By Jackie Lam
Buying a house is an overwhelming process in itself — but buying a house out-of-state or even in a new neighborhood? That can make things even more complicated. To make the process easier, here are ten steps on how to buy a house in an area you’re unfamiliar with:
1. Do preliminary research
First thing’s first: Do your homework to determine the cost of living, conditions in the housing market, neighborhoods, walkability, and commute times in the area you’re moving to. Resources like AreaVibes and Niche can help you feel out a specific city, and the local chamber of commerce or tourism bureau can help you learn more about what the area has to offer.
Some considerations to make: How much property taxes will you have to pay? Is there reliable public transportation? What’s the job market like? If you have kids, how are the schools? Is there an art or cultural scene? Are there nearby opportunities for outdoor activities, such as nature trails? Of course, how important each of these factors is depends on what’s most important to you and your family.
2. Determine what you can afford
As buying a home is likely the largest purchase you’ll make, it’s crucial to determine exactly how much you can afford. What are your household’s earnings and expenses? You’ll need to consider how that fits your new mortgage payment and homeownership costs, like insurance, maintenance, repairs, and taxes. If you’re moving somewhere where the cost of living is significantly higher or lower, you’ll need to consider that in your budget, as well. You can use a cost of living calculator to help estimate what you can realistically afford.
3. Start shopping for a mortgage
Once you’ve zeroed in on a price point, it’s time to start shopping around for a mortgage. Look for a mortgage lender who issues loans in the area you’re moving to — a national lender might be best — or for a loan officer who is licensed in that area. Besides considering how much you can borrow, think about what interest rate and terms you’ll get from different lenders, and take the time to research each lender’s reputation. Your loan officer should be someone you trust, enjoy working with, and knows about the area.
When you settle on a lender with the best rate and terms for you, ask for a preapproval so you’re prepared with the financing ahead of your home search.
4. Create a needs and wants list
You’ll almost always need to make a few trade-offs when buying a home, so carefully consider what you will and won’t compromise on. What are the absolute must-haves? Are you dead set on a large yard for your garden or an attic or basement that can serve as your she-shed or man cave? On the flip side, what are the features you can do without? A two-car garage? Less closet space? What’s on your list of “must not-haves”? Does the home have to be close to a park or the beach? Family or friends? Creating this list now can save you time when you set out to search for your new place.
5. Work with a local real estate agent
Since you’re unfamiliar with the area you’re moving to, it’s important to work with a local real estate agent who knows the ins and outs of the neighborhoods you’re house-hunting in. If you’re not sure who to work with, you can ask an agent in your current city for a referral to a local agent in your new city. The agent can help you get acquainted with the area, make recommendations for dining and other activities and offer video tours so you can view homes if you’re unable to visit.House-hunting can take time — in fact, buyers typically spend eight weeks and look at nine homes, according to the National Association of Realtors (NAR). Having an agent in your corner can help in the process.
6. Make an offer
When you find a home you’re interested in, it’s time to make an offer. The amount you’re willing to pay is only part of the equation — the seller might also present some terms to see if you’re open to accepting them. Many contingencies are standard, such as securing a mortgage before the deal can be finalized. In a competitive market, accepting the seller’s contingencies and removing some of your own makes it easier for the seller to accept your offer. If the seller counteroffers, your agent can help you negotiate, too.
Another, even better way to make your offer stand out? Make it an all-cash bid. But what if you can’t pay all-cash? If you partner with Opendoor to buy a home, you’ll be able to present an offer with no appraisal or financing contingencies, giving you a competitive edge.
7. Get a home inspection
If your offer is accepted, hire a home inspector to ensure you’re aware of any issues with the property before agreeing to purchase it. The cost for this is usually $300 to $400. If the inspector uncovers major problems, you could have grounds to negotiate with the seller — you can ask for repairs to be completed before closing, or for the seller to come down on price — or choose to walk away.
8. Finalize your mortgage
If all goes well with the inspection, you’re ready to move forward with the purchase and finalize the financing. Your mortgage lender will review your employment, income, credit, debt, and assets, such as what you have in your bank accounts and retirement savings, and decide whether to approve you for a loan or for how much. You’ll also need to purchase homeowners insurance at this time.
9. Do a final walkthrough
Before closing, the buyer and the real estate agent typically do a final walkthrough of the home to make sure it’s clean and there’s no new damage or issues. If you’re unable to do this in person, your agent can do a video walkthrough with you or complete the walkthrough on your behalf.
If you can be there in person, that’s even better. During the walkthrough, test light fixtures, examine the floors, ceilings, and walls, turn on and off each faucet and flush the toilets. Is the garage door in working order? Does the garbage disposal function? Leave no stone unturned.
10. Close and prepare to move
Before closing day, review the closing disclosure your lender provided to you — this includes all of your home loan details. If there are any discrepancies between what you were quoted and you’re not sure why, ask your lender for clarification. While some documents can be signed electronically before the closing, you’ll almost certainly need to attend the closing to sign the remaining paperwork. Come prepared with the funds you need to pay the closing costs, and ensure you leave with the keys and any other items you need as the home’s new owner, such as a garage door opener.
Aside from the cost and work of organizing and packing for your move, you’ll need to factor in whether you need to stay in a hotel for a time or take unpaid time from work while you’re moving. If possible, allow yourself plenty of time to uproot from your current home to your new city. If you have the money or your company offers it, consider working with a professional relocation service, as well. These firms can assist with everything from the logistics of the move to helping you acclimate to your new stomping grounds.
This article is also posted on Bankrate here.