5 Things to Do Before You Buy a House

So, you're finally ready to buy a home. What's the next step?

To answer this, I asked Dave Ness of Denver's Thrive Real Estate Group to break down the five most important things that you should do before officially starting the home-buying process.

Image: 401(k) 2013

1. Consult three full-time realtors
Part-time realtors are like part-time doctors -- that is to say, they should be avoided. To determine if a realtor is full time, ask to see his or her resume. If there isn't one, that's a red flag. If one is provided to you, look for what the agent's volume was over the preceding 12 months.

If the average single-family home in your area is $250,000, and the realtor's sales volume was $2 million, it would only be eight homes in a year. Although that sounds like  a lot, it equates to less than one a month. You want to see AT LEAST one home sale per month.

Bottom line, avoid "Uncle Bill," who got his license back in 1983 but hasn't done a transaction since.

2. Consult three friends who recently bought homes
Learning from others' mistakes can save you a lot of money and inconvenience. Ask your friends or family members what went great in the process, what went just OK (but could have been improved), and what went really wrong (and could have been avoided).

3. Scout the areas you like
After determining your price range, determining where you want to live is the next step. Too many people get too focused on what they want (i.e., hardwood floors, stainless steel appliances, granite countertops, etc.).

Don't forget that when you buy a home, you're also buying a lifestyle. And that lifestyle is dictated not by what you live in, but where you live in it. The best way to scout is either on foot or by bike. Driving is too difficult to really absorb the area.

Image: 401(k) 2013

4. Consult three lenders
One mistake homebuyers make in today's market is focusing too much on the interest rate. While there's no question that it's critical, it's not everything.

Interview three lenders and ask them not just what their current rates are, but also what their process is like, how much communication you can expect from them, if they offer any special programs, and what makes them different from the other lenders you could choose from.

DO NOT choose a lender strictly based on the interest rate. You'll most likely set yourself for heartache when they terminate the loan three days prior to your closing -- this happens more often than you think.

5. Get focused
Spend some time really thinking about what you want and why. Jot down your absolute "must haves" (i.e., you won't buy a home no matter how great it is unless it has these attributes), and what your "wants" are (i.e., you'll buy a home if it is a great fit even if it does not have these).

Ask yourself how you will use your home. Do you love to entertain? Inside or outside? What is the most important room in the house to you? Why? Where do you spend the most amount of time living?

Answering these ahead of time will help you steer clear of the otherwise overwhelming supply of home choices.

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