If you’re going to buy a home this year, take the time to do these five simple things. It’s sure to smooth the home-buying road ahead.

1. Get pre-approved for your loan.

Getting pre-approved is the only way to ensure that you’re searching in the right price bracket. Too often, people search for homes in a price bracket they can’t afford, either because they don’t understand how the numbers work, or because they imagine that they’re going to negotiate the seller down to a more affordable number. Not knowing or holding out false hope of a negotiation miracle seems to me to be a haphazard way to spend several hundred thousand dollars, and I don’t recommend it. Instead, spend the time it takes, either online or in person with a mortgage lender, to get pre-approved for your loan.

2. Consider working with a great buyer’s broker.

Would you invest $100,000 in a stock just because you got a hot tip on a cold call? Of course not. But people go out every day and spend hundreds of thousands of dollars on a home without consulting a licensed buyer’s broker. This is foolish, particularly since consulting a buyer’s broker typically won’t cost you anything out of your own pocket. You need someone on your side who can advise you on the neighborhood, demographics, and sales history of other homes similar to yours in your neighborhood of choice.

3. Know the neighborhood before you make an offer.

You don’t just live in the house, you live in the neighborhood. Spend time walking around the area at all times of the day and night before you make your offer. Chat with your prospective neighbors about their experiences in the neighborhood. Pay a visit to the local dry cleaners, supermarket or coffee shop. Stop in at the local police headquarters and inquire about the local crime rate. Pay a visit to the local schools and observe. No matter how much information is on the Internet, learning first-hand about your future neighborhood will pay off in spades.

4. Protect yourself.

Make sure your contract has the right contingencies, and the right language, so that you’re protected. If attorneys are used in the state in which you are purchasing a home, then use one. If attorneys aren’t used, consider using one anyway, so that you have someone advising you who doesn’t have a vested interest in seeing the deal close. Buy enough homeowners insurance and make sure to increase it as the value of your home – and it’s contents – increases. Stay on top of your purchase so that there are no unpleasant surprises.

5. Have reasonable expectations.

If you buy an older home, understand before you close that it’s not going to be in perfect condition. There’s no way everything will be perfect even if the seller has recently gutted and renovated the whole property. But when homebuyers pay list (or over list) prices, it’s understandable that they might expect something nearing perfection. However, as a home inspector friend of mine likes to say: “All homes have problems, but older homes have older problems.” If you expect perfection in an existing home, you’re likely to end up disappointed.

See also…

Buying and Selling Property