After following the previous steps you now know how much you can afford to borrow, how much you want to borrow, what qualities are important to you in your new home. Now it is finally time to start looking for homes that are for sale.
There are many sources of homes for sale. The traditional Multiple Listing Services (MLS) remains the largest source of homes for sale. Ask your friends, neighbors and co-workers if they've considered moving. You'll be surprised how many people have considered moving but don't want the hassle of the traditional selling process. If you like where your renting, ask your landlord, they may want to sell and be in a position to carry back a loan with favorable terms.
Special situation homes for sale consist of properties owned by the lenders (REOs), properties about to be owned by the lenders, Trustee Sales, and Probate (Estate) Sales. It's beyond the scope of this site to explain these situations in detail. Briefly, single family REO property usually gets listed with a RealtorŪ and sold. Some lenders have subsidiary companies to market and sell their REO. Be prepared for terrible delays as these lenders struggle to rationalize their losses. Don't be in a hurry chasing these homes. Some REOs can be purchased with very low down payments. Don't be fooled into thinking that there's a pot of gold at the end of the foreclosure rainbow. You have to ask yourself , "Why did the current owner allow the property to go into default?". There could be problems with the home, the neighborhood, etc.
Trustee sales are when the lender exercises it's power of sale on a defaulted loan. Notices of Trustees Sale are legal notices describing the property to be sold and the terms and conditions of the sale. These notices must be published prior to sale and can be obtained from real estate professionals and various Web sites. Property is acquired at Trustee's sales for cash or cashiers check. Financing is generally not an option here. Property is also acquired as it stands, no warranties, no disclosures and no repairs. Any tenants in possession are the new owners responsibility.
Probate sales are typically listed for sale with a real estate brokerage for a 90 day period. Any offers received will be confirmed by the probate court and are subject to overbid in court. Again, don't be in a hurry here either. Costs are typically higher for buyers here. Title insurance, pest control work, any repairs, escrow fees and recording costs will generally be borne by the buyer.
This subject deserves very special attention. I've seen too many people reach hasty conclusions about a particular home and how it could meet their needs. Remember, avocado green was once a popular color to decorate with. Don't put too much faith in a homes' Curb Appeal. With existing homes a neglected front yard could be the result of a lengthy illness that kept the seller from maintaining it. The interior could be in immaculate condition. Conversely, I've seen home fronts very well maintained by professionals and interiors that were uninhabitable.
Many buyers insist on "looking on their own" or "driving the neighborhoods". This is good for an initial impression of an area but don't disqualify property entirely based on this. The old real estate maxim about location, location, location is still true but the financial realities of ownership, as opposed to renting cannot be dismissed. As we have limited sprawl in California the pressure to own will drive up values as the areas neglected during the exodus to the suburbs undergo the inevitable revitalization.
Once you've decided to see more than just the front yard here are some things to consider.
How is the Floor Plan; We tend to dwell on square footage in this business and neglect floor plans. Does the layout work, envision your day in this home, how does it start?
Don't dwell on "Rooms"; Do you have to have a formal dining room for family gatherings in this age of hyphenated last names and extended families? Would an extra bedroom be more valuable?
What used to be called the family room has morphed into the media room. How much time do you spend watching TV?
Do you entertain? If not, just how valuable will that wet bar be?
Our parents had a study. Today, we can't live without a home office or computer room. Would it be easier to add phone jacks to an extra bedroom, remove the closet doors and declare it a home office than to pay $$$ for a newer home equipped with one.
I encourage/demand my clients take notes on the properties that we visit. While we're there, I'll ask about specific details of the home and have the client write down the positives and negatives. This helps me by instantly recognizing what's important to them and it helps them to compare the properties later without wasting time trying to figure out which one is which. Also, I'll tend to only show 3 or 4 homes in a day to help ease the confusion.
The perfect home for you remains to be built. As our lives unfold, what we expect from our homes continually changes. When you find the home that's right for you, you'll know it. Don't give up, your financial future is at stake. If you find that you honestly can't find a home to buy that meets your needs, remember this,"Rent goes on forever, a mortgage can be paid off."
What that means is to maintain your tenant lifestyle you'll need to continue working to pay that rent. When you finally pay off that home loan, it's done, pay your property taxes and insurance. Your reward is this stability and piece of mind.