Buy

There's just 7 steps to buying a house. It's not hard.

STEP 1 : SET YOUR BUDGET

If you look around the web at other “how to buy a house” blogs, you probably won’t see this on there, never mind as #1. It will just say talk to a bank and see how much they will lend you. Well the banks will lend you as much as they can because they make more money the more that they lend you(and so do realtors, so don’t let any realtors try to push higher priced homes your way).

It’s your wallet and your budget, so you need to decide up from what price range you are comfortable with and then go to the bank and say “I want to borrow X amount”. Don’t let the bank dictate your family budget.

When you figure out your budget, write it down with a sharpie so you can see it clearly, stick it somewhere you can see it every day and resolve to stay within that number. Seeing it every day will help you to stay focused on keeping within your budget.

It is so important to do this upfront because once you start looking at houses, you’ll start to get emotionally involved in the process and that’s where your heart begins to take over and good decision making can go out the window.

2. HIRE A REAL ESTATE AGENT

It only takes 80 hours of classes to become a licensed real estate agent in Charleston, SC. That means every Tom, Dick and Harry has their real estate license.

Everyone know at least 5 agents in their social circle right ? Well you are not looking for your realtor to be your friend, they are going to be your advisor on the biggest purchase you’ve ever made so you want a professional helping. They are going to know a lot about your personal financial information, you may get mad at the them and you may even have to fire them. Keep work and friendship separate. It’ll make for a less stressful life.

Before I became a realtor, I was a real estate investor, so I’ve been in your shoes before trying to find a good realtor. Here is my checklist for finding a good realtor in Charleston

Response time, this is my biggest one. Call or email and see how long they take to get back to you. If they don’t respond very quickly, find someone else. Time is absolutely critical in real estate.
Must be full time career agent. Period. No other jobs, real estate is a 24/7 job and if your agent isn’t available when you need them, you’re the one losing out.
Must be experienced & must have sold at least ten houses last year. I wouldn’t hire someone without 3 years experience. Sorry, there’s too much of your money at stake here to let a rookie learn their job at your expense.
Must know the area & I mean know it inside out. When you talk first, drill them with questions. If an agent claims to be a specialist in every part of the Charleston area, well, that's generalizing, not specializing. Beware anyone who claims to know everywhere.

3. TALK TO A BANK

In step 1, you’ve set your budget and after step 2, you’re hired an agent who will help you find a house within that budget.

Now it’s time to talk to the bank to make sure they will lend you that amount.

There’s two reasons you should talk to the bank at this stage :

You want to be sure you can qualify for the loan you want. You don’t want to waste your time looking at houses that are out of your budget.
When you find a house you like and want to submit an offer, the seller will want proof that you are qualified to buy the house. If you wait until you find the house you like before talking to the bank, you’ll lose valuable time waiting on the bank and during that time, somebody else could bid on your dream house.

It’s a very easy process, just call your bank or mortgage broker and tell them that you would like to buy a house, you’ve worked out how much you‘d like to spend and can you get pre approved for that amount. Normally this can all be done over the phone in 15 minutes. Very quick, very easy and they should have an answer to you within 24 hours.

STEP 4. LOOK AT HOUSES (THE FUN PART)

Now you get to enjoy yourself a little. Time to start looking at houses.

You’ll have already told your agent what's important to you i.e. schools, commute to work, do you want a brand new house or are you ok with a fixer upper. Do you need master bedroom down, a big yard, what square footage do you want, do you not like a certain style of architecture. The more information you can give up front, the more suitable houses your agent can line up for you.

So if this is your first day out looking at houses, you're unlikely to find your dream home on day one. Today is more about narrowing down your search to finding an area or neighborhood that you like. Yes, you will go into houses but take time to get a feel for the neighborhood, do you like it or not ? If you don't, then let the agent know and you can rule it out. Maybe you like the neighborhood but not the house, great, there's lot of floor plans in each neighborhood, find the one you like. Maybe you like the house but not the neighborhood, well it's likely that same builder has other neighborhoods.

Be vocal, let your realtor know exactly what you like and don't like. If your agent is a specialist in the area (remember one of my rules for picking a realtor), then he/she will know the market well enough to recommend other subdivisions you'll like.

BTW, if your realtor is pushy and trying to sell you the house rather than show you the house, then time to change realtor. The realtor's job is to open doors & answer your questions, not to sell you a house you don't like. Only you will know if you like the house and from my experience, you'll know that within the first few minutes in the house.

Some Tips

Fuel up, it's more tiring than you think looking at houses. Bring water, snacks to keep energy level up
Don't look at more than 5 houses at a time, they'll all blend into one and you'll lose track of them.
Bring pen and paper to make notes, use camera on your phone too.
Look for signs of how well maintained a house is...the yard is a great indicator. A well maintained yard usually means a well maintained house.
Don't let a house that needs some cosmetic tlc put you off. It's a great way to buy a good deal on house.. Countertops, appliances, paint, carpet etc are all very easy and not too expensive to replace. A good agent will have all the contacts to make the renovations easy.
Think of selling the house. This may seem strange when you are buying it, but you'll likely sell it too and you want a house that will be easy to sell. Is it noisy, is the lot private.
Do you have kids ? Drive through the neighborhood at the weekend, see if there are many future friends for your children.
How's the traffic ? Drive there at rush hour.
Ask your real estate agent if there is anything planned that could impact your home i.e. new roads etc. Parts of West Ashley/Johns Island could be impacted when I-526 is extended for example.

STEP 5 : MAKE AN OFFER

I did tell you that buying a house was easy, but it's been all too easy so far, now we get into the offer & negotiating step, probably the most stressful part of the whole process.

First, the Basics. to submit an offer, you need

Pre -qualification letter
An amount you want to offer
A date you want to close on (30-60 days)
Do you want to ask for any other items i.e. refrigerator, washer, dryer.
Sign the offer, send it off and wait for response.
Seller counteroffers, you respond etc until you agree on price or the deal dies.

That's it. I could write a book on each of these steps, and but for the purposes of this guide, I'll just give you some tips from my 20 years of buying homes.

The Budget gets an Upgrade

Remember the budget you wrote with a sharpie from step 1 ? Ok, we're going give it the respect it deserves and upgrade it. Crumple up the post-it that it was written on, now go to your computer and print out that magic number on the largest font that will fit on one page and keep that page in front of you until a deal is reached.

While keeping your budget in mind, equally don't get stubborn, make your offer/counteroffers based on the house and its value, not on the behavior of the seller or the asking. This is a business deal and the seller is trying to get as much money for his/her house as possible. That is their job and they are fully entitled to do it. You are trying to pay as little as you can and that's your job.

Sometimes the asking price is the correct value and it’s ok to offer full price to snap it up before someone else does. Don’t negotiate just for the sake of it, you risk losing the house to someone else or creating a bidding war.

I've seen folks lose great deals (despite my best efforts) because they got mad at the seller.

Houses are like buses, there's always another one around the corner

The reason I feel so strongly about your budget is because houses are like buses, there's always another one around the corner. I cannot tell you how many times I've seen folks refuse to exceed the budget and are sad that they've missed out on their dream home, only to see a better home come on the market and they are so thankful for missing out on the first dream home. Happens all the time. ALL THE TIME.

Be Patient, it will save you thousands.

When you submit your offer, you can't wait to hear back. You're going to find yourself checking your phone every five minutes. It can take 4/8/24/48 hours to get a response.

There are many reasons for how long it takes a seller to respond, there might be multiple sellers to consult, the seller may be out looking at houses to buy or maybe, just maybe, the sellers are to try to 'ice' you.

Do not ask your realtor to call their realtor asking for the offer back...that reeks of desperation and any sensible seller will increase their counter offer once they hear that you have called.

Be patient, calm down, go for a walk, swim, run, whatever it takes you to stay calm. Being patient can save you thousands.

My goal with the points above is to prepare you so you can act like a seasoned buyer even if you're not. There are many many more things I could have included above and that I do teach all my clients before we even look at a house. That is where I really earn my money.

STEP 6 : UNDER CONTRACT

Congrats, you have agreed a legally binding deal with the seller to buy their property.

All going well, you should be getting the keys to your new home in 30-45 days.

However there’s still a lot that needs to happen before then.

Home inspection
Termite inspection
Lots of legal stuff (don't worry, attorney handles it)
Appraisal (the bank handles this)
Negotiations on some of the items above

Home Inspection

The home inspector's job is to crawl, climb & test everything in your house to find problems. The home inspector will check to make sure you're not buying a lemon or Charleston's version of the money pit.

He works for you and his job is to find problems, you want this guy to be such a stickler for rules that you nearly don't like being around him. Remember that kid in school who loved pointing out everybody's problems well that's the guy you want as your home inspector.

I want someone who knows construction inside out, that's why my preferred home inspector is a former builder. I swear he sits up at night reading building code books.

They crawl under the house to make sure it structurally looks good, they climb in the attic to check the beams up there. They climb on the roof to check it out, they test the a/c, the heating, the water tank, every appliance in the house. It takes anywhere from 2 to 4 hours depending on the house.

At the end, you will get a 50+ page report with everything broken down by mechanical, electrical etc. KEEP THIS REPORT. It is a goldmine of information.

If there are issues with the house (there will be issues with the house, every house), then you can request the seller to fix the issues. Some they are required to fix, some are negotiable. This is another place your realtor earns his bacon. This part can be tetchy and has caused more than a few of the grey hairs on my head.

My best advice for this is choose your battles carefully, pick the main items that are important to you.

Termite Inspection

I don't envy this guy's job, he gets to crawl around under the house while avoiding any furry or scaly squatters that may be lurking down there. He tests the foundation to make sure that termites haven't eaten through the structure. He will come into the house and check the baseboards and other areas. This is Charleston, there are termites everywhere and they don't discriminate based on home value or age. The wise homeowner will have a termite bond.

At the end of the termite inspection, he will issue what is called a CL-100. This is a standard state document and any findings will be reported on it. If there are any issues, they must be cleared, the banks rarely allow the sale to go ahead unless they have a 'clean' CL-100 i.e. any issues found are fixed or determined to be small enough not to affect the house.

Legal Stuff

You will have an attorney, in South Carolina, house closings are done by attorneys. Your tip here is be very nice to the paralegal, they are the ones who do all the work. They have a job slightly above the termite inspector, I don't envy them at all, they have to deal with banks, insurance, home owners association, sellers attorney, county/city/state govts, termite, inspectors and worst of all, me calling every day to see what the status is.

Appraisal

The bank are going to lend you money to buy the house and the bank wants to know that it not lending $500k on a house that's only worth $300k. Well 'the bank' is really some guy sitting in a cubicle in some small town where office space is cheap like Minot, ND....he couldn't find Charleston on a map if it was the last question on "Who Wants to be a Millionaire" and he definitely doesn't know the value of a house here so he will order a local appraiser to tell him the value of the house. The rules have changed with appraisers, back in the day, the mortgage guy could call his buddy Joe the Appraiser and have him do the appraisal, well times have changed and now the appraiser is totally independent so there are no outside influences.

STEP 7 : CLOSE ON THE HOUSE

No matter how long ago you signed the contract, the banks like doing things last minute, so don't be surprised if there is some last minute requests for something from them, they have to get a closing disclosure to you 3 days before closing so that you can review all the items on it.

The attorney's office will put together the ALTA, closing statement. This is a standard federal document and it will list every cost associated with the sale of the house and most importantly how much money you have to bring to closing.

Unless you only need a small amount of money to closing, it is typically wired in to your attorney’s office. There has been a lot of the wire fraud recently, so be extra cautious here. It’s a good idea to phone the attorney and confirm the bank details over the phone.

The closing takes place at the attorney's office in South Carolina. It’s at the buyer’s choice of attorney.

The seller might be there or might not. You don't even have to be there, you can do a power of attorney, but typically the buyer is there. It takes about an hour.

That morning you will have done a walk through of the house to make sure it is still there & agreed repairs are complete.

But to close on the house, all you need a pen with a lot of ink, wire in your downpayment and your identification. That's it. You will sign lots of documents and then you get the keys to your new home.

Congrats, you’re a homeowner !!