9 Smart Home-Buying Tips From Real Estate Experts


There are right ways and wrong ways to buy a home. The latter of which will cost you a lot of unnecessary money, stress, and frustration. Use best practices, however — as offered by real estate experts below — and you'll walk away a winner with a smile on your face and cash still in your bank account.

1. Research agents before choosing one

Selecting the right real estate agent can make all the difference when it comes to finding your dream home and negotiating the best price. Carlos Miramontez, vice president of mortgage lending at a California credit union, offers a few pointers on narrowing down the agent pool.

"Doing your research upfront can help you make a wise decision and choose a well-qualified real estate agent who's right for your needs," he writes on the company blog. "Remember that you're creating a business relationship. It's important that you work well together, as it could be several months before the entire buying or selling process is complete. Enjoy a cup a coffee with a few agents before you make the decision on which partner is right for you."

There also are specific questions you should be asking your agent, such as:

  • How often will you send me listings?
  • Will you show me homes when I'm available (e.g., after work or on the weekends)?
  • How long have you worked in real estate?
  • What type of property do you specialize in (e.g., condos, single-family, or town homes)?
  • Have you worked with other clients in my desired area and price range?

2. Search social media for local real estate groups

Social media is a great resource for connecting with real estate agents in an unfamiliar area, says Brady Hanna, president of Mill Creek Home Buyers in Kansas City, who has been buying, renting, and flipping houses for over a decade.

"Search on Facebook for real estate groups in your local area," he says. "You will be surprised to find that there will probably be 10 or more. Join all of them, including investor and wholesaler groups. Then post across all of these groups that you are looking to buy a house in ABC area, what your criteria is, and if they have any off-market properties to send your way, and include your email address. You would be amazed at how many people will send you off-market properties using this technique. I have bought six properties in the last few months just from local Facebook groups." (See also: 5 Things Your Real Estate Agent Wishes You Knew)

3. Add a personal touch when there are multiple offers

How do you stand out in a pool of potential buyers? Send a personal note to the seller with a creative story about yourself, why you're the best buyer for the house, and your plan to make it a home.

"If you talk about your family in the letter, you will pull at the heartstrings of the seller and have a much better chance of being selected if you have a similar offer than another buyer," Hanna says. "I have experienced this personally when selling houses and every time I picked the buyer that wrote the personal note when I had multiple similar offers."(See also: 4 Times a Handwritten Letter Can Save You Big Bucks)

4. Don't automatically settle on city living

Life in the city is attractive and convenient for a lot of people, especially if you're the type that likes to have necessities within walking distance. But even though life's essentials are easily accessible, the financial picture over time may rob you of a certain quality of life.

"Be sure to check out properties in the 'burbs and take the cost and time of your commute into consideration," suggests Shane Lee, data analyst for RealtyHop. "While the city life is always amazing, you might find a way better deal in the burbs. You can even find a fixer upper and make it your dream house with the money you save on the purchase."

5. Run through all costs before starting the home-buying process

Most first-time home-buyers concentrate on the down payment — the largest of all the out-of-pocket expenses — but there are plenty of other fees required for a property purchase that you should be aware of before starting the process.

"Budget for down payment, closing costs, and other costs as early as possible," Lee advises. "In addition to the 20 percent down payment (some lenders require less), origination fees are usually between 2 and 5 percent of the total loan amount, and it is crucial that you start saving early on, so you have enough cash to cover all mortgage-related payments, legal fees, as well as broker's commission by the time you are ready to close the deal."

Don't forget about the often-overlooked hidden costs that'll pop up before you know it, like property taxes, insurance premiums, and any Homeowners Association (HOA) dues. Taxes and HOA dues vary, so be sure to ask for details. Obtain an insurance premium estimate from your insurance agent.

It's important to figure all this out before committing to a property to ensure you can afford the entire scope of fees associated with it.

6. Investigate the HOA to make sure you're compatible

Homeowners Associations can be great for many communities because they provide a set of standards to ensure that all residents are living in a place that values beautification and resale value. On the other hand, some folks find the HOA to be too involved, and the decisions of the board may not always be best for everyone. (See also: What You Need to Know About Homeowners' Associations)

Robert Nordlund, founder and CEO of Association Reserves, explains.

"'Location' is certainly one of the most influential factors in the value of a real estate transaction, but when it comes to buying a home in one of the 350,000 association-governed communities (AGCs) in the United States, home-buyers face two additional circumstances," he says. "First, getting a good value on the front end will be influenced by largely unpublicized financial factors unique to that AGC. Second, the long-term fate of their investment will be permanently hitched to the decisions or whims of a group of volunteer board members. The vetting process is not complicated, but it does take time and should be completed before any offer is on the table."

To help you find the right HOA for you, consider these tips:

  • Attend a board meeting.
  • If the association is professionally managed, meet with the manager.
  • Check the association's annual budget and make sure it's accurate and balanced.
  • Ask for a copy of the Reserve Study and take the time to understand it.
  • Check the curb appeal closely in daylight and in the evening.
  • Make note of any obvious deferred maintenance.
  • Ask about the history of special assessments.
  • Evaluate the transparency of the board and manager.
  • Read the association's rules and standards.

7. Buy a home below your means

Real estate expert, Julie Gurner, makes a case for spending the least amount possible on a home that meets your needs and makes you happy — even when you have plenty more to spend on it.

"While your friends might struggle to pay for something at the top of their budget, shoot for a home that is 75 percent or less of what you're approved for to be able to save more effectively for retirement, emergency repairs, travel, and generally enjoy your life far more without the fiscal burden," she says.

How can you do that? Look for the most outdated home in the most desirable neighborhood.

"Look for a home where the style is outdated — it might need a new kitchen, there's likely old wallpaper or carpets — but it's well tended to and all the bones are solid," Gurner adds. "With time and a bit of effort, the ugliest home on the block can almost always become your dream home. With so many people expecting move-in-ready homes, the outdated homes are often overlooked gems that can save you a fortune and put you in a position to build sweat equity from day one."

8. Invest remotely in high-yielding real estate markets

For home-buyers in New York City, San Francisco, Los Angeles, and many other coastal markets, purchasing affordable single-family rental (SFR) homes out-of-state is a great way to get started buying real estate and building long-term wealth.

"Buyers in these coastal areas can find higher yields and lower median home prices than they can in their own backyards," says Zach Evanish, who leads sales efforts at investment-property resource Roofstock. "Some prime examples include Memphis, Cleveland, Indianapolis, Atlanta, Dallas, Phoenix, Pittsburgh, and other metros across the Southeast, Midwest, and Southwest. Buying SFRs remotely can also be a stepping stone to amassing an investment real estate empire with ample positive monthly cash flow, and to eventually buying an owner-occupied home in one's own hometown, thanks to this stable stream of monthly rental income."

9. Ask for reductions after inspection

One of my own personal tactics for saving money on the homes I've purchased is taking advantage of an inspection that reveals interior or exterior issues. If the seller is in a depressed market or needs to sell quickly because of other circumstances, you have a great chance of making post-inspection deals.

"Home sellers often describe their property's condition as much better than it is. A good inspection often reveals unanticipated defects," explains Lucas Machado, president of House Heroes, a real estate investment company. "Don't be afraid to ask for a reduction. Buyers sometimes hesitate to request a lower price due to fear of losing the house. In reality, sellers give plenty of reductions upon request — even tens of thousands below the initial offer. There is no downside to asking — and you can still proceed if they say no."

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