Step 5: Find the Right Home
Now the process gets exciting! Once you've finished your budgeting and mortgage planning, it's time to start searching for the home of your dreams. Where to begin?
Based on your discussions of location, needs/wants and price range, your Chicago real estate agent will perform an exhaustive search of Chicago properties that meet your criteria. They will then scrutinize available properties to generate a list of potential homes.
At this point, you and Your Dream Town REALTOR® will begin to visit properties. Your REALTOR® will schedule and confirm all appointments, maximizing the use of your time and energy.
Bring a notepad to record observations and questions about different properties, as seeing multiple homes can overload your senses and make you forget important distinctions, details and questions.
Your Dream Town REALTOR® will make sure you tour enough homes to compare similar properties and cross-reference them with your needs and wants, on the one hand, but be selective enough so you aren't overwhelmed with too many visits, on the other. Some homes you will eliminate quickly, some will show promise, and others will capture your fancy immediately.
Feel confident when you make an offer. Make it contingent upon at least three approvals: mortgage approval, legal approval from your attorney, and a home inspection with a professional inspector. You can add more contingencies, such as an architect's visit, but the more demands you add to your offer, the less likely it is to be accepted.
Gather as much information as possible about the property, such as the square footage of the home, property taxes, average monthly utility bills, ages of appliances and major mechanical systems. Take a close look at the furnace, air conditioning, and electrical box and wiring. Check the roof, gutters and exterior finish. If the floor plan doesn't suit you, see if remodeling and/or an addition to the house is feasible. Find out how long the sellers have lived there and why they are selling. sellers and their Realtors® are required by law to warn buyers of material defects in a property that may not be apparent during a routine inspection. If no information of this type is offered, be sure to ask. Jot down anything you think might be an expense to you after you've bought the house, as this will affect the price you offer. When looking at older houses with the intention of remodeling or expanding, arrange for an architect or contractor to accompany you on a visit.
Elements Affecting the Price of a Home
- Asking Price - This is usually the primary factor that controls which homes you choose to visit and with which other buyers you are competing. This is the starting price point for negotiations, while the actual market value is determined by how much buyers are willing to pay. Your Dream Town REALTOR® will tell you what nearby properties comparable to the one you're considering have sold for, and give you the average spread between asking and selling prices in the neighborhood—but remember, each transaction is unique. Some sellers are more willing to bargain than others.
- Location, Location, Location! - If you have specific location needs and wants, you may have to pay a premium to achieve your goals. Homes that are close to the lakefront, the El, the Magnificent Mile, schools, parks and other community infrastructure are more expensive.
- Economy - The strength of the overall financial and real estate markets can affect interest rates, competition, and other elements that work to determine asking and selling prices. Homes on the market for a long time tend to decline in price.
- Property Condition - Structurally and mechanically sound homes can demand a premium price, while the prices of fixer-uppers and homes with flaws can be negotiated downward.
- Contract Terms - Contingencies, closing requirements, and fixture and accessory exclusions are among many variables that can affect asking and selling prices.
Considerations for Condo buyers
- Number of units in the complex
- Percentage of owner-occupants
Monthly association dues
- - What do dues cover?
- - How often do they increase?
- - Any anticipated increases?
- Fee for transferring association membership?
- What does the homeowner's insurance cover?
- Is the homeowner's association professionally managed?
Amount in the Association reserve account?
- - Any large expenses anticipated?
- Is the Association involved in any litigation?
- Are pets allowed?
- Can you rent your unit out?
- How many parking spaces are included?
- How many storage spaces are included?
- What common facilities are included?
- What do current owners like best about the complex?
- What do current owners like least about the complex?
- Is there soundproofing? Are the walls thin?
- What's the type and quality of the water pressure, heating, and cooling systems?
- Are sale prices increasing or decreasing?
- How active are condo sales?
Don't Make These 7 Costly Home Buying Mistakes
Don't let these mistakes cost you thousands of dollars—or even the home that's just right for you! Your Dream Town REALTOR®, your trusted advocate, will guide you effortlessly through your entire home-buying experience.
Avoid the following:
- Not bringing your REALTOR® with you when you visit a developer's sales office - You must have your Dream Town REALTOR® accompany you in order for you to be represented. Once you visit the developer's sales office or model in person, alone, or visit their website and register, no other REALTOR® can represent your interests with that developer. The Onsite developer's real estate sales representatives serve the best interests of the developer, not yours. And, just as importantly, your Dream Town Realtor will be able to save you money on upgrades and builder incentives that you wouldn't otherwise know were available to you&mdqash;improvements that can dramatically increase the resale value of your home.
- Falling in love with a home and ignoring practical limitations - Purchasing a home is an emotional decision. Often, buyers get caught up in things they love about a home and ignore financing and functional realities. Purchases based on your specific needs and wants rather than spur-of-the-moment impulses are always better investments, and your experienced Dream Town Realtor will point you down the right path.
- Deciding that renting is a better option than owning because you pay less money - After you factor in income tax deductions, rent increases, long-term appreciation, and equity you invest in a home, it usually costs far more to rent. Rent money is gone and never seen again. Mortgage payments are valuable investments that enable you to accumulate wealth.
- Looking at homes before becoming prequalified and knowing what you can afford - Your Dream Town REALTOR® will work with you to determine an appropriate purchase price range, and will encourage you to prequalify with a lender. Being prepared is half the battle—it gives you leverage in negotiations.
- Assuming that you have to have a 20% down payment to purchase a home - There are a wide variety of options open to you, even if you have less than a 20% down payment in the bank. Ask your Dream Town REALTOR® about alternate financing options—you can even purchase a home with NO money down.
- Failing to have a home properly inspected - Sure, you love the home and want to purchase it. But when you detach yourself emotionally, and objectively evaluate a professional home inspection, you gain peace of mind and ensure that you are making a sound purchase. This holds true for new construction as well as existing homes—new developments sometimes have faults, and a professional inspection can alleviate any problems.
- Being a passive bystander during the home finding and purchasing process - Ask questions. Be assertive. Act in order to get everything you want. Your Dream Town REALTOR® is your dedicated ambassador during the home-buying process, and is always willing to answer your questions and address your needs. Knowledge is power!
Buying A Chicago Vacation Home
Have you always wanted a place that you can use to just get away for a while? You might want to consider buying a Chicago vacation home. Even if you don't use it that much, it could still be a nice place to live when you retire. If neither idea appeals to you, a Chicago vacation home is still a solid investment that can produce substantial monetary gains in the future.
Depending on what you decide to do with your second property, you will have to declare it as either a rental property or a vacation home. The IRS requires this because it applies different rules to each type of property. In addition, property tax and the interest from the mortgage are tax deductible.
If you decide to rent, check out the section entitled "Considering Buying a Chicago Rental Property". The section will discuss some of the pros and cons of renting. Renting is a good way to generate revenue if you are not planning on using the home very often. This can help alleviate the financial burden that some people feel when buying a second property.
While there are many advantages to a Chicago vacation home, there are a few things to consider before looking for a property. Make sure you can afford a second mortgage. Also remember that you might have to take some extra time to keep up the property. However many people consider a Chicago vacation property an investment and an opportunity.