buy the home.
What should I do then?
When you present an offer to a seller, you usually need to prove that you can pay for the home.
- If you’re buying with a loan, you’ll need a loan pre-approval or pre-qualification. Talk to a loan officer beforehand and get that ready before you go home shopping.
- For more in-depth information on getting a reliable loan pre-approval, please check out my article here:
- If you’re buying with cash and don’t need a loan, I recommend you get a bank statement ready.
- Either visit a bank or go online to print it out or get a pdf of it online and e-mail it to your agent.
This will save you from frustration down the line. And you’ll have peace of mind that anytime you come across a house you like, you can put in an offer immediately and be taken seriously by the seller.
Power Tip #4: Know exactly how much you’re paying for a home before signing off.
What do you mean?
When your lender tells you how high of a loan you can qualify for, that’s the limit of what they can lend you. That doesn’t always mean you can realistically or comfortably pay for everything involved.
This means the down payment, closing costs, origination fees, and monthly payments. Most folks wouldn’t ring up a luxury item without checking the price tag. Neither should you.
What should I do?
Look at the real price tag before you buy anything. Ask your lender or agent to estimate all the costs involved before searching for a home.
Ask your lender and agent about the following costs before you buy a home or go shopping:
- How much are the estimated closing costs?
- How much are the association fees (if any)?
- If you are buying with a loan, ask:
- How much is the down payment and loan related fees if I buy this home? or a home of this price?
- How much is my estimated total monthly payment if I buy at this price? (Including all principal, interest, taxes, and insurance)?
- Are there any other fees I should know about?
Buying with a Loan – Example: If your lender qualifies you to buy a home for up to $280,000, and the up front total amount (Down payment + Closing costs) is $10,000 and the total for monthly payments is $1500, you shouldn’t just go shop for $280,000 homes right away.
If you are only comfortable paying $7,000 up front and $1200 a month for your monthly payments, that would be an issue. You should inform your lender and he/she will let you know what price range you should stay in to fit your preferred budget.
Buying with Cash -Example: If you tell your agent you have a total of $200,000 to buy a house, you should know that there are usually 1-2+ % of closing costs on top of the purchase price, unless the seller has agreed to pay for all of them. So if you only want to spend $200,000 in total, you may want to look in the $190-195,000 max range to be safe.
Power Tip #5: Opening new credit cards or loans during the home buying process can sabotage your home purchase.
Why?
When buying a home, it’s important where the money for your down payment comes from and how long it’s been in each account. Your current debt payments also affect how high of a loan you can qualify for, so buying a nice car or furniture on credit right before you buy or close on a house may be a mistake.
For example, if you are qualified for a $300,000 home based on your current financial situation, and you offer to buy a home for $300,000, then you should be fine.
But increasing your monthly payments for debt would make it look like you have too much in payments to handle now. So the bank may disqualify you from getting the loan.
What should I not do?
Don’t buy big ticket items on credit or open new credit lines before or during the home buying process. The home buying process is not done until the title/escrow company confirms that the home is recorded in your name.
If you buy anything big on credit or open new credit lines or credit cards or loans during this home buying process, it could disqualify you from getting the home loan.
Power Tip #6: Try not to make your offers too emotionally.
Why?
Sometimes people see a home, and love it so much, they’ll bid much more than the value of the home. Other times, they severely underbid or lowball everything they see out of stubbornness thinking that they MUST get a discount to be successful in buying a home.
The truth is, when you overbid above the home’s value, it tends to increase the down payment by a lot, sometimes too much. And if you lowball everything too much, you’ll never get a good home, and end up spending a lot of time and gas running around seeing homes you’ll never own.
What should I do?
Aim to bid near market value. Unless you want to unnecessarily pay a lot of money more for your down payment or search for homes forever, it’s usually advised to bid close to market value.
Overbidding (bidding too much): Sometimes you really fall in love with a home, but overbidding by $10,000 when you don’t have that much extra in the bank is foolish. Most of the amount offered above market value should carry straight to the down payment, not the loan. A good agent should be able to watch out for you. For more on bidding and appraisal value, please read my article here:
Underbidding (bidding too low): If a nice home is on the market and reasonably priced, you can be sure the owner knows its value and will not only wait for the right offer, but get it soon. Lowballing a home worth $200,000 with a $150,000 or $180,000 offer when the owner is under no pressure to move quickly or liquidate is a surefire recipe for failure. Some owners will feel so offended by such a low offer that they don’t even send back a counter offer. They just outright reject it or choose not to respond.
What should I do?
Most of the time, you can try to get away with asking for 2-3% in closing costs or negotiating the price a little lower if the home is priced higher than the market or has been on the market for a while. If it’s not worth anywhere near the list price to you, you should probably move on. And if you can’t comfortably afford paying $200,000 for a home, you shouldn’t be looking at those homes and wasting your time or your agent’s time. It’s like walking into a Mercedes Benz Dealership and trying to negotiate them down to Ford prices. It’s not a good use of anyone’s time.
Power Tip #7: Always always get a professional inspection. It’s well worth it.
Why?
The first time we see a home we really like, it usually seems more perfect than it is. Oftentimes there’s maintenance issues to take care of that aren’t apparent in the first walk through. If you buy a home and complete the sale without knowing what you’re getting into, you might end up needing to spend much more than you expected.
What should I do?
Always get the house checked out before committing. This means to always perform a professional home inspection within the due diligence period (usually within the first 10-15 days of getting an accepted offer and opening escrow)
How much is a professional home inspection and what is included?
The average price for a home inspection is around $300-350. It can be on average $20-50 more for larger homes, or $50-100 for homes with pools & spas. This home inspection covers a wide range of areas all over the home and can alert you about potential problem areas to be given attention and possibly further advanced inspection.
A good inspector can usually tell you how much you can expect to repair certain items he finds, and if you have any specific questions about knocking down walls or maintaining your home, they can help with that as well.
It’s well worth the $300ish to know what’s going on in the home so you can decide if you still want it or not. There’s no penalty if you want to back out during due diligence due to your inspection findings or any other issues you find with the purchase. That $300 could save you from a potential $3000 or $30,000+ problem that you don’t want to find out by surprise later on.
I hope this article has helped inform you on some things to watch out for before you buy a home.
Have a great day! 🙂
If you have any questions at all, feel free to contact me at 702-343-2670 or lengsellsrealestate@gmail.com, no strings attached. 🙂