How much can I afford to spend?

Experts say you will typically spend about a third of your income on financing your home. Before you start to look for your dream house, figure out just how much of that dream you can afford. Mortgage lenders look at your ability to repay the mortgage loan by reviewing:
• Your credit history
• Your monthly gross income
• How much cash you can accumulate for a down payment.

How long does it take to buy a house?

Buying a house can take from a few days to a few years. In most cases, the process will take several months of diligent effort.

How long should I look before buying a home?

You should look until you find the home that is right for you. This could take a week or a year depending on your personal needs and the state of the real estate market. Ideally, you would like to find a home after you have looked long enough to know what you like and what you do not like. You need time to educate yourself about the housing inventory.

How many times should I look at a house before I make an offer?

You will no doubt want to take a second or third look at a house that interests you. Your agent can arrange this; you should not call the sellers directly for access. But you should drive or walk by the house to get a better feel for the neighborhood. Return several times, at least once during rush hour, to see if the street is busy or congested. Drive a few blocks away from the house to see if the neighborhood holds up to your expectations. A map is a handy house-hunting aid.

How do I figure out what to offer?

Learn as much about market values as you can. Look at comparable properties. Ask your agent to prepare a comparative market evaluation of the property that will tell you recent selling prices of comparable properties. When market values are rising, there is a bit of guesswork involved in pricing. You may need to be a trendsetter and pay a bit more than recent comparable sales to be the successful bidder. Find out all you can about the property before writing an offer.

Do sellers have to disclose the terms of other offers?

Sellers are not legally obligated to disclose the terms of other offers to prospective buyers.

What are the standard contingencies?

Most purchase offers include two standard contingencies: a financing contingency, which makes the sale dependent on the buyers' ability to obtain a loan commitment from a lender, and an inspection contingency, which allows buyers to have professionals inspect the property to their satisfaction. As a buyer, you could forfeit your deposit under certain circumstances, such as backing out of the deal for a reason not stipulated in the contract. The purchase contract must include the seller's responsibilities, such things as passing clear title, maintaining the property in its present condition until closing and making any agreed-upon repairs to the property.

What are some tips on negotiation?

There are several cardinal rules to negotiating effectively. One is do your homework, and learn as much about the property as you can. Another is to play your cards close to your vest and not reveal too much information to the other party or their agent. Don't let yourself get rushed into any decision, no matter how tempting it may be. Finally, if you have doubts about your negotiating skill, hire someone to help. The more you know about a seller's motivation, the stronger a negotiating position you are in. For example, a seller who must move quickly due to a job transfer may be amenable to a lower price with a speedy escrow. Other so-called "motivated sellers" include people going through a divorce or who have already purchased another home. Remember, that the listing price is what the seller would like to receive but is not necessarily what they will settle for. Before making an offer, check the recent sales prices of comparable homes in the neighborhood to see how the seller's asking price stacks up. Some experts discourage making deliberate low-ball offers. While such an offer can be presented, it can also sour the sale and discourage the seller from negotiating at all.

Is a low offer a good idea?

While your low offer in a normal market might be rejected immediately, in a buyer's market a motivated seller will either accept or make a counteroffer. Full-price offers or above are more likely to be accepted by the seller. But there are other considerations involved: Is the offer contingent upon anything, such as the sale of the buyer's current house? If so, a low offer, even at full price, may not be as attractive as an offer without that condition. Is the offer made on the house "as is", or does the buyer want the seller to make some repairs or lower the price instead? Is the offer all cash, meaning the buyer has waived the financing contingency? If so, then an offer at less than the asking price may be more attractive to the seller than a full-price offer with a financing contingency. You should always do your homework about comparable prices in the neighborhood before making any offer. It also pays to know something about the seller's motivation. A lower price with a speedy escrow, for example, may motivate a seller who must move, has another house under contract or must sell quickly for other reasons.

How do I handle the purchase offer when buying a for-sale-by-owner home?

If you do not have the expertise to draft a purchase contract, consider hiring a real estate attorney for this critical part of the transaction. If you are short on time and have little experience with real estate sales, you also can hire a real estate agent for an hourly rate or a fixed fee to represent you in the transaction. Some agents will handle such a transaction for a discounted fee because they will not have to spend time and money marketing the property or showing you the property.