CalCity Investments

Buying a home

Why do I need a real estate agent to help me buy a home?
What should I do for looking for a home?
How do I know how much home I can afford?
How does buying vs. renting?
Where can I get local schools information?
How many bedrooms should I be considering?
What do I need to bring along when I'm looking at homes?
How many homes should I look at before I buy?
How do I know I'm getting the best value for my money?
What does a home inspector do?
Are there any other inspections I need to have done?
When I've found the home I like, how do I make an offer?
What is earnest money and how much do I need?
What should I look for on my final walk-through?
What will happen on closing day?
Why do I need a real estate agent to help me buy a home?

Buying a home is certainly one of the most rewarding experiences most of us ever have; it's also one of the most challenging. If you're buying for the first time, the process may seem overwhelming. And even if you've been through it several times, every move is different, and presents new challenges.

So one clear advantage of enlisting the help of an agent is simply that you don't have to go it alone. A good agent has the training, the know-how, and the experience to help you through each step of the process, and make the process of finding, buying and moving into your new home as smooth, quick, and enjoyable as it can be. Another advantage is that an agent represents a valuable source of information about market trends, communities and neighborhoods, and especially, homes for sale throughout the area. Remember, not every home seller runs an ad in the local paper or puts a sign up in the yard. In fact, many of homes actually sell before there is ever a need to advertise them. An agent offers you market expertise augmented by access to complete, regularly updated information about every home listed by area agents through the Multiple Listing Service (MLS). As you'll see in the following several questions, professional expertise and services can be of considerable help throughout the buying process.


What should I do for looking for a home?

The first thing you should do is to begin focusing on what you're looking for in a home. You can start by establishing priorities in the following three areas:

Location: Are you relocating to a new town because of a new job, or to be closer to your current job? How will the location of schools, shops, and transportation affect your choice of neighborhoods?

Personal tastes: How large a home do you need? What style of architecture to you prefer? Depending on where you live, you may have a choice of homes in dozens of styles, sizes, and settings.

Budget: How much home is it wise for you to own?

As you consider these areas, do a little research of your own. Look through magazines for ideas about home styles and features. Drive through neighborhoods that appeal to you to see what's available. Read the real estate listings in the newspaper to learn about current prices in the areas you're considering. Talk to friends about the features that you'd really like to have in your home. The more knowledgeable you become, the better your final decision is likely to be.


How do I know how much home I can afford?


We've found that affordability is probably the single biggest concern of today's first-time home buyers. Given the wide range of media coverage regularly devoted to the issue, it's not surprising that many young families wonder how long it will take them to afford their first home.

Our advice: Don't sell yourself short. Talk to your real estate agent. A good agent is committed to honestly and responsibly working with you to determine your affordable price range. There are many financing options available today, and some include low down payments. Your agent will help find an option that fits your budget, and you may be surprised at just how much home you can afford.


How does buying vs. renting? top

Renting offers a lifestyle that's nearly maintenance-free. That may appeal to you, but consider that renting offers you no equity, no tax benefit, and most likely no protection against regular rent increases.
If your rent has averaged $700 a month for the last 10 years, you've spent $84,000 with nothing to show for it. Isn't it time you invested in yourself instead of your landlord?

Several financing options hold special advantages for first-time buyers or families with limited cash reserves. FHA-insured and VA-guaranteed mortgages can minimize or even eliminate your down payment. You may also consider a lease-purchase agreement, or borrow cash for a down payment from life insurance, profit-sharing or retirement account.

In addition to tax deductions you'll likely receive that can partially offset the cost of real estate taxes, insurance and home maintenance, your home may appreciate in value. Say you purchase a home that costs $100,000. If property increases in value a meager 2% each year, your potential appreciation in just two years is nearly $4,200. And thanks to recent changes to the tax code, but subject to certain restrictions up to 250K/500K if married filing jointly, the profit you make when you sell the house is tax free as long as you own the property for a minimum of 24 months.


Where can I get local schools information?


Again, a good real estate agent is perhaps your best source. They know where the local schools are, and can provide you with valuable information about school districts, including test scores, extracurricular activities, bus service and more. And if you want to do a little searching on your own, the Internet may also be a good place to start. The web sites, such as, etc. provide a lot of great information about area school districts.


How many bedrooms should I be considering?


Whether you are married or not, or have kids or not, spare bedrooms come in handy when family and friends come to stay. And when you're not having guests, extra rooms are useful as a library, den, or TV room.

Another good reason to choose a home with extra bedrooms: Extra space will make your home more appealing to a larger number of interested buyers when it comes time to sell.


What do I need to bring along when I'm looking at homes? top

Bring your own:
Notebook and pen for taking note
Flashlight for seeing enclosed areas
Tape measure for checking room sizes, clearance, etc.
Be prepared to snoop around a little. After all, you want to know as much as possible about the home you buy. Sellers understand that because their home is on the market, it will be looked over pretty thoroughly.

If you need to go back to a home for another look, your agent will be happy to schedule an appointment. Also, be sure to ask any questions you have about the home, even if you feel you're being nosy. You have a right to know


How many homes should I look at before I buy? top

There is no set number of homes you should look at before you decide to make an offer on one. That's why providing the agent with as many details as possible up front is so helpful. The perfect home may be waiting for you on your first visit. Even if it isn't, the house-hunting process will help you get a feeling for the homes in the community and narrow your choices to a few homes that are worth a second look. Also, be sure to take along a camera and snap some pictures of all the homes you like. That will make it easier to remember and reach a decision.


How do I know I'm getting the best value for my money?


A professional appraisal is the best way to tell if a home is priced fairly. A real estate appraisal is an unbiased opinion of a property's value based on its style and appearance, construction quality, usefulness, and other factors, including the value of comparable properties nearby. When you apply for a mortgage, the lender will have a professional real estate appraiser perform an appraisal of the property.


What does a home inspector do? top

For your own safety, and to make sure you're getting your money's worth in the home you choose, using a professional home inspector is highly recommended. A home inspector will check a home's plumbing, heating and cooling, electrical systems, and look for structural problems, like a damp or leaky basement.

Usually, you call an inspector immediately after you've made an offer on a home. However, before you sign any written offer, make sure (or have your attorney make sure) that it includes an inspection clause or other language which says that your purchase obligation is contingent on the findings of a professional home inspector.

Your home cannot pass or fail an inspection, and your inspector will not tell you whether he or she thinks the home is worth the money you are offering. The inspector's job is to make you aware of repairs that are recommended or necessary. A seller may be willing to renegotiate a price to accommodate needed repairs, or you may decide that the home will take too much work and money. A professional inspection will help you make a clear-headed decision.

In choosing a home inspector, consider one that has been certified as a qualified and experienced member by a trade association. Your real estate agent may refer you to qualified inspectors in your area.


Are there any other inspections I need to have done? top

In addition to the overall inspection, you may wish to have separate tests conducted to check for termites, or the presence of radon gas. Talk to your real estate agent for information about these tests, and companies in the area that perform them.


When I've found the home I like, how do I make an offer? top

When you've found a special house you want to call home, you'll probably feel excited and a bit nervous. Let the agent know you're ready to write an offer to purchase --- a written document that declares how much you will pay for the home provided that certain conditions are met. Because it's a legally binding contract that you will sign and date, it may be a good idea to have a lawyer review it before you sign, or within the grace period noted in the contract.

This is the time when it is most important for you to keep in mind that the agent is the agent of the seller (unless you are working with a buyer's agent). As the legal agent of the seller, the agent is obligated to help the seller get the best price and he will report to the seller any confidence you share.
It's best to make your offer without sharing with the agent your willingness to offer any higher price if the seller does not accept your offer.

Your offer should have a time limit for the sellers to accept, reject it, or make a counter-offer. If a counter-offer is made, you'll have some time to respond. Often, several offers go back and forth until an offer is accepted, or one party decides to end negotiations.


What is earnest money and how much do I need? top

When you sign an offer to purchase, your agent will ask you for earnest money --- that is, money that shows you are serious about wanting to buy. Usually, you will be asked to write a check for 1% to 10% of the sale price. This money will be held in a special escrow account. If your offer is accepted, your earnest money will be included as part of your down payment. If your offer is not accepted, you'll get back all your earnest money. But keep in mind that if you back out, you may forfeit the full amount.


What should I look for on my final walk-through? top

In most cases, you'll be given the opportunity to inspect the home immediately prior to closing. At this time, it's important to check on any work the seller agreed to have done in response to your initial inspection. You should also carefully check the condition of walls and ceilings from which window treatments, pictures, or any other attached furnishings have been removed. If you find any problems, don't hesitate to bring them up at the closing. It's the seller's responsibility to correct them.


What will happen on closing day? top

1. The lender's agent will ask for your paid home insurance policy.
2. The agent will list the adjustments. These include the money you owe the seller (the remainder of the down payment, prepaid taxes) and what the seller owes you (unpaid taxes, prepaid rent).
3. You will sign the mortgage. This gives the lender legal rights to the property if you don't make your payments.
4. You will sign the mortgage note, the promise to repay the loan in regular monthly payments.
5. You will get title from the seller in the form of a signed deed.
6. The lender's agent will collect the closing costs from you and give you a settlement statement of all the items you have paid for.
7. The deed and mortgage will be recorded in the town or county Registry of Deeds.