Are you ready to buy your dream home in Alabama? Congratulations!
Buying a home can be complex. It may take longer than you expect, as well. It will make a big difference if you understand everything involved in the home buying process. Doing your homework will take some time, but this guide will give you a big head start.
Working with an experienced local realtor will help you find the property you’re looking for quickly and for the right price.
Curious about the buying process in Alabama? Here are eight steps that you will follow.
Step 1: Evaluate Your Current Financial Situation
The first thing to think about is whether you’re financially ready to buy a home. You’ve probably already considered this, and hopefully you’ve spent some time saving up a down payment.
What you might not realize is that in a competitive market, the higher your down payment, the more likely it is that your offer will be accepted. The seller sees it as less likely that your financing will fall through if you have a larger amount down.
You should also think about your credit score and review what financing options are available to you. Of course, you’ll need money for closing costs as well.
Finally, it’s important to think about the larger financial picture as well. Owning a home isn’t just about the mortgage. There are property taxes, home insurance, and regular repairs to think about. It’s recommended that you set aside 1%–3% of the home’s purchase price for repairs each year.
Step 2: Find a Great Alabama Real Estate Agent
If you want to get the best deal on the perfect home, you’ll need help from a professional. An experienced buyer’s agent can not only help you find the right home in your market, but they’ll also help you negotiate the price and give advice as you go through the purchase process.
Don’t worry about a buyer’s agent being expensive — the realtor commission is usually paid by the home seller, meaning you can get the help you need at no cost to you.
Working with a Clever Partner Agent gives you even more advantages. We can help match you with an experienced local realtor. Clever Agents are top performers in their area and offer “on-demand” showings that fit your schedule.
Learn More: What Does a Real Estate Agent Do for a Buyer?
Step 3: Read Up on Local Real Estate Market Trends
Before you dive into buying a home, you need to understand how the real estate market is in your area. In the state of Alabama, the median home value is $130,900 and the market is strongly slanted toward sellers.
A sellers’ market means that there are more buyers than homes available in the area, which is currently the case in most areas of the country. It may mean that you’ll have to bid more highly than you expect in order to get a home and that houses will sell very quickly.
Of course, these details may vary significantly depending on the specific city and neighborhood you are looking in. That’s why working with an experienced real estate agent is so essential — they’ll know a lot more about the specific conditions in your area.
Market trends will tell you when the best time is to buy a home as well. Because Alabama has a temperate climate, it doesn’t have as many seasonal fluctuations as other states when it comes to the real estate market.
A realtor can help you buy at the right time for a great price.
Learn More: Will it Be a Buyer’s or Seller’s Market in 2019?
Step 4: Get Pre-Approved For a Mortgage
Before you start home hunting, you need to make sure your home financing is in order. This involves being pre-approved for a mortgage.
Being pre-approved is different than pre-qualifying. A pre-qualification allows you to go to the bank and verbally tell them what your income, credit, and debt profile looks like. They use that information to tell you what you will probably qualify for.
However, that’s only an estimate and it’s not binding. When you get pre-approved, you need to provide paperwork to prove your income and other financial details. The bank will also check your credit. With this information, they will approve a specific mortgage amount and give you a written pre-approval letter.
Of course, the letter is contingent on your financial information not changing over time. However, the paper will tell the seller that you are a serious buyer and it will be easier to negotiate the sale.
Step 5: Start House Hunting
Now that you’ve gone through the preliminaries, it’s time for the fun part! Start by getting you must-haves and nice-to-haves written down. Your buyer’s agent can help you find homes that have as many of your must-haves as possible, but they need to know what you’re looking for.
How many bedrooms and bathrooms do you need? Garage? Are you looking for a specific type of kitchen or basement? Of course, you may not be able to get everything you want within your price range, but your realtor can help you understand what’s realistic.
Set a budget for your home purchase and stick to it. Use online tools and your realtor’s advice to find local properties that you’re interested in. Be sure you’re aware which neighborhoods in your target city are safest and best for your needs — for instance if you need excellent schools for your kids.
Your local agent will be extremely valuable as you hunt for houses in Alabama.
Learn More: Free House Hunting Checklist
Step 6: Make an Offer
Find your dream home? Great! It’s time to make an offer. In a strong sellers’ market, it’s important to move quickly. Your realtor will help you decide whether you should offer the asking price, slightly less, or slightly more.
Your offer isn’t just about price. It also includes details such as your pre-approval letter, the expected closing date, and what you expect of the seller leading up to the close. It will include contingencies for the home inspection, for instance. If you’re selling a home at the same time you’re buying, you may want to include a contingency for your home to sell before you’ll finalize your purchase.
You can also use some strategies to make your offer stand out. Here are some ideas:
- Include a personal letter sharing why you love the house and what you plan to do once you buy it. This can help especially if the sellers are sentimental about the home.
- Be flexible. The fewer contingencies you can offer, the better. However, never skip the inspection!
- Consider quirky numbers. Sometimes offering something other than a round number helps your offer stick in the seller’s mind.
Once you make an offer, the seller may come back with a counteroffer. Your realtor will help you with the negotiation process. In the end, both sides will agree on a price and conditions.
Learn More: How to Make an Offer on a House
Step 7: Inspections and Negotiations
Once the offer is made and accepted, it’s time to make sure that the house is in the shape promised by the seller. A big part of this is getting the inspection. The inspector will look things over and let you know if specific parts of the home will need repair immediately or in the near future.
Once the inspection is done, you can negotiate further with the seller. This is why it’s so important to have an agent that’s a good negotiator. You may ask the seller to do specific repairs before closing or to reduce the price so that you can use the money to do repairs yourself.
Having an inspection helps you make sure your dream home isn’t actually a nightmare. It also gives you leverage in the final negotiations.
Step 8: It’s Closing Time!
Once everything is settled, it’s time to close on your new home. You’ll need to have closing costs ready. Unfortunately, Alabama is known for having high closing costs, so be sure you’re prepared. As a national average, buyers pay closing costs of approximately 3% of the purchase price of the home.
What costs will you face? Some of the fees at the closing table include:
- Lender fees
- Inspection and appraisal fees
- Property taxes
- Title fees and insurance
- Escrow settlement fees
- Property insurance
Shopping around for your mortgage will help you save on the biggest cost, lender fees. Your realtor can give you advice about how to minimize other fees.
Working with a professional buyer’s agent will help you move through the eight steps of this process smoothly. There are a lot of benefits to their help, and remember — the seller generally covers the commission!