Buying a house is one of the biggest investments you will make in your lifetime.

In part 1 of the homebuying series we talked about everything you need to know before you step foot into a potential home. If you missed it, you can check it out here. Now that you’ve found a realtor & you’ve been preapproved for a loan—it’s finally time to start looking at houses! And maybe even make an offer! Here are a few things to know & think about during this exciting time.

time frame

One question you should ask yourself is: what is my time frame for finding a house and moving into it? Are you trying to buy a home and coordinate it with the end of your current lease? Or maybe you’re moving to the city for a new job and want to live in your new home instead of renting. Time is valuable, so try to give yourself as much as you can or think you will need. Keep in mind that once you place an offer on a home and it gets accepted, it’s another 30-45 days till you can call it yours.

make time to see houses that fit your criteria, and don’t bother with ones that don’t

This may seem obvious, but just listen. You may shrug off some homes based on what you see online. For example, when I saw my home online it looked dark & dingy—probably because all the photos had been taken at night—and there were no photos of the carriage house (the main reason why I purchased!). Seeing homes IRL allows you to take in all the details that may not translate on the screen. If it fits most things on your list of must-haves, I say give it a look. Try to look past bad paint colors or bad staging. Good bones are good bones. If it doesn’t fit your criteria, don’t waste your time. You can get exhausted from seeing everything out there, and it will only leave you confused about what you want. FOCUS!

making the offer…but for how much?

Alright, you think you’ve found the one, and you’re finally ready to make an offer. Now how much should it be? Your realtor can give you a list of similar homes (similar # of bedrooms/bathrooms, size, etc.) in the area that have sold in the last 3-6 months. Looking at that list, they can suggest a range that your dream home would fall in. Ultimately, it’s up to you to decide how much you think the place is worth. At the end of the day you want to feel good about your offer—keeping your budget in mind. If you’re in a situation where the house has a lot of interest (ie, competing offers) your realtor can help you figure out ways to make your offer stand out and still work for you. Remember, you always want to give your best offer first.

earnest money deposit

Yes, that’s right. As soon as you make the offer, you will need to put some $$ down. This is known as an earnest money deposit. Your earnest money deposit is proof that you are serious about your offer and committed to completing the sale. Usually it’s about 1-2% of your offer price. So if you are making an offer of $150,000 on a home, it would be $1,500 - $3,000. Don’t worry, this money doesn’t just disappear once you hand it over! It will goes towards your closing costs.

inspection contingency

Another thing that can be included in the offer is a list of inspections you may want done. You can indicate that your offer is contingent upon these inspections, meaning that if you find out there is severe structural damage or maybe a flooded basement during the inspection (me), you can walk away and not lose your earnest money deposit. Your realtor can suggest to you a list of general inspectors that they have worked with, but you are free to pick one outside of that list if you’d like. The inspector will look at the exterior, interior, electrical, heating/cooling systems, plumbing, structure, etc. They will send you a report outlining the status of these items and any issues that need to be fixed/brought up to code.

Outside of a general inspection, there are a ton of specialized inspections that you can have done on the home—such as radon or lead based paint testing. This is a personal decision you will have to make. Do your research on the different types of inspections out there. Your general inspector may be able to suggest some additional inspections if they feel they are necessary.

Who is paying for all these inspections? You are. Expect to pay around $300-$500 for your general inspector—depending on the size of your home, and of course additional $ for specialized inspections. Personally, it’s better to know what you’re dealing with before you buy it—so I highly suggest getting an inspection before purchasing. After the inspection you can negotiate with the seller on the items that need to be fixed/corrected (more on that in part 3 of this series).

calculate the monthly cost of the home

Remember in part 1 when we talked about budget? This is where that comes in. When you are ready to submit your offer your lender can provide you with a pre-approval letter for a loan up to the specified amount you are offering to include in your offer. Your lender will also give you estimations for closing costs and how much the monthly payment will be for your loan. Remember that there will be other home expenses outside of your loan, such as gas/electric, water, internet, potential furniture funds, and of course—emergency $. I suggest calling your local gas/electric company and finding out what the average cost has been per month for your future home—just so that you have an idea of what to expect and budget for. Estimate your other expenses and make sure this house price point makes sense for you financially.

negotiations

Depending on the market, negotiations may happen. Your realtor will help you communicate your needs to the sellers realtor, so you won’t be speaking to the seller or their realtor directly. Negotiations can be tricky & emotional. Your realtor is your biggest champion here and should work hard to get you the best deal possible.