Those in the homebuying market don’t need to be told twice: shopping for a house is difficult. For many consumers, purchasing real estate is the single largest investment they’ll ever make, not to mention the day-to-day impact their choice can have on their lifestyle.
Should the home be in the city or the suburbs? Have two bedrooms or four? Even once these basic parameters are locked in, you may still be faced with a superfluity of options — an excess of freedom which can, paradoxically, leave us feeling even more anxious and stymied.
Of course, “shopping around” can also help ensure you find the very best fit at the very best price available. So how should we tow the line between shopping and overshopping?
How to feel confident in these 5 homebuying decisions
The homebuying process is full of daunting decisions, from choosing a realtor to learning how to compare homeowners insurance plans, and a desire to get it right is natural.
That said, stagnating at any step along the way can draw out the purchase from weeks to months (or even years), leaving you frazzled and exhausted.
Fortunately, you can often gain a lot of ground, research-wise, with a relatively small amount of legwork. Here are some tips to help you find the happy balance of doing your homework without getting completely overwhelmed.
1. Selecting a real estate agent.
Your real estate agent plays a huge role in determining which properties you’ll end up choosing from — which means selecting that agent is the first major step toward finding your dream home. In fact, more than half of shoppers say a realtor’s ability to help them find the right home is the No.1 factor they have in mind when hiring one.
So it’s important to take time to look for the right fit, vetting potential realtors’ personalities, reviews and performance histories.
While reading client reviews online through websites like Yelp and Angie’s List can help you do a lot of the heavy lifting from the comfort of your home, one great way to find a professional realtor is to ask for referrals. Leads from friends and family are great, but asking similar homeowners who they worked with can put you on the fast track to finding someone who “gets it” — whether that means scouting for LGBTQ-friendly neighborhoods or needing ample outdoor space for pets.
You could also reverse engineer the search by driving around your target neighborhoods to see whose name keeps showing up on for-sale signs; they’re likely to know those areas well.
2. Contacting a listing agent.
Whether or not you’re represented by a real estate agent of your own — also sometimes known as a “buyer’s agent” — you may find homes for sale that are represented by a different realtor. This agent is also known as the “listing agent,” and buyers can reach out to them directly to express interest and set up a showing.
That said, if you’re already working with a realtor, etiquette dictates you should organize the showing through them. After all, they’re working towards making a commission on the sale.
It’s worth keeping in mind that the listing agent’s primary responsibility is representing the interests of the selling party. Whereas your buyer’s agent makes a commission whenever you buy a house, the listing agent only makes a commission if you buy that house, which might lead to a more aggressive sales pitch.
Allowing your buyer’s agent to work with the listing agent means both parties in the sale have the benefit of a mediator — and since the seller typically pays both agents’ commissions fees, you get the benefit of professional help at no additional cost.
3. Finding a home.
This is a big one — and one that’s likely going to require lots of conversation with your family. Only you can suss out the make-or-break aspects of your new home, whether it’s a fenced backyard or a breakfast nook.
Even in tight markets, there are likely dozens of listings to choose from, which can easily lead to analysis paralysis if you don’t go in with some priorities set. It’s a good idea to write down your must-haves in as much detail as possible, from number of bedrooms to price point. Be sure to think about your daily lifestyle and how your home’s layout and location might have an effect.
Bonus: this written list will serve as a great resource for your buyer’s agent, who can use it to help pinpoint the listings you’re looking for. (It can also be the foundation for setting your own filters while searching online.)
4. Making an offer.
As hard as it is to find the right house, it can be even harder to figure out how much to offer. After all, even a few percentage points can mean thousands of dollars when you’re talking about a six-figure purchase. If you offer too much, you stand to lose cash you could have kept in your pockets, but if you go too low, you might offend the seller and lose the deal entirely.
There’s no one hard and set rule on how much to offer on a home purchase; rather, the answer depends on circumstances. If you’re in a hot seller’s market, you may need to offer more than asking price in order to outbid other potential buyers. On the other hand, if the listing’s been active for several months or a year, you may have more room to negotiate.
The good news is, your buyer’s agent can help here, too: ask them to work up a comparative market analysis, sometimes also called a comp or CMA, which shows you how much other, similar homes in the market have sold for recently.
5. Buying insurance.
It might seem like a small detail in the scope of the buying process, but insurance can actually be a pretty big deal. In fact, a recent study found that insurance is a source of conflict for nearly 40% of married couples.
What’s more, the average cost of homeowners insurance can vary from $400 to $3,000 depending on where you live. That’s a huge range — which is why it’s important to have a solid understanding of what you should be expecting to pay in your area.
You can start by researching the average homeowners insurance cost in your state, which will then empower you to compare online quotes from a more educated standpoint. Keep in mind, of course, that additional factors like your home’s total square footage and renovation history will have an affect on the prices you’re offered.
Once you’ve got your quotes, you’ll have to figure out how much coverage is sufficient — and you might want to think twice before opting for the cheapest plan available. A plan with a lower deductible and more coverage may have higher premiums, but can certainly come in handy if you end up needing to use it.
While homeowners insurance claims are relatively rare — only 11% of homeowners have filed a claim in the last 15 years — the average claim payment is over $8,500; common causes of those claims include wind- and weather-related damages as well as theft. It’s also important to make sure you’re covered for natural disasters that occur in your area, which may not be rolled into your primary insurance. (For instance, in Florida and Texas, you may have to purchase extra coverage for damage caused by hurricane winds.)