Newsday April 1 2009
http://www.newsday.com/classified/realestate/ny-re-pittfallsforbuyers,0,4746811.photogallery
You’ve found the house of your dreams. Now get practical and examine the building and the financial obligation you will take on. It’s time to decide if this house and this dream will make you or break you. (Photos.com Photo)
1. Start with a list
If you don’t figure out just what you want, you might just buy the wrong house.
“I always say this to all the young buyers: They have to decide where they want to live and what they’re looking for in a home,” says Michelle Cohen, associate broker and executive vice president for Century 21 Laffey Associates in Greenvale.
“Does it have the proximity to your job? Especially now, with the cost of transportation so high, it might make more sense to look for a house close to your place of business.”
You also have to look at the cost of owning a home — again, with fuel costs high, how much will heating it run you? If it has a large piece of property, keeping it up costs either time (if you do it) or money (if others do), she says.
How is the school district? Can you afford
2. Get your finances in order
Avoid a nasty financial surprise that could ruin a deal.
“I think education is extremely important right now,” says Jeff Barker, Bank of America’s regional executive for consumer banking. “The buyer should fully understand what will be asked of him or her when they are ready to apply for the mortgage.”
It’s important to check your credit reports to see if you can fix any mistakes, he says. And be sure to figure out how much house you can afford — most lenders, including Bank of America, have online tables that will help you figure it out.
You’ll need to get your financial records in order — proof of income, tax records, a solid source for a down payment and the like, he says. Then, get prequalified so you can show a seller you’re a serious buyer who’s ready to go.
Barker says that even though lenders may be taking more care than in the past, “it’s not a difficult process for people who can afford a mortgage.”
(Newsday Illustration / Tim Berry)
3. Hire a lawyer
You might think you can wait until the closing to hire an attorney — but things can go wrong, so it’s a good idea “from the get-go” to find a good lawyer, says Elysia Prinz, manager of Coach Realtors’ Northport office.
And they’re surprisingly affordable — most attorneys charge a flat fee for the entire real estate transaction, and you’ll probably pay somewhere between $1,000 and $1,500 locally, experts say.
It’s a good idea to have your lawyer look over any legal document before you sign it — no matter how boilerplate it might look, including an agreement with a broker, says David Sappé, a Huntington attorney with a practice concentrating in real estate law. “As soon as they’re out in the market and serious about buying or selling, they should have an attorney — from that first binder handshake,” he says. “There’s no premium that you have to pay for lining up an attorney before or after.” If you don’t have recommendations, he says, you can check with the state or local bar association.
Look at it this way, he says: When else would you get involved in “a half-million-dollar transaction” without protecting yourself legally? (Photos.com Photo)
4. Going for brokers
Not all real estate brokers are alike — and remember, most of them represent the homeowner. Not you, the buyer.
Ask friends, neighbors and relatives for recommendations, and find an experienced person who makes you feel comfortable.
Especially if you’re a first-time buyer, you might want to consider hiring a buyers’ broker to represent your interests. (It won’t cost you any more — their fees are split with the seller’s agent, as in any real estate transaction.)
Even brokers who take you around are working for the seller (which is their legal obligation), not for you, unless they’re specifically a buyers’ broker — a concept more common elsewhere in the country, but catching on here.
A buyers’ broker “might be able to do a little better job negotiating,” says Prinz of Coach Realtors. Plus, she adds, a broker representing a seller is not required to reveal things or find things out about the property or neighborhood that might be negative — for example, if a local planning committee is considering an action that would mean “that lovely piece of land that you’ve been looking at, that greenbelt, is going to be an industrial park,” she says.
A buyers’ broker, on the other hand, should do that kind of research for you.
(Newsday Illustration / Tim Berry)
5. Pick your finance service carefully
No one who’s followed the news in recent months about failing mortgage companies — and even banks — should take the prospect of financing a house lightly.
Make sure you deal with a reputable mortgage broker or a bank, says Robert Bram, senior loan officer for Preferred Empire Mortgage Co. of Melville, an affiliate of Prudential Douglas Elliman Real Estate. And, he says, it’s important that you have a bit of a cushion when you apply for a mortgage in case the situation changes.
If the interest rate suddenly goes up half a point, you shouldn’t be so tight that you can no longer afford the mortgage — not to mention having a fund for repairs and emergencies.
(Newsday Illustration / Tim Berry)
6. Get good advice — and listen to it
Listen to the experts, not your Aunt Bertha. Talking to relatives who don’t own houses but feel free to give advice is “a sure deal killer,” says Michael Daly, principal broker for Beach Properties of the Hamptons in North Haven and author of the Hamptons Real Estate Blog
You’ve put together a team of professionals — a broker, a financial adviser, a real estate attorney — so listen to them. That’s what you’re paying for.
(Newsday Illustration / Tim Berry)
7. Don’t skip the engineering report
By no means skip that all-important engineering report. This is where problems come to light.
The seller should handle serious issues, such as removing an underground oil tank or fixing any serious problems with plumbing or electrical systems — and these can be negotiating points. If the house has serious issues and the seller doesn’t want to address them, the best bet might be to walk away, experts say.
But something that comes up on the report could help you bargain for a lower price — that is, if it’s not something vitally important that makes buying the house questionable.
On the other hand, you’re not buying perfection. On a used house, Sappé says, “wear and tear” — say, some outside boards that have rotted, or painting that needs to be done, or the like — are not the seller’s responsibility to fix.
An engineering report can sometimes kill a deal, says Joan Silverman, a Northport attorney whose practice concentrates on real estate.
“Buyers kind of want it perfect, and sellers feel like they don’t want to give it away,” she says — adding that both buyers and sellers need to be reasonable and compromise.
(Newsday Illustration / Tim Berry)