Have you just left an open house and have fallen in love with the home?

Could this be THE ONE?

Should you place an offer?

Are there issues with the house that should send you running?  Far away??

It all sounds a little like falling in love with a person, doesn’t it?

• Your heart skipping a beat every time you walked into another room at the open house.

• Your eyes popping out at the features you can’t believe are all here in this dream home.

• Your mind fantasizing about what it will be like when you settle in and get to call it your own.

But, just like falling head over heels for someone you just met – it’s not always meant to be.

That’s what I’ll help you figure out in this article.  After going through the ten questions below, you’ll be able to answer the big one:  

Is this house the right one for us?

(It could be a house just for you.  Or you might be buying it as a couple.  Either way, I’m going to use the word ‘us’ throughout this article.  No biggie.)

Time is Not on Your Side

One of the problems here – is when you fall in love with someone you just met, you have the luxury of time to figure things out.  

You can take things as slow as you want to find out if he or she is the right one for you.

Not so much these days with houses.  

That’s because even though the market is slowly shifting, we are still in a strong seller’s market.  And one of the many downsides to buyers right now is that houses are still selling incredibly fast.  

Oftentimes, an open house is scheduled for a Saturday afternoon and the offer deadline is that coming Monday at 5:00.    

Not much time to ‘get to know’ the house before you have to decide whether or not to make a commitment.

It’s like you have to completely bypass the ‘dating’ stage.

Let’s get right into the questions.  So you’ll know if you should get down on your hands and knees and propose (I mean ‘place an offer’) in a few days or not. . .

And if walking down the aisle (I mean ‘closing on the house’) in 45 days is the right thing to do.

One Note:  I’m going to assume that you’ve already officially decided that homeownership is right for you.

In other words, you are not on the fence about renting vs. buying your own home.  You’ve made the decision that it’s officially time to buy.

If you’re still not sure whether or not to keep renting, here is a great article that will help you decide.

In it, I give a list of 10 pros to renting and 10 pros to buying your own home.

One more note before we dive in:  I’m also assuming you have your mortgage pre-approval letter all set and ready to go. 

A pre-approval is essentially a letter written by your lender letting you and everyone involved know that you are capable of purchasing a home – and how much you can afford.

In these days where houses are selling so fast, having a pre-approval in hand is a must.

This is for several reasons:

A Pre-Approval Means You are Financially Ready to Own Your Own Home  

A lender has checked your credit score, credit report, work history, debt-to-income ratio, and other information – and has determined that you can, in fact, afford a house. 

A Pre-Approval Allows You to Know Exactly How Much House You Can Afford 

After running the numbers, the lender lets you know the highest amount you can spend on a house.  

This is based on factors like:  

1. How much you can put down on the house as a down payment; 
2. What the monthly mortgage payments need to be at in order for you to safely pay them every month; 
3. And the type of loan you are approved for.  Ex. Conventional  
   

A Pre-Approval Shows a Potential Seller That You are Capable of Buying the House

This is especially important if there are multiple offers on the table that the sellers are looking at.

All the information written in the pre-approval will show the sellers (and their real estate agent) just how strong of a buyer you are.  Included in it are: 

1. The highest amount you can finance for a house 
2. The types of mortgages you can apply for.  Ex. FHA and Conventional
3. The mortgage terms
4. How much of a down payment you can pay
5. And additional wording

A Pre-Approval in Hand Could Help You Beat Out Other Buyers Who are Scrambling to Get Theirs

It’s almost like a race in some offer situations.  

Sellers with multiple offers to choose from might not want or need to wait for someone to get their pre-approval. 

The slow moving tortoise doesn’t always win the race.

Let’s dive in to the questions:

10 Questions to Ask Yourself to Know if This is the House for You

1. Is it a ‘Heck Yea!’ for Both of Us?

They say everything you buy in life and what you choose to do should always be based on the ‘Heck Yea!’ factor.

If you’re in a showroom or a store deciding whether or not to buy that car; or that outfit; or that pair of shoes. . .  and you don’t get a full body ‘Heck Yea!’, then it’s not the one for you.

If you’re deciding what new career to choose; what new hobby to take up;  where to eat for dinner Saturday night – it all can be decided on with this internal meter in mind.

So, for something as gigantic as purchasing your first house – you definitely want to make sure it’s a ‘Heck Yea!’ for both of you.

Compromise is always a good thing.  But, just make sure one person isn’t compromising too much of their wants and needs with the house.  

How can you tell?  Is this house a ‘Heck Yea!’ for him or her too?

2.  Are We Not Seeing Important Issues with the House?

Let’s compare the house to a person again.

Like the old expression goes – love can sometimes be blind.

(Being blind to your partner’s so-called ‘negatives’ is a beautiful thing, by the way.)

But, remember when you fell head over heels for someone in high school or college?  He or she was perfect for you!  Or were they?

Ask yourself if there are major issues with this house that you might be turning a blind’s eye to.  Because you are so enamored with everything else about the house.

It’s also possible that you’re not seeing them because they’re not in plain sight.  Like mechanical issues that aren’t easily spotted by laymen.

That’s where asking plenty of questions to your agent, the listing agent, and going through any seller disclosures is so important.

Make sure you’re really thinking about the house’s major problems.  Find out the answers to questions such as:

1. Is this a huge issue that will need to be taken care of right away?
2. What will the price tag be on repairing or replacing it?
3. Where will the money come from?
4. What should we offer on the house now that we know about this issue?
5. Etc.

One good thing is that the home inspection in a few weeks (if your offer is accepted) will uncover all of the problems with the house.  Some no one will have even spotted.

Once you know all of them, you will have the legal right to walk away from the house if you choose to.

You can get your earnest deposit back at that point.  It’s usually $1,000.  

But, you’ll have spent a lot of time and effort in the meantime – besides getting your hopes up.  And another good house might have passed you by during this time.

So, seeing this house clearly and objectively before you place an offer is your best bet.

3.  Is The House in Our Price Range?

You don’t want to be so enamored with a house that you scramble to try and get pre-approved for more money.

If the house is above your pre-approval amount, it means you can’t afford it.  Period.  

You not only can’t afford to purchase it now – you could also run into financial trouble down the road trying to make the monthly mortgage payments.

If you still think the house is worth trying to get pre-approved for a higher amount, make sure to spend some time thoroughly running your numbers on paper.

You’ll be running them anyway with your lender. 

But, learn to get good at financial planning – short term and long term.

Include every single expense you have each month now and add all of the new expenses you’ll have that go along with owning your home.  

Like maintenance expenses each season, oil or gas, electricity, water and sewer bills, and on and on.

This house could be worth it.  But, you want to be guided by solid numbers.

4.  Are the Property Taxes too High?

Right on the mls listing for each house is a line that shows how much the current yearly property  taxes are.

Is that amount you’ll have to pay doable?

The good thing is property taxes are escrowed in with your mortgage payments every month.  That and homeowner’s insurance premiums.

This means that included in your mortgage payments is money that the bank puts aside to pay the property taxes and homeowner’s insurance each year.

This is the bank’s way of protecting itself from a homeowner not paying these two bills on their own.

So, you don’t have to allocate that money separately in your budget every year.

That being said, some towns have extremely high tax rates.

You would think only affluent towns have higher tax rates.  But, that’s not always the case.  

Often a small town that’s known as a bedroom community can have a higher than usual tax rate.  

Because they don’t have many retail, commercial, and industrial businesses in town to help offset the cost of running it.  

The burden lies almost solely with the residents to fund all the town departments, its infrastructure, and school system.

It’s worth taking a quick look at the taxes for that house – and making sure you’ll be fine paying them every year.

5.  Is the House in a Good Location?

Location, location, location – right?

Make sure the house checks off all of the boxes in this category.  Such as:

• Do we want to live in this city or town?

• Do we like the neighborhood?

• Does the school system meet our standards?
  
• Is it close enough or far enough away from family and friends?
  
• Is it close enough to the services we need – like doctor’s offices, hospitals, and stores?

• Will the commute be ok?  

Luckily, more and more people are working remotely these days.  But, since regular trips to the workplace every now and then are usually required, make sure you’re fine with the distance.

Is it a good location as far as the area goes?  What this could mean is:  

• Are the roads in good shape? 

• Are homes or buildings near the house being maintained?

• Is the house in a development that the builder packed up and left unfinished ten years ago?

• Is there town or city sewer and water?  Or a good running well?

• Is the houses around all on ledge, which could mean you’ll need to run a radon mitigation system in your basement?

• Is there a loud airport nearby?  A noisy highway?  A school?  Prison?  Etc.

None of these are necessarily deal breakers.  It’s just good to make sure you know what’s around and are fine with it before going ahead and placing an offer.

6.  Does Purchasing this House Fit into Our Time Frame?

Many houses that are for sale these days have a ‘seller suitable housing’ clause attached to them.

This means that a buyer must be able to allow the seller time to find a new house themselves.  

With the housing inventory shortage we’ve been experiencing for the past several years, it’s an important safeguard for sellers that:

1. A buyer will allow them extra time to find a new home.
2. The buyer is willing to give up this house, if the seller doesn’t find a new home.

Another reason these suitable housing clauses are used often is because of the timing involved with the seller’s mortgage.

Unless a seller has the money, a lender won’t allow them to get a mortgage on their new home until their current home is under agreement.  

This prevents a lot of financial issues.  One being that the seller won’t have two mortgage payments on their hands if their house doesn’t sell by the time they purchase a new one.

Aside from this suitable housing clause that requires homebuyers to give sellers the extra time – up to three months in many cases – there’s other time stipulations that could go along with purchasing the home.

Like the sellers might need a buyer to close on the house very soon.  

This could be an issue for a buyer in a few ways.  Like getting out of their current lease.  

And since lenders usually require 45 days to process a new loan, your mortgage might not be ready in time.

So, make sure to check that you are all set with any time constraints that go along with purchasing this house.

7.  Can We Afford the Repairs and Upgrades It’s Going to Need?

Fixer uppers can be a great investment.  Especially if buyers are willing and able to roll up their sleeves and get the work done.

It might not even be a so-called ‘fixer upper’ you’ve got your eye on.  Just a house that needs some repairs.

But repairs and renovations cost money. 

So, ask yourself if you’ll have enough to cover all that’s needed to bring the house up to speed.

If you’re planning on doing a lot of the work yourselves, that will obviously save you a ton of money.  

Just make sure you won’t be doing work yourselves that legally requires licensed contractors.  Like electrical, plumbing, and roofing.

Before you place an offer, ask yourself questions like:

1. Does this repair need to be done immediately?
2. What’s the risk of this repair not getting done asap?
3. Can we live with this issue while we’re saving the money to repair it?
4. Will it require hiring a contractor or can we do the work ourselves?
5. How much will it cost?

In regards to question #2 above, this could be a biggie.

For example, how bad is the roof?  If it’s already leaking, this could mean extensive water damage that needs to be dealt with aside from replacing the roof itself.

Do you have the money for all of this work?

An extreme example is if an oil tank is corroding underneath and on the verge of leaking.  A point of corrosion even as small as a pinhole can cause a major issue that needs to be dealt with immediately. 

Once you own the home, if oil starts dripping out, it’s not only a huge safety risk for you and your family.

But, it’s actually considered a hazardous spill and you’ll be required to call the local fire department and Department of Environmental Protection to report it.

As you can see, your new job as a homebuyer is also being an investigator – uncovering any issues you can about a house you’re hoping to buy.

8.  Is this ‘Too Much House’?

What if you’ve gotten this far and the house has passed all the tests above?

It’s in your price range and most of the maintenance work needed is basically cosmetic, for example.

Could it still be too much house to manage?

Let’s go back to the dating analogy again.

I used to have a rule back in the day.  If a guy took longer than me to get ready for a date, it most likely wasn’t going to work out.  

He was too high maintenance for my liking.  (And I’m guessing I was too low maintenance for his.)

Could this house be the same?

Does it come with 10 acres of swampy wetland that’s private and picturesque, but that you’ll never be able to use?  Yet you’ll be paying taxes on for the next 20 years?

Could it have an old idyllic barn on the property that’s gorgeous?  But the roof is as curvy as a Pringle’s potato chip and one swift storm could knock the whole thing down?

These surely aren’t deal breakers.  In fact, these special features are most likely what made you fall in love with the house.

Just make sure to ask yourself if you’ll be fine with all of the expenses and the work that will no doubt go along with them.

9.  Are We Settling Because We’re Tired and Frustrated with Home Shopping?

Here’s the other end of the spectrum.

Back in those old clubbing days, we all joked about how much better looking people got as the night went on.

Especially right before the club was about to close for the night at around 1:00 or 2:00 a.m. – lol!

Is this house looking good because you’re feeling like your options are running out?  

Have you been home searching for a while and are worried it’s never going to happen?

If this is the case, you might want to step back and ask yourself if this really is the house for you.

And on the opposite end – this house might not be perfect, but it could be the absolutely perfect one for you!

10.  Is it Still a ‘Heck Yea!’ the next morning?

The good old ‘morning after’.

I always tell my homebuying clients to ‘sleep on it’ after they’ve found a house they love.  

Meaning after they’ve debated the pros and cons for hours and hours – they need to take a break from all the thinking and see how they feel about it in the morning.

Basically, giving their overworked mind a rest, so that their intuition can come up.

I believe we don’t give enough credit to our intuition.  That ‘knowing’ deep inside of us.

That’s not to say you throw out all of the logical reasoning.  But, you combine the logical with the intuitive.  Our left brain with our right brain.  Or our conscious mind with our subconscious mind.

I think we’ve all been there.  When something or someone looks perfect on paper.  

We’ve planned and reasoned and debated all the information – yet, something just isn’t right.  Even if we can’t put our finger on exactly why.  

So, tomorrow morning when you first wake up refreshed, will it be a:

“Heck yea, we love that house!”

or

“OMG, what were we thinking?”

Good luck!

I hope this article helped!

Stay tuned for more like it on all the ins and outs of homebuying for first-time homebuyers.

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If you’d like to ask me any questions, email me anytime at:  paula@michaelandsullivan.com.