Tips for Buyers

Before beginning your property search, be sure to investigate your financing options. Having pre-approval for your loan strengthens your negotiating position with a seller and clearly defines the limits to the home price you can consider. It is also important to understand the distinction between pre-qualification and pre-approval.

• Pre-qualification is an informal way to see how much you may be able to borrow. You can be 'pre-qualified' over the phone with no paperwork by telling a lender your income, your long-term debts, and how large a down payment you can afford. This helps you arrive at a ballpark figure of the amount you may have available to spend on a house.
• Pre-approval is a lender's actual commitment to lend to you. It involves assembling your financial records and going through a preliminary approval process. Pre-approval gives you a definite limit of what you can afford and gives sellers assurance that you have the capacity to finance your purchase. Typically, a mortgage broker or bank loan officer will sit down with you for about an hour to go over your records, review your credit report, and discuss your options. This is a complimentary service, and does not obligate you to apply for a loan with that lender.

One of the criteria used to determine a pre-approved loan amount is your credit score. A credit score is a numerical value based on an analysis of a person's credit files and is used to represent the creditworthiness of that person. Lenders, such as banks and mortgage companies, use credit scores to determine who qualifies for a loan, at what interest rate, and with what credit limits. A credit score (also called a FICO score) ranges from 300-850. The higher your score, the less risk involved in lending to you.

Give careful consideration to the lending professional you choose to help you obtain financing. Having a local person in charge of your loan and available to you and your Realtor when questions arise can be an invaluable asset!

Make a list of what you want and need in your new home, then prioritize. Consider local schools, property taxes, proximity to shopping and other needed services. Make sure your Realtor understands what is essential to you, so he or she can use your time effectively. At the same time, you may find your priorities changing as you see what is available on the market. Keep an open mind to the possibilities; your ultimate choice may look quite different from what you first imagined!

Look beyond the cosmetics of a home, assuming it meets the basic requirements of location, floor plan and over-all condition. Paint color and floor coverings can be changed relatively easily, and in some cases the cost can be built into the terms of the sale. Larger concerns, such as the need for kitchen or bath remodeling, should be carefully considered, both in terms of cost and timing.

If you are buying an investment property, do your homework on the financial return you can expect from a purchase. Evaluate the typical rents in the area, the anticipated maintenance expenses for the property, and the cost of property management. Ask questions about the current tenants, and determine if you would be willing to continue renting to them. Starting off with good, reliable tenants in a rental property is well worth the effort!

Consider that someday you may want to sell the property you're about to purchase. Focus on homes that will have appeal to future potential homebuyers.

A well-crafted offer includes a number of important elements. Perhaps the most critical is to make your offer contingent on a thorough inspection of the property. At a minimum, have pest & dry rot and whole house inspections done to assure yourself of the basic soundness of the structure and to identify any needed repairs. These inspection reports, typically paid for by the buyer, will form the basis on which your repair negotiations will rest. A good inspector will also provide you a wealth of information about your new property and offer advice on routine maintenance as you take over ownership.

Price, amount of earnest money and downpayment, details of financing, length of time to closing, and requests for the inclusion of personal property such as appliances are other factors to consider in making an offer. A good Realtor will help you to weigh and balance these elements to create a strong offer which will serve your interests while making a favorable impression on the sellers.

It is important to use a Realtor you trust and with whom you can communicate openly and with confidence. Honesty, integrity, responsiveness, and hard work are essential qualities in a good Realtor. Ask friends and colleagues for personal recommendations, check the Internet for more information, then meet with your top choices, being sure to include the following questions:

• What techniques does the Realtor use to determine if a home is fairly priced?
• How much time is typically spent viewing and evaluating homes before using your time to show them?
• How and how often will the Realtor communicate with you?
• How long has he or she worked in the area?
• Are references available from satisfied clients?

• The home buyer's area of the U.S. Department of Housing and Urban Development website.
• The Oregon Real Estate Agency Property Buyer Advisory.