Tips for First-Time Homebuyers

Home-price adjustments in markets around the country have opened doors of opportunity for many renters. If you are transitioning from renter to homeowner, the prospect of making such a large investment may be exciting, while at the same time overwhelming. But it doesn’t have to be. Here are six common mistakes to avoid.

1. Not understanding the homebuying process. Educate yourself. Find a homebuyer seminar that you can attend or research online. The U.S. Department of Housing and Urban Development Web site (www.hud.gov) has an entire section devoted to homebuyers with common questions of first-time homebuyers, mortgage and home-buying programs information, downloadable tools such as a wish list and home-shopping checklist, tips on selecting a real estate professional, etc. Likewise, Prudential Real Estate’s popular Web site, prudential.com/realestate, offers consumers brand-new tools for the homebuying process, such as free home environmental reports, Value Range Estimates and Property Profiles, among other resources.

2. Not asking questions. There are many facets and intricacies to the homebuying process, so although you may gain a basic knowledge, you will still have questions. Don’t hesitate to let your real estate professional know that you are new to the process. Make sure you choose a sales professional who is willing to spend time with you and walk you through the entire process. He or she will expect you to have questions at each step—from house hunting, to making an offer to the closing. Remember, this is one of the largest financial transactions of your life, so you want to have a clear understanding of what’s going on.

3. Buying on impulse. Don't feel pressured into making an offer on the first home you see. Buyers, especially first-timers, may be impressed by the first two or three homes they view. Look at a good selection. List the positives and negatives about each home. Narrow the prospects to three or four and then return for a closer look. When you decide to make a bid on a property, work with your real estate professional to get all of your questions answered before making an offer. But don't wait too long to make an offer. The longer you wait, the greater the chance other prospective buyers may place offers, making it harder for you to negotiate a good deal.

4. Looking outside your price range. Before beginning your home search, consider getting pre-qualified to so get an idea of how much you may be able to borrow. Use this information as a starting point in determining your price range. Then take into consideration other factors that will affect your monthly budget once you are a homeowner, such as property taxes, homeowners insurance, utilities, private mortgage insurance (PMI) and maintenance.

5. Not planning ahead. Think about personal changes you are planning in the next five to seven years. For instance, are you starting a family, and if so, is the home large enough and will it continue to be? If this will be a starter home or if you think you’ll be relocating in a few year, you’ll probably want to pay closer attention to appreciation and resale value. If a double-income is necessary to qualify for financing and to make your payments, do your plans foresee an income sufficient to continue making payments?

6. Failure to focus on location. Don’t just focus on the house. Examine the community. Does it suit your lifestyle? Is the area safe, well-maintained, close to work, stores and schools? Find out about zoning and what new construction is planned on vacant land in the immediate area. Also consider the property marketability when it’s time to sell.

Above all, remember knowledge is key. No question is a silly question. Your real estate professional can be an invaluable asset throughout the process. Making smart home buying decisions will make the home-buying process less scary and your first home purchase a rewarding experience.

Prudential Olympia, REALTORS is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity.

Stronger Home Warrantees on the Horizon?

More protection for house buyers sought

Brad Shannon

Stymied by the builders lobby a year ago, consumer advocates at the Capitol are taking a new approach to winning warranty protection for homeowners who buy shoddily built homes.

The approach, which Rep. Pat Lantz aired this week in a House Judiciary Committee meeting, builds on legislation already on the books to protect purchasers of condo units. It includes a four- to six-year warranty against defects for single-family homes and duplexes, and it gives builders a chance to "cure" or fix flaws before a buyer can sue.

Sen. Brian Weinstein, the Mercer Island Democrat who had pushed for a law making contractors negligent for shoddy work just as lawyers or doctors are, said he likes the new approach.

"Hers is an easier sell," Weinstein said of Lantz's approach, which might have more political appeal. "The argument is why shouldn't the buyer of a new home have the same rights as the buyer of a condo?"

Lantz was preparing to bring the measure to a critical vote today in the House Judiciary Committee, which she leads. Friday is the deadline for keeping bills alive by passing them out of committee.

Builders who belong to the Building Industry Association of Washington and contractors' insurers are not convinced. They insisted in testimony Tuesday evening on Substitute Senate Bill 6385 that Lantz's amendment could add costs for homebuilders, especially small outfits, while burdening an industry in hard times.

They also questioned whether the legislation tailored in 2004-05 to deal with problems in the condo industry really fit the residential housing market — including requirements for inspections and arbitration, which are costly unless spread out across dozens or hundreds of units, as they are on condo projects.

Olympia builder Daimon Doyle testified that bad contractors make up perhaps 2 percent of the profession.

Doyle said the legislation could have a "devastating effect" on his insurance rates, and Amy Brackbury of BIAW warned it could undo work of several years to bring predictability to the insurance market for builders, driving up rates and home costs.

Using similar arguments, the BIAW and others persuaded House Speaker Frank Chopp, D-Seattle, to kill last year's warranty proposal that could have protected homeowners for up to 10 years for some defects.

Chopp is not saying what approach he will take this time. He referred questions Wednesday to Rep. Mark Ericks, a Bothell Democrat who is pushing for a bill to require a study of the industry and passage of a licensing requirement in 2009 for contractors.

Ericks said he doesn't have an opinion about Lantz's bill but is focused on getting the Senate to pass his measure, House Bill 3349. It would have the Department of Licensing study the need for contractor licensing and bring back recommendations to the Legislature for a bill he is sure would pass in 2009.

Olympia homeowner Karen Veldheer testified Tuesday in favor of the statutory warranty proposal, letting homeowners sue for damages if builders don't correct shoddy work. Veldheer said her family received a builder warranty as part of the sales agreement — "take it or leave it" — but the builder warranty was not helpful for recovering costs of repairs to her water-damaged house foundation in west Olympia.

King County attorney Sandy Levy said most homeowners have no meaningful rights in disputes with builders over construction defects.

"This bill will be very good to good builders, and very detrimental to bad builders," he said.

Levy argued for giving homeowners a longer period to discover major underlying defects such as foundation problems, and he said that if builders want mediation and arbitration to resolve disputes, they should pay for them. He also said he would favor more accountability to home inspectors.

The Olympian, Olympia WA, February 28, 2008