everything you wanted to know about house buying, but were afraid to ask

This week, if all goes well, we shall complete our house-buying saga. Along the way, we've learned a helluva lot... so just in case anybody needs 'em, here are all the steps.

1. Go to a first-time homebuyer's seminar. Those are generally free, will give you a good overview of the process, and should serve coffee.


2. Hopefully, during the seminar you'll get a chance to sign up for MLS access (if not, wait until the next step). MLS is a database of all (well, most) properties for sale, so make friends with its quirky interface.


3. Find a buyer's agent. You don't have to have one, but they come in useful, and are free to you - the two agents will split the commission that the seller pays. If you don't get one, seller's agent will run the entire transaction and keep the entire commission (around 5%). On the flip side, if you're working without an agent, seller's broker will pretend to be your best friend - remember, it's 2.5% vs 5% for him/her. BTW, when you're looking for an agent, either ask around to get someone qualified, or sign up through any number of referral schemes to get a kickback (and a random person to help you make the biggest purchase you've ever made). Guess which one we picked... yup, let's just say we'll be expecting a Home Depot gift card in the mail in a few weeks.


4. Realize you're already way over your head.


5. Guided by your best friend, MLS, get a feel for the market. Figure out what's going on in different neighborhoods, and which houses sell quickly. Search around on the web and in the newspapers to figure out which town are doing well financially, and which ones host Superfund sites (heh... took me a while to figure out why houses in Wilmington were such a steal.. until I dug up some brain cancer statistics).


6. Go to open houses, again for the purpose of self-education. Yes, some do serve cookies.


7. If you find something that looks remotely livable, make your agent earn his/her keep, and tell them to schedule a viewing (this can be done even before the first open house).


8. Your agent will try to make it seem like he/she serves a purpose greater than being a professional door opener, and send you some listings to look over. Those will inevitably be at the high side of your range (2.5%, remember?), and the houses will resemble ancient ruins... only less majestic.


9. Right about now, you will start to see right through the real estate terms like "cozy" (small), "perfect for first-time buyers" (an absolute wreck), "full of character" (walls are caving in), and "private" (can't see the house through all the weeds).


10. Get pre-approved. For that, you will need to find a mortgage broker - which I would recommend going with, since they can pick the best offer from several banks. You call them up, answer a few questions, and they fax you a pre-approval letter stating how big of a loan you can swing. You can ask about the rates, but don't sweat it, since those go up and down constantly.


11. Find the house of your dreams. Resist the urge to jump up and down.


12. Here, you have to act reasonably fast. Factor in the listing price, condition of the house, time on market, and level of desperation on the other agent's face - and come up with the lowest number you think the seller will take without giving into his/her desire to strangle you.


13. Have your agent write up an offer. You can play with several variables - price being primary, of course, but timing is important too. Your agent will prefer the quickest closing possible (thus, less of a wait for that 2.5%), but you would probably need at least a week to conduct a home inspection, and close to a month to get the loan hammered out. Oh yeah, make sure that the offer is made conditional on inspection results. With the offer, you need to include a deposit of $500-1000, plus (usually) a pre-approval letter. Now, your mortgage broker is gonna love you for this, but you'd want to include a letter that states that you are pre-approved for exactly the amount of your offer - not a penny more. If you show that you can spend more, the seller would be much more inclined to ask for more.


14. The seller now has three choices - accept the offer, reject it, or draw up a different one. This game can last for several rounds.


15. Once your offer is accepted, find a home inspector to go through the nether regions of your potential abode. If he/she (ah, face it, it's probably a "he") finds anything horrific, you can still back out and get your deposit back.


16. Assuming everything's OK up to this point, work with a lawyer on hammering out the Purchase & Sale Agreement (your agent and your mortgage broker will probably recommend their "guy"). Make sure to chuckle every time you say "P 'n S".


17. Read over the P&S, and make sure every concern of yours is covered. If the house is filled with junk, like ours was, specify that you want it delivered in "broom-clean condition".


18. With the P&S, you have to fork over some more dough, maybe $5000 - in a form of a bank check. At this point, it is wise to start making copies of things, like the said check. You will also realize that you have passed a point of no return, and getting your $5000+ back now will be a tiny bit difficult.

Sounds exciting so far? You just wait, we haven't even gotten to the best parts yet... I'm just tired of typing for now.