Renter’s Resource

A Complete Guide to Purchasing Your First Home

Our goal is to equip you with all the information you need to be an informed first time homebuyer.


So you have decided that

purchasing a home is in your future.


Purchasing a home can be one of the most personally rewarding and financially impactful decisions you will ever make –– but it can also be one of the most intimidating and overwhelming.

We are here to help.

We created this post to not only break down how you go about purchasing a home, but to do a deeper dive into the best tips and tricks of how the best buyers purchase properties.

At One South, we believe that an informed client is always the goal and thus we share willingly all that we know –– including the advanced techniques that we employ everyday to help our clients achieve the best possible outcome. 


If you read nothing else in this post, go to the section entitled ‘Reading the Market.’ You will be glad you did.


We get it, this post is a bit long –– but that is intentional. Fully understanding the process is more than a 3 minute read or a one page infographic.

Knowing how complex the process can be, we did what we could to break it down into consumable pieces with a lot of examples and PRO TIPS. We also added a lot of navigation to help you find the sections that you need easily and even added some of our favorite proprietary charts to help make some of the points easier to understand. 

The end result is a professional explanation of how to purchase a home –– and is broken down to the level that we would want to know if the roles were reversed.

We are the One South Realty Group, an award-winning local real estate brokerage.

This post is an accumulation of our collective knowledge about the home buying process that is literally based in hundreds of years of experience, not just in representing clients, but also in buying and selling for ourselves. 

The partners at One South have experience that dates back into the early 1990’s and encompasses buying and selling residential and commercial properties, land development, tax credit development, new construction, property management, investing in real estate, and even lending. 

We have done quite a bit.

Furthermore, we have assembled a dedicated team of professionals around us to help all of our clients manage the home buying process. Our team of transaction managers and strategic partners work together  seamlessly to provide a client experience that is as smooth as possible, despite a fickle and highly competitive market with constantly evolving guidelines. 



Understanding Housing


Thinking About What You Want

We all have a dream house we envision for ourselves. Perhaps it is the brick cape cod with white picket fence near the local coffee shop, or perhaps it is the modern condo in the sky overlooking downtown, or perhaps it is the grand colonial on acreage in the country, but we all have one.

But most of us are not lucky enough to start at the end, and we have to buy many homes along the way in order to wind up where we dream of living. 

{ PRO TIP } Want to get to your dream house as fast as possible? Make good decisions along the way. Buying houses with flaws, even though they are cheaper, is not a good strategy. On the way up, buy houses that will resell easily and will appeal to a wide swath of potential buyers. 

Furthermore, if there is a significant other in the process, getting on the same page is essential and thus having deep conversations about the ‘must haves’ and the ‘nice to haves’ will save a lot of pain later. 

So starting with a list of wants  –– ordered by importance –– is extremely valuable when you are getting started. And not to be the bearer of bad news, but when budgets are limited, odds are you are not going to get everything on the wish list on the first try.



The biggest misconception in the online search world is that Zillow and Trulia are the same as the Realtor Multiple Listing Service (MLS). While there are parallels, the MLS database gold standard when it comes to information about housing. MLS is the database the realtors use and it updates in real time.

{ PRO TIP } The best way to think of Zillow vs MLS is as follows: Zillow is like Barnes and Noble and MLS is like the library. B&N is good enough for the basics, but the library is for research. If I am about to invest hundreds of thousands of dollars, I want to do research. 

Zillow / Trulia / / Other Search Portals

Online real estate search sites develop their property lists from a myriad of sources, not all of which are reliable. Additionally, there is a delay (sometimes multiple days) between when a property is listed in MLS to when it becomes visible on the search portals. In the current inventory environment, immediate notification is highly preferable.

The accuracy of information in MLS is protected by 40 pages of rules and regulations that includes fines and suspension for non-compliance. Zillow and Trulia have no such rules or guidelines and thus, the reliability of their information is suspect.

{PRO TIP} You may sense an anti-Zillow stance –– don’t. Zillow (and Trulia, and are phenomenal tools and amazing technological accomplishments. It is just frustrating that the public doesn’t always understand the differences and gets angry at agents when Zillow is wrong. 

The chart below outlines some key differences:

Zillow and Trulia are good at many things (like GENERAL searches and GENERAL valuations), but are often used by serious buyers as a substitute for MLS. In doing so, buyers tend to miss many of the best properties by learning about them late or not at all.


The Multiple Listing Service (MLS) is the proprietary Realtor housing database. It contains decades of information about nearly every home in the coverage region, but it also contains information about sales, availability, conditions of sale, inventory levels, marketing times, price changes, concessions, financing, as well as a host of other important metrics.

MLS is broken down by zones. Realtors tend to search by the MLS zones rather than by zip code. The MLS zones do a good job of helping guide searches. 

{PRO TIP} An agent can be fined or have their access to MLS suspended for any number of reasons relating to the abuse of the system –– which is why the online search portals want to have direct feeds from MLS. MLS has the best data and it updates in real time –– and the portals know that they can never recreate that level of accuracy. 

What is also critical to know about MLS is that its use is governed by about 50 pages of rules and regulations, any of which, if violated, can cause an agent to lose their access. 

Due to the fact that the information is protected by rules, it makes the integrity of the database nearly absolute, and thus the information contained within is as curated and reliable as possible.

And that is why the search portals all want access.

The Client Portal/MLS Direct Link

So can clients access MLS? Yes –– via a Client Portal (or sometimes called a Client Gateway.)

By far and away, the most effective tool to use in your search is the direct link to MLS called the Client Portal –– despite Zillow’s claims to the contrary.

Client Portal to MLS can only be set up by a Realtor and will give you a direct link into the Realtor’s MLS Database AND IN REAL TIME! 

As you can see from the chart above, MLS provides:

  • The MOST Homes For Sale
  • The MOST Information on Individual Homes
  • The MOST Accurate Availability Status (For Sale, Under Contract, Sold, Price Reduced)
  • REAL TIME Updates

At the end of the day, just get the Client Gateway from MLS. It is the best resource.


Types of Housing

 Which is right for you? It depends. 

Generally speaking, housing for the first time buyer tends to fall into the following three categories:

  • Single Family Homes
  • Townhomes
  • Condos

I left out the discussion of both land and investment properties –– duplex, triplex or other commercial mixed-use properties. We can save that discussion for another post.

The Single Family Home (SFH)

The Single Family Home is the American Dream (or so it has been said). A SFH, unlike a townhouse, is detached from the neighboring property and sits on its own lot. They can be found in urban neighborhoods, suburban ones, and rural settings.

SFH sales comprise roughly 90% of all sales in the Greater Richmond area. 

Things to note about Single Family:

  • You own the land and the structure, unlike condos, and there is space between you and your neighbor, unlike a townhouse.
  • Single family homes comprise the largest part of the market and can be found in all ages, shapes, styles, and sizes all over the Metro. 
  • They are the easiest to finance.
  • You are typically responsible for all of the maintenance (unless you live in some type of low maintenance neighborhood usually targeted at empty nesters).
  • Sometimes a community association will be mandatory, impacting some of the exterior freedoms. Fence types, siding colors, and other restrictions may be governed by an owners association. 
Townhomes (or townhouses)

You can find townhomes throughout the region and in ever increasing numbers. 

The nature of the townhome is that it allows for increased density and with land and construction costs increasing as rapidly as they are, town homes can provide a more affordable option than detached single family homes. 

The primary difference between condos and townhouses is that the owner of a townhouse owns the ground beneath them where a condominium does not. 

This makes them easier to finance than condos.

Things to note about Townhomes:

  • In a townhouse, you own the land upon which you sit.
  • They are usually connected on one side (or both) and thus noise (if not soundproofed properly) can affect your experience.
  • Townhomes are often part of an overall community and often come with a clubhouse, pool, tennis court or other common amenities. 
  • Townhouses also have dues, but they are typically less than in a condo because the burden of maintenance is the owner’s. In some cases, townhomes will have exterior maintenance included.
  • Townhomes can be a good investment if the cost of land is expensive and the demand in the area is high. Most people prefer a single family home, so townhomes prove to be good investments in areas where the single family home is far more expensive. 

Condos, at least in Richmond, tend to be smaller than single family homes and as a result, they can be less expensive and thus a good option for an entry owner.

Things to note about condos:

  • Condos are different from a single family in that the land and much of the structure in a condo is owned collectively. In a single family home or townhome, you actually own the dirt upon which the property sits.
  • The condo will come with ‘dues’ which are your contribution to the expenses and upkeep of the building and grounds. They contain a small portion that goes into the bank for future repairs (the reserve account) so that when the roof needs replacing or exterior painting, there is money in the budget to do it.
  • The condo association is effectively a small government that runs the condo. Residents vote on decisions and elect officers who run the condo (usually in conduction with an outside management group).
  • Bad news –– the associations can get kind of prickly, especially over increases in dues or large repairs.
  • Good news! Maintenance is typically nil and there are usually some additional amenities that make it a cool place to live (pool, exercise facility, security, elevators, parking, etc).
  • An important thing to note –– the difference in how condo mortgages are underwritten can make a condo a bit of a challenge to finance. Ask your lender about the differences and how they may impact your ability to secure a mortgage.

{ PRO TIP } Condo mortgage finance is a specialty and very lenders know it well. Make sure that you are working with a lender who is versed in the differences between condos and single family homes. Ask them ‘What percentage of commercial density is allowable in a condo before a variance is required?’ If they can’t answer, then go find another lender.


Whether it is the impact of HGTV or the rapid price increases, the flip has become popular.

A flip is nothing more than a person who buys a home in need of updating and repair, does the work, and then remarkets the home at a higher price in the hopes of making a profit. 

{ PRO TIP } If you are considering a flip, check and see what the flipper paid for the home. If you see a $300,000 purchase price and a $375,000 listing price, you can be sure that the systems were not updated. $75,000 is not enough money to update systems AND install a new kitchen AND pay the carry costs AND pay commissions. 

Flippers serve a valuable purpose in that they can take a home that is either substandard or even condemned, and bring it back to life in order to provide a living option for an owner who does not have the ability to do the work. 

{ PRO TIP } ‘New plumbing and electrical’ can mean a lot of things. Did they bring additional power to the home or just add grounding to the existing wiring? Did they replace the drain line in the house or did they replace the sewer line all the way to the street? If the seller is vague on details and won’t merge the list of repairs into the contract, you might want to pass.  

However, the regulation and oversight for a ‘flipped’ home is suspect at best and the level of renovation is often hard to tell. 

Many ‘flipped’ homes are rebuilt correctly with permits issued and code violations updated. Other times, cosmetic flips are performed where the systems are not updated, only the visible items such as flooring, cabintety, counter tops, and fixtures are replaced. 

Before purchasing a flipped home, be crystal clear on the level of renovation and the reputation of the flipper. Don’t fall in love with the decor and how cute it might feel –– dig deep and find out what was actually done.

The New Home

The lure of a new home is powerful and comforting on many levels. I think deep down, we all want to live in a brand new home at some point in our lives. 

But is it a good idea?

It can be if you really know what you are doing and why you are doing it.

Know this about new homes: You rarely steal them. Typically, each new home that sells will be priced at or above the most expensive last new home to sell. As neighborhoods build out, prices tend to rise (with the obvious exception of 2008-2011). So, if you are going to be seeking a new home, it is important that you are committed to being there for a while.

New homes tend to be broken down into two categories:

  • Speculative (Spec) Homes


      • The SPEC home is a home that was started before the buyer emerged. Typically, a builder will like to have a few SPECs standing so that a buyer who needs to be in a home in the next 90 days can still make some décor selections and take possession at a reasonable time

  • Ground Up or Contract Houses


    • Other times, a client will want to choose a specific lot and have a great deal of input as to what gets built. These buyers will literally watch their home get built from the ground up and wait anywhere from 6 months to a year for it to be completed.


Types of Builders

Like the spec vs. contract job, there are also basic types of builders:

  • Custom builders
  • ‘Semi-custom’ builders
  • Production Builders

Custom builders

As one would imagine, the custom builder builds fewer homes per year and builds very few that are alike. They also tend to operate in the upper price points and not in large scale subdivisions. 

A good custom builder can take your plan or theirs (or even a series of ripped pages from a magazine) and build something to the buyer’s tastes.

Custom builders build the fewest homes per year, but tend to biuld at the highest price points.


Semi-Custom Builders

The semi-custom builders tend to build 20 to 40 houses in a year and will have a cadre of plans that they can modify to the purchaser’s tastes. 

They will build at the upper middle price ranges and try to position themselves as higher quality than the production builder, but less expensive than the true custom builder. 

A semi-custom builder will also include more upgraded features as standard the production builder.

Production Builder

The Production Builders can be found in the middle price points (or lower) where absorption is greatest and will build upwards of 50 houses in any given year. 

{ PRO TIP } I once had a client walk into the selection center of one of Richmond’s production builders and walk out with a price that was close to 25% more than when he walked in. The crowning upgrade was the remote control that could turn on the shower while lying in bed so as to not have to get out of bed and then wait for the shower to warm up. 

These builders will often have their own showrooms, complete with design staff, whose goal it is to get you to upgrade to the house that looks like the model you fell in love with. 

Production builders make their money in volume and efficiency (and upgrades) so customization is not their strong suit –– and they will KILL you with change orders.

{PRO TIP} Production Builders are masters of the model home. I once went to a new neighborhood where the sign read ‘From the $400’s’ but the model was listed at $1.1M. While that isn’t illegal, it felt misleading. If you go to a model, assume that almost everything you see is NOT standard. 

Negotiating With Builders

Negotiating with each type of builder differs as well.

Negotiating with a production builder is like negotiating with Target; you don’t so much negotiate as you watch for sales. By keeping an eye peeled for incentives (usually to coincide with quarterly or yearly production goals) you can probably get a slightly better deal from a production builder. Look for notices like ‘Hardwood floors throughout if you contract by x/x/xxxx’ or ‘Upgrade to our Wolf and SubZero package with a full price offer!’

If you want a deal from a semi-custom builder, find a spec home. Usually, a semi custom builder uses a credit line to finance their spec homes and if they have too many, they cannot start the next one. If they have a spec sitting, they are better off selling it to you at a slight discount and start the next one. 

{ PRO TIP } Ask a builder what their most popular plan is because odds are, they have built it so many times that they know their costs well and have engineered waste out of the plan. A builder’s most popular plan typically offers the best value. 

The true custom builder generally won’t negotiate too much, especially if they are building an entirely new plan. If you can build something close to what they have built before, they can usually sharpen the pencil a bit and find some room to work with you on price.

{ PRO TIP } When you negotiate with a builder, you are negotiating with an expert. The entire builder life is one big negotiation and any builder worth their salt is still standing because they are good at it. Builders negotiate with banks for credit, with suppliers for materials, with contractors for labor, with the county for permits and inspection, with developers for land, and of course, with clients, over and over again. Don’t try to trick them –– it makes them NOT want to work with you. 

So if you are going to build a new home, do your homework, have a plan, and know that the house you build should be the home that you live in for some time.

Oh, and it is kind of fun…

The Fixer Upper

So you want to buy a fixer upper? Cool, we have bought a ton of them. It can be fun, but it can also be a total pain. Beware.

{ PRO TIP } Most people tend to overestimate the cost of easy items and underestimate the cost of expensive items. People tend to think that wallpaper removal, painting, and / or refinishing floors is far more expensive than it actually is –– but things like moving walls is easy. 

The term ‘fixer upper’ can mean many things and generally, the term means something different to each and everyone. If you are a contractor, then your version of ‘Fixer Upper’ is different from a professional decorator’s version.

I tend to think of Fixer Uppers in the following categories:

  • ‘Painter Uppers’
  • ‘Wall Openers’
  • ‘Rehabs’

The Painter Upper

As you would expect, a Painter Upper is really a cosmetic renovation. A home in need of paint, flooring (carpet, vinyl, wood), some drywall repair, and maybe an appliance or two all fall into the category of Painter Upper.

In reality, you are only replacing items that are non-structural. You don’t really need a handyman or contractor to oversee, you just need installers and/or a Lowe’s Credit Card.

The Wall Opener

When you have to open up the walls to fix plumbing, electrical, or structural issues, the risk increases dramatically. If you need to open up the walls to renovate a home, you better be sure of what you are doing. 

Once the walls are open, all of the trades (framing, plumbing, electrical) will probably be needed and the cost (and time) just jumped. I have seen (and had to deal with) what seemed a benign repair jump in expense substantially when the true cause of the issue was found.

{ PRO TIP }The HGTV shows make it seem like you can move walls and fix foundations for hundreds of dollars. Do not think that the costs they illustrate are in any way accurate. Watch these shows for inspiration and / or entertainment only. 

The Gut Rehab

The last type, the Gut Rehab, is a big project. 

How can you tell if you are about to be involved with a gut renovation? If step one involves the word ‘demolition,’ you are in a big project. 

While you may hope to save some of the structure (and save some money), you really know that all new plumbing, electrical, drywall, flooring, fixtures, and kitchens/baths are part of the rehab. I might also classify putting an addition on a home as a Rehab because the process is pretty similar.

In Rehab (or addition), you will probably need to have a licensed contractor oversee the work and you will need to get permits. An unpermitted job or one where no licensed contractor is used is a huge risk to you.

The bottom line is that Rehab is not the right idea if you are new to ownership. The risk far outweighs any upside.

At the end of the day, all resale homes will require some level of fixing up. The key is knowing what repairs/renovations are investments and what are expenses. A good Realtor will be able to tell you what improvements are likely to bring value in excess of their expense.

{PRO TIP } Financing a rehab is also different and often requires more cash than just the down payment. While options exist to finance rehabs (a HUD 403k loan, for one,) generally speaking they are hard to navigate, extremely inflexible, and otherwise not a great option for a beginner. Big rehab projects are often not the right first time purchase. 

A Foreclosure

This can be a great idea or a terrible one.

First, understand that a foreclosure is not a ‘thing’ as much as it is a condition. 

Foreclosures are properties that, due to the default of the borrower (meaning they quit paying), are now owned by the lender. Since the lender has no interest in living in the property, they need to sell it and typically end up taking a discount to do so. 

You can more or less buy a foreclosure at two points:

At The Courthouse – Some people will literally go to the courthouse steps and bid to purchase the property as-is, right alongside the bank that ordered the foreclosure. When you do this, you are buying with little to no guarantee about condition and will only have had a brief period to do a visual inspection.  Most times, the bank will elect to buy the property back to themselves (sounds weird, I know) and then decide whether or not to fix it up, wholesale it, or just get it habitable.

Through MLS – If the bank buys it back at the courthouse, then as soon as they know what they have and develop a reasonable plan of action, they will list it with a Realtor, place a sign in the front yard, put it in MLS and sell it. So most foreclosures are purchased in much the same way that non-foreclosures are purchased. 

But What Are You REALLY Buying?

The issue with foreclosures is that most assume a foreclosure is a good deal –– and this is not necessarily the case. While the foreclosed home may be discounted for the pricing a non-foreclosure would command, if the repair costs exceed the discount, then what purpose did the purchase serve? Why buy a home for $150,000, spend another $50,000 to fix it up only to have a home worth $200,000? People do it all of the time.

Remember – Foreclosures come with additional layers of risk, both from a title standpoint (especially now that we have millions of contested foreclosures proceeding from the crash) and from a renovation and repair standpoint. While the repairs may look cosmetic, you really never know. Once a homeowner loses the incentive to maintain the home in the face of foreclosure, things can get ugly quickly. There are a lot of horror stories about what owners in the throws of divorce, job loss, and subsequent foreclosure have done to the homes they were losing (ductwork can get abused in the worst ways…)

Do You Want a Foreclosure or Do You Just Want a Deal?

So when I hear someone say that they want to buy a foreclosure, what I’m hearing is that they want a deal and are looking to add value via renovation or repair. 

Finding homes which are in need of repair can be found through multiple channels, not just foreclosure, and a smart Realtor/Buyer team can use advanced search techniques designed to identify properties where value can be created through subdivision, substantial renovation and/or addition or tear down.

  • Motivated Sellers – Often, Realtor remarks will include ‘Motivated Sellers.’
  • As-is Property – When you see ‘as-is’ it usually includes some work is needed.
  • Short Sales – If you are willing to stick it out, here is the list…
  • Foreclosures – As discussed above…just because it is a foreclosure does not make it a good deal… but here is the list.

A final note: The type of foreclosure also matters. Fannie Mae, Freddie Mac, FHA and VA all handle the sale of foreclosures differently, but with a defined set of protocol and will often resale the property with financial incentive on the mortgage side that can have real value. Buying a Fannie Mae foreclosure with a low down payment and low interest rate can be more impactful than negotiating several thousands off of the price. 

If you think ‘big picture,’ you can find value in all aspects of a transaction.



So what is a home worth? Well, simply put, it’s worth what someone is willing to pay for it.

{ PRO TIP } Most valuations use past sales as their basis for establishing today’s values. This is akin to driving your car while looking out your rear view mirror –– it tells you where you were, but not where you are going. 

That said, there are several methods of valuations that you need to become familiar with and how each is used (or mis-used.)

In this section we will address:

  • Fair Market Value
  • Appraisals
  • Zestimates and other AVMs
  • Assessments
Valuations are Subjective

Houses are valued differently by different people. Someone who has bad knees would obviously be less interested in a 3-story townhome, just as someone who likes to work on motorcycles in their 4 bay garage would be less interested in a condo downtown. In that regard, homes (and their values) are established by those who want to buy them, not by those who do not.

So remember, there are many different types of valuations, each one measuring something slightly different. 

Fair market value (FMV)

A willing buyer and a willing seller, neither of which is under undue pressure to buy or sell, establish fair market value. In effect, all of the valuations discussed below are an attempt to reach Fair Market Value.

Unfortunately, those who have input on your value don’t always get it right –– especially in rapidly changing markets. 


If you get a mortgage, you are going to get an appraisal. The bank charges you about $500 to send out an appraiser to examine the house and compare it to other similar recently sold homes. If sales A, B, and C indicate that you are paying a fair price, the appraiser will note that the property you are buying meets or exceeds the price you are paying. Suffice it to say, probably 95% or more of the homes under contract meet or exceed appraisals. In reality the appraisal process is a moderate annoyance.

When appraisers get it wrong: This can be an issue because there is no good (or quick) way to combat the appraisal. Typically, unique properties or new properties which push prices will run for most risk of this happening.

The appraisal is used by the bank to set the maximum loan amount, so if an appraisal comes in low, it just means the buyer may have to make up the difference in cash. If cash is a constraint, then a missed appraisal can be a big deal. 

{PRO TIP} When a home receives multiple offers (say 20 or so) and the seller chooses an offer that is lower than several others (maybe the closing date suited them better or maybe the purchaser was a cash buyer), that fact is not reflected in the comparable sales. In other words, an appraiser won’t know that the $400,000 sale could have been as high as $425,000 had the seller accepted a riskier, but higher, offer.

Zestimates / AVMs

Use these estimates with caution; they don’t mean much. If you want to know roughly how much it costs to buy a 4 bedroom home in Salisbury or Wyndham, then yeah, look at Zillow.

Without giving too much detail, just know that Zillow’s estimates do well when the market is static, there are numerous recent sales that are similar, and the age of the houses is tightly banded. When Zillow has to estimate house values with irregular lot sizes, varied ages and / or architecture, or where values shift quickly (urban areas), then the accuracy decreases quickly. 


We like to tell people that Zillow is a tool that should be used IN YOUR ANALYSIS, not a tool that should be substituted IN LIEU OF YOUR ANALYSIS


{ PRO TIP } Zillow’s algorithm uses the asking price as an input to its valuation. So what a seller is asking for a property impacts the Zillows estimate. Really?


The assessment (or TAX assessment) is the level at which the local municipality (town, city, or county) will tax your property to pay for schools, fire and rescue, and other county services. Your assessment is the county’s (or town’s) estimate of the value of the property.

{ PRO TIP } When you see a low assessment relative to the sales price, odds are that the property has been improved since the last time it was sold and the county doesn’t know about the improvements. This probably means the work was probably performed without a permit. No permite is not necessarily an issue if it was done by a licensed contractor, but it does lead to some additional questions to ask. 

In reality, the assessment is about collecting maximum tax revenue. The county or town attempts to value property high enough that the owner thinks, “hmm… yeah that sounds about right,” but also not so high that they complain. If the county can perfect this number, then they will maximize their revenues and minimize challenges.

Two things to note about assessments: One is that if the home has sold recently, then the county will usually set the assessment equal to the sales price. So recent sales will usually make the assessment more reflective of market value. Secondly, not everyone tells the county about improvements they make to a home, so often these are not reflected in the assessed value.

The assessment is not a particularly useful number other than for “back of the napkin” types of valuations.

CMA (Comparative Market Analysis)

A CMA is more of a Realtor’s version of valuing a property –– and when done properly, is the most accurate of all of the methods. 

{ PRO TIP } A good CMA should include some adjustments for pending sales and inventory levels –– not just past sales. You can gain a lot of insight when you know how to use other measurements as indicators of market conditions. 

A good CMA not only takes into account past sales, it takes into account current market conditions (not just past ones) and can use all sorts of additional information to arrive at a more accurate price for a home.

Whereas an appraiser is hamstrung by strict protocols in how the value is derived, a CMA is far more open ended in how values can be reached. 

{ PRO TIP } In markets where pricing is moving quickly in either direction, appraisals tend to depart from FMV and cause either over (or under) valuations. These poor valuations cause issues with financing and have absolutely caused otherwise solid transitions to blow up because the appraised value came back at less than the sales price. 


The key takeaways are as follows:

  • Use MLS as your source of housing information. MLS is by far and away the most accurate database from which to draw information from.
  • Beware AVMs. Zillow’s algorithm is a great tool if you need to be +/-5%, but not if you want to be highly accurate. 
  • Use pending sales and inventory to assess which direction a market is moving and at what rate. 


Selecting Your Team

When you’ve decided it’s time to start getting things in order to purchase your first home, step one is building your team. 

Buying a home, when done correctly, can be one of the most financially beneficial undertakings imaginable, but the flip side can be just as negative. 

A good representative is equal parts advocate, counselor, advisor, psychiatrist, and tour guide, and will not only help you navigate the increasingly complex process, but will help you make sense of the endless supply of information.

{PRO TIP} If you can, find and hire an agent early. This gives you and your agent plenty of unhurried time to get your finances in order, learn the market, and to create a plan of attack. 

If you’ve got questions like, ‘Why should I even hire an agent?’ or ‘What makes someone a ‘good’ agent?,’ don’t be intimidated. You’re on the right page and our goal is to answer those questions.


The Team Members

Purchasing a home requires a team.  

Along with the agent, a number of additional service providers will be a part of the process. Oftentimes, a team works far better if the team members are familiar with one another –– especially amongst the agent, lender and attorney. 

This fact is especially true when attempting to close a transaction quickly. That said, a buyer is free to choose any and all team members.

{PRO TIP} Seek out an agent who thinks and communicates in the manner you prefer. Everyone gives and receives information differently and being on the same page is critical if you want to avoid unnecessary stress. 

Generally speaking, the following team members will be a part of the process:

Your Realtor, the Buyer’s Agent

The Realtor who represents you is called the Buyer’s Agent. There is a contractual services agreement between you and the agent that defines compensation and duration of the contract for the service. 

All agents in the transaction are required to abide by a code of ethics (found here) and numerous state and federal statutes surrounding discrimination and fair housing. 

But also know that the primary difference between the buyer’s agent and the seller’s agent (below) is whose pocketbook they are looking after.

Their Realtor, the Seller’s Agent

The name on the sign works for the seller. 

While they are bound by the same code of ethics and fair housing laws, their job to get the seller as much money for the property as possible. 

A good listing agent can make a log cabin look like it’s the Taj Mahal (at least on paper) and make sure you pay as much as possible –– and with terms that strongly favor their client. 

Why? Because they work for the seller.

When you call the name on the sign, you are calling the seller’s advocate, not your own. It is akin to asking your spouse’s divorce attorney for advice –– do you really think you will get an objective response?

Your Inspector

Most people elect to have a licensed home inspector do a ‘whole home inspection’ within the time frame specified in the contract. (The American Society of Home Inspectors or ASHI is the professional group that most reputable inspectors belong to.)  

{PRO TIP} Inspections are difficult to navigate and can be some of the biggest stressors in any purchase. Inspection reports can seem daunting for both buyer and seller, but odds are there isn’t anything that can’t be fixed. Far too often, emotions override logic and a series of small items cause a perfectly good contract to blow up. An inspection should focus on big issues (roof, foundation, mechanical equipment) and not little items (doorbells, squeaky floors, or drippy faucets.)

Typically, this entails the inspector checking out the entire house –– literally from the top (roof) to the bottom (crawlspace) and handing you a report of the home’s condition, including needed repairs and their estimated costs. 

Know that the inspector can only inspect what they can see (meaning the inside of the walls go largely un-inspected) or what they can reasonably reach.  

Often, an inspector will tell the buyer that they should ‘have a licensed HVAC tech service clean the unit’ or ‘have a roof inspector check for leaks in the SW corner’ if there is something a little beyond their capabilities. The inspection report is what will drive the second round of negotiations over what items will be repaired or credited to the buyer.

The Closing Attorney (Your Attorney)

The closing attorney is the person who actually legally transfers the home from the seller to the purchaser. 

Effectively, the closing attorney takes all of the documents between buyer and seller, bank and buyer, and title insurance and buyer, puts them all together, gets you to sign everything, collects and distributes all of the money, and then records everything at the courthouse to make it official. 

Some elect to save money by allowing the title company to close the transaction, but we typically recommend an attorney.

Attorney vs. Title Company

To expand on the point above, a real estate transaction can be legally closed by either an attorney or by a Title Company. 

A Title Company typically costs slightly less and can basically provide the same service with one major exception – legal advice. If a closing begins to go poorly (inspection dispute, lender delays, personal property issue) the Title Company cannot offer legal advice unless they have an attorney on staff. 

In the large majority of closings, the attorney who is closing the transaction will offer free advice related to the transaction and can either keep a deal together or minimize the likelihood that a small dispute escalates into something far more expensive. 

Generally speaking, the difference in cost is anywhere from $100 to $300, and having legal advice built in as part of the closing fee is generally worth the incremental cost.

Your Lender

If you are using a mortgage company, you will have been in quite a bit of contact with your mortgage professional. We will talk more about the lender in the ‘pre-qualification’ section of this post.

Your Appraiser

Okay, not your appraiser –– it’s the bank’s appraiser but you still pay for it. 

The appraiser is a neutral third party who gives their opinion on the value of the home. They are required to submit their estimate of value on a standardized appraisal form. 

They select the three most comparable recent sales and compare them back to the home you are buying. 

Hopefully it will support the price you are paying. While the flaws in this process are numerous, it is the way the game is played. We discussed the appraisal in the section labelled ‘Appraisals’ in ‘Valuations.’


Your Agent’s Role

Why do I need an agent? You’re right to ask this question. 

The legal answer is that you do not. You can either go directly to the listing agent on the home and ask them to prepare the contract for you to purchase the home or you can approach literally anyone who owns a home and offer them a contract to purchase their home. 

However, in the large majority of cases, buyers prefer to employ an agent to help find the property, do the analysis of what it is worth, help them craft the purchase offer, negotiate the terms, and then manage the remainder of the process across the goal line. 

For the work that the agent does, they are (typically) entitled to a commission that is (typically) paid by the seller for not just bringing the contract, but helping to execute the contract until settlement (closing.) It’s a lot more work than it appears –– especially when the market is moving fast and / or issues arise during the sale process. 

The Hats Agents Wear

  • Set up searches
  • Showings
  • Scheduler
  • Tour guide
  • Information gatherer
  • Translator 
  • Strategist 
  • Contract writing
  • Negotiations 
  • Access provider
  • Coordinator
  • Monitor
  • Logistics
  • Sounding board
  • Problem anticipator
  • Problem solver
  • Emergency solver
  • Service recommendations

And that is just on a typical day.  

A good agent is worth their weight in gold when it comes to knowing what is about to happen before you had any clue it was about to –– and to already having a solution in place before you even knew what your options were. At the end of the day, an agent is your advocate throughout the process and an integral part of the home buying process. 


Realtors and Commissions

This is the section about commissions. 

It would take about 5 days to cover all of the subtleties and complexities of who gets paid and when –– so let’s stick to the basic scenarios which play out in most transactions. When you see the word ‘typically’ in this post, we mean like 95% of the time or more. 

Resale homes typically offer a buyer’s agent commission that is paid to the buyer’s representative by the seller. Yes, the commission paid in the transaction to the buyer’s rep is paid by the seller, meaning that the home you buy does not cost you (the buyer) a commission.

Typically, the commission paid to the buyer’ agent is stated as a percentage of the sale price ranging anywhere from 2.5% to 5%, depending on the type and price of the property. For most resale homes, a buyer’s agent’s expectation is +/- 3%. 

Sometimes you will see commissions go down on expensive properties (say $1M or so) and up on inexpensive ones like foreclosures (below $100K).

So, to repeat, when you buy a home you typically do not pay your representative. The seller does.

The Open House Mistake

Now, let’s say you are out and about on a Sunday afternoon and you see a sign for an open house. You walk in the house and it is beautiful –– it is exactly what you have been looking for! 

The agent at the open house says that there has been a lot of traffic today through the home and that another couple is thinking about making an offer. 

You decide right then and there to buy it and tell the listing agent to write the contract for you. 

What did you just do? Well, the listing agent (who works for the seller –– see the section on TEAM above) just earned roughly twice the commission and you got no representation. In other words, you just made the listing agent’s day and probably paid too much. 

Please don’t do this.

Bother Your Agent

Another scenario (and this happens ALL of the time): You are out in the car and you see a home. You don’t want to bother your buyer’s agent so you call the listing agent directly. 

This can get you in trouble because, if you have signed a contract with your buyer’s rep and the listing agent shows you the home, they may be entitled to the entire commission and you might be responsible for compensating your buyer’s agent. 

If you are going to call on a sign –– or walking into an open house without your agent –– then make sure to tell the listing agent you are working with a buyer’s agent. Most agents will ask if you have your own agent, but not all do. 

At the end of the day, you are not bothering your agent if you ask them to show you a home. It is their job.



Mortgage finance is a complex topic. For brevity’s sake, we will attempt to stick to the major points.

{ PRO TIP } Did you realize that a 30-year mortgage with an interest rate of 5.50% means that the total of the payments you make will be twice as much as you borrowed? Few people think in these terms and spend far less time on understanding mortgages than they should, which can be financially detrimental in the long run.


Levels of Qualification

There are three basic levels of mortgage approval and each one is of increasing levels of value: 



Getting Pre-Qualified is really just having a conversation with a lender where you discuss debts, income, and assets. Based on your credit report and the conversation they will write a letter saying you are ‘pre-qualified’ for a mortgage of X dollars. 

Being pre-qualified is of little value in the grand scheme of things and more likely to get you in trouble by giving you a false sense of security. To really know, you need to have a lender pull your credit, verify your income, and verify your assets. 


Being Pre Approved is better. 

Pre-approval means verification of credit, income, debts, and assets. Becoming pre-approved means the lender has been able to verify that what you said in the conversation is true and that you are reasonably certain, provided nothing in the financial picture really changes, that you are qualified to purchase the house you choose within the budget allowed.


Being pre-underwritten is the highest level. It takes it even one step further by not only verifying the information supplied, but actually running all of the income, debt, and asset verifications through the underwriting. 

{PRO TIP} Did you know that your credit score changes based on what you are applying for? Your credit score for purchasing a car or opening a credit card is different from the one you use to purchase a home. Credit score services don’t like to tell you that.

Going through the pre-underwriting is especially important when job changes have occurred recently, commission (or a bonus) is a large percentage of the income, or there are other issues which might give an underwriter pause about giving you credit for your full job history or all of your income. 

Remember, the amount of income you think you make, the amount of income the IRS thinks you make, and the amount of income FHA/Fannie/Freddie think you make can all be vastly different.


The Fundamentals of Qualification

Qualifying for the purchase of a home is a rather complex (and often frustrating) process. Sorry, but it isn’t a lot of fun for most of us. But there is a reason that we go through it –– the interest rate and loan terms you get make it worthwhile. 

The US is one of the only countries on the planet that has a 30 year mortgage, and one of the only countries that has loan products that require sometimes as little as ZERO down payment. 

In the large majority of the cases, the loan that you secure is guaranteed by Fannie Mae, Freddie Mac, FHA, or VA –– which is in turn, guaranteed by the Federal Government.

So if they are guaranteeing the loan –– and giving you incredibly amazing terms and a super low rate –- they get to set the rules on who can borrow the money. 

It is a pain, but totally worth it. Just remember that when your loan officer asks you to write a letter explaining the $1,000 check your parent wrote you for the riding lawn mower last August. 

How Do You Determine How Much You Can Afford?

In its simplest form, a lender will let you spend 28% of your gross monthly income on housing, provided your overall monthly obligations do not exceed 36% of your gross monthly income. 

The 28% figure is called the ‘Front End Ratio’ and the 36% is called the ‘Back End Ratio.’

So, in effect, if you earn $4,000/month, your maximum payment allowable is 28% of $4,000, or $1,120. This maximum payment includes not only the principal and interest payments, but it also includes the projected real estate taxes and the homeowner’s insurance. The total is often called PITI or  (Principal + Interest + Taxes + Insurance).

This 28% figure can go down if the other debts (car, student loans, alimony, credit cards) exceed 36%. 

Now, understand that different loan products may have slightly different ratios and other mitigating factors may exist. Recent graduates from medical school come out with high levels of debt and little cash, but with huge earning potential –– and thus there are loans for Doctors where everything discussed above is thrown out the window. Likewise, debts near expiration may not count against the back end ratio.

Down Payments
When buying a home, you will need some liquid funds (cash) in order to obtain a mortgage.

For the most part (and this is a big generalization), mortgage companies like to see 20% of the purchase price come from the seller in the form of actual cash –– but don’t stop reading here if you don’t have 20% –– It gets better! 

Many loan programs exist that allow borrowers to finance anywhere from 95% to 100% of the purchase price. 

{ PRO TIP } Despite the feeling that big corporations tend to be impersonal and greedy, they don’t like to foreclose on homes. Foreclosure is expensive, time consuming, and chocked full of bad PR. Banks will try to work with delinquent homeowners in order to prevent a forced foreclosure (refinance, outright sale, short sale, deed in lieu, voluntary foreclosure) despite what the memories of 2008 would have us believe. 

While banks prefer to have 20% of the price of the home paid to them in cash (your cash) they don’t always have to have that much. As we mentioned above, borrowers do have options where far less than 20% of the homes price is paid in cash –– the effective interest rate is higher than loans with 20% down, but not so much that is makes buying a poor decision. 

Why does a bank want 20% (or more) as a down payment? If you have put $50,000 of your own cash down on the purchase of a $250,000 home, then you will do what you need to do to make that payment every month or risk not only losing the house to foreclosure, but your $50K as well.

Likewise, if you don’t pay and the bank does foreclose, they should be able to sell the $250,000 home for enough to cover their $200,000 debt.

Mortgage Insurance

The loan products that exist with down payments require you to pay for mortgage Insurance (also referred to as MI). The best way to think of MI is that it is an insurance policy that the purchaser buys which will protect the bank against loss in the event of foreclosure. 

Grants and other Down Payment Assistance

For many reasons, our government wants us to own houses –– and in order to help us do so, they periodically will offer grant funds to help with down payments. 

{ PRO TIP } There are any number of programs designed to help buyers with incomes that might not support the purchase of a property close to their jobs or kid’s schools. Programs like the Maggie Walker Land Trust is one such program where the land upon which the home is constructed is held by the trust, holding pricing artificially lower than where it would be a full market value. 

These grant funds come from a variety of agencies, but typically are made available to those who need a little bit of help in getting into a home by providing funds to make a down payment. 

In most cases, grant funds come with a few strings attached: 

  • In order to receive grant funds, the purchaser is required to take a home buying class to ensure they are educated about the process
  • Most grants require the purchaser to hold the home for a minimum period of time in order to make the grant fully forgivable

A good loan officer knows where to find the grant funds and can help the buyer whose profile allows them qualify for a grant to make the application. 

Closing Costs

A home is a big asset and the costs associated with purchasing a home are consequently also quite substantial. 

Commonly referred to as ‘closing costs,’ the additional fees that accompany the home purchase often catch buyers by surprise. In most scenarios, closing costs will run anywhere from about 2% of the sales price to 5% of the sale price –– with 3% as the generally accepted norm. 

A large percentage of closing costs are associated with securing a mortgage for a property and thus closing costs on a cash purchase are generally lower than when a mortgage is being used. 

Common Closing Costs  

In order for a bank to feel comfortable loaning you hundreds of thousands of dollars, they are going to make sure that they have made a safe decision, and protecting the asset that secures their loan costs money. 

On your closing statement, you may see a charge for the following:


In order to make sure the property is where everyone thinks it is and that no one has built something on or over a property line. Often the survey requirement will be waived if a past survey can be supplied in lieu of ordering a new one. 

Homeowner’s (or Hazard) Insurance

You need to insure the home against damage from fire, storms, or other events that could affect the value of your home. This is nothing more than ‘accident’ insurance for your home and can be obtained by any number of property and casualty insurers. 

Floodplain Certification

The bank needs to know the property is (or isn’t) located in a flood plain and would require flood insurance. The ‘flood cert’ tells the bank that your home is / is not in a flood plain and if so, what type of flood plain it is in. 

Tax Service Fee

If you are getting a mortgage, the bank will typically want to pay your taxes for you (as well as your insurance.) Why? Because if a borrower doesn’t pay the taxes, the county (or city) can seinze the house and sell it to pay the back taxes. If that happens, the bank loses.

Recording Fees

Someone needs to record the transfer in the public record so that everyone can tell who owns what –– and recording has a charge associated with it. Recording fees are a function of the sales price. 

Closing Fee

The attorney or title company that handles the settlement will charge something for their work, too. Generally, a title company’s charge will be lower than an attorney’s charge, but title companies cannot offer legal advice unless they have an attorney on staff. 

Various Lending Fees

Often, you will see charges labelled things like ‘origination fee’ or ‘underwriting fee’ or ‘document review fee’ on the closing statement. These are fees that the banks charges you to loan you the money (yes, it pads their margins a bit.) If there is a fee on the closing statement that was not disclosed, the bank can get in a lot of trouble so generally speaking, these fees were disclosed early in the process. 


In the escrow section, you will see charges to the borrower (typically) for taxes and insurance to be paid in the future –– even though the bill is not due yet.

If the bank is going to pay the taxes and insurance on your behalf, then they want to collect enough to be able to pay with your money when the bill is due –– and not have to pay with their own money.

In effect, your mortgage payment will include 1/12 of the cost of insurance and taxes so that when the bill comes due, the money is in the escrow account to pay the bill.

Your escrow account will rise and fall and periodically require adjustment as the taxes and insurance adjust. 


The prorations section on the closing statement is where charges are ‘zeroed out’ between the purchaser, seller, lender, and any other party to the transaction.

As an example, if the seller has already paid the taxes for the year, but the settlement date is in April, then the seller would be entitled to a credit back for the taxes that were paid for time they are not going to own the home. 

The proration section will have a series of credits for things like taxes, heating fuels, or other items which are paid irregularly throughout the year. 

Title Insurance

Title Insurance is an insurance policy you buy to protect your basic ‘property rights.’ Title Insurance legally insures that when you take title to the property, no one else can lay either an ownership or monetary claim against the property. 

If a title insurance company issues a policy, they are in effect saying that the title to the property is clean and if someone comes back later with a legitimate claim, then the title insurer will have to pay the claim.

{ PRO TIP } Title Insurance will become increasingly important when many homes bought at foreclosure auctions during the period of 2009-2012 trade hands again in the coming years. Many were foreclosed on by mortgage holders using less than scrupulous methods –– and it can be assured that many foreclosures will be challenged in the courts. It is wise to purchase the ‘Enhanced Title Policy’ as the insurance grows with the value of the property.

Lending Fee Disclosure

Yes, the loan process is a bit complex. Mortgage lending is the intersection of law, financial markets, insurance, and government guarantees –– and yes, the fees add up. 

Know that all of the fees you see on the closing statement should have been disclosed in detail by your lender at the time you made your official loan application, if not before.



Types of Mortgages

The three basics types of mortgages are:

  • Fixed Rate Mortgages
  • Adjustable Rate Mortgages
  • Hybrid Mortgages

As the names would suggest, the differences have to do with how long the rates are guaranteed for and the circumstances under which they can adjust. 

Fixed Rate Mortgage

In a Fixed Rate Mortgage, the interest rate does not change over the life of the mortgage. 

If you secured a fixed rate mortgage for 4%, the rate in month 1 is the same as month 360. When rates are low, more buyers select this option to lock in the rate over the life of the loan.

Adjustable Rate Mortgage (ARM)

In an ARM, the rate is subject to change at specified intervals based on the specific index it is tied to. 

Typically, the language in the ARM document will also contain caps, meaning that the mortgage rate can only adjust by a maximum amount in any given adjustment period. 

Typically ARMs are either 1 year (meaning the rate adjusts yearly), 3, or 5 years.

It should also be noted that ARM products, in addition to specifying the intervals at which the loan adjusts, also tie the rate to an index. Treasury rates, the LIBOR (London Interbank Offer Rate, which is similar to the US Federal Funds rate) or the Prime Rate are all indexes, which are used to determine rate adjustments.

The Hybrids

In addition, you will see hybrid products, which combine elements of both the fixed and ARM mortgages. Hybrids often offer a fixed rate for a period of time (say 5-7 years) and then turn into a 1-year ARM. 

Market conditions and mortgage company speculation will often drive creation of hybrid loan products, which come into the market and leave with regularity.


Selecting a Lender

We cannot stress the importance of selecting a good lender enough. A lender that over-promises the ability for a borrower to qualify is one of the most common causes of financial damage in the real estate market.

When a lender does not do their due diligence on a prospective purchaser yet makes what seems like a commitment to lend, the purchaser (thinking that they can buy a home) enters into a contract and exposes themselves to not only expenses (appraisal, inspection, deposits) and contractual liability if they do not settle on the property. There are numerous sources from which a purchaser can obtain a mortgage, each with different strengths and weaknesses. 

Let’s discuss. 

Online Lenders

The minute you use your computer to surf Zillow or any other real estate related terms, you will begin to see ads in your sidebars and / or social platforms advertising ‘the best rates.’

Their teaser rates seem low and are enticing to explore –– don’t fall for it. 

Online lenders tend to take on two basic forms:

  • Lenders like Quicken who have a call center of salespeople who are trained to suck you in –– and a substantially limited product line
  • Lead Generation platforms who take your information and sell it to loan brokers who will then badger you with offers that aren’t very good either. 

The online lender carries tremendous risk to the buyer:

  • The advertised rates that enticed you to call is likely unavailable for you –– especially if you are going to be using a loan with a low down payment.
  • When buyers submit offers with online lenders, especially when there is more than one offer, listing agents will recommend the local lender over the online lender. In effect, using an online lender makes your offer less competitive.
  • In a situation where the buyer is penalized for a delayed closing, an online lender is downright dangerous. 
  • Finally, if an online lender botches the deal (happens all the time) the damage done to their reputation is minimal. If a local lender gains a reputation for non-performance, then they are in real trouble and thus the commitment letter from a local lender carries far more weight in the minds of the real estate community.

Online lenders are perfectly acceptable if you are going to refinance a mortgage and don’t have any penalty if you close later than anticipated. But in reality, the savings they promise are minimal, if at all, and the risk that they carry is great. 

Yes, we are not fans of the online lender if you cannot tell. 


It is also tempting to call the institution you bank with. This option is preferable to dealing with an online lender, but still not your best option. 

Banks do tend to have mortgage departments, but these departments are more than often filled with individuals who are more or less ‘order takers’ than they are mortgage experts. Banks also tend to have limited product lines and fewer options for the first time buyers. 

That said, many of the smaller local community banks do have good mortgage officers who know their stuff. Generally speaking, if the number you dial is an 800 number with an extension, you are not going to be served well. 

Credit Unions

In the same way that large banks are not the best option, credit unions also tend to be limited in their scope and skill.

The credit union mantra is to have you believe that by using their services, you are receiving a benefit that you would not otherwise receive. The opposite is actually true as the credit unions have far fewer mortgage products to offer their members, and the rates they offer are essentially the same as everywhere else. Credit unions serve a valuable purpose in many respects, but their mortgage departments are not a focus and their representatives are not mortgage experts. 


Mortgage Companies

A mortgage company is, as the name suggests, a company that does nothing but mortgages. 

A good and experienced mortgage company will have 4 to 5 times the number of loan products that a credit union or online lender will have, their loan officers are required to be licensed. Each and every time a licensed mortgage officer issues a commitment letter, they are putting their reputation on the line. 

In addition to the typical loan products, good mortgage companies will have access to grant funds, shelf loans, VHDA, non-warrantable loans, ALT A, and other specialty loan options that banks and credit unions don’t.


Interest Rate Chart

The chart below compares many types of mortgage products. Please note that the chart comes from a national online source and may not accurately reflect the rate environment in our specific region, but can give you a sense of the historical trends for mortgage rates. 

Please consult your local lending source for actual quotes on rates and terms.



In this day and age of the gig economy and shifting work history, an experienced loan officer with a portfolio of loan products to choose from is the best option, by far. 

If you have owned your home for 20 years, have 30 years of work experience, are putting 50% down, and have an 800 credit score, then you can use just about anyone you want and have a perfectly acceptable experience. 

But if you are a new buyer with limited funds and even more limited experience, work with a lender who will spend the time helping you understand all of the options available to you. 




Understanding Your Lease

Before you enter the housing market, odds are you have been renting.

Being a renter can actually give you a huge advantage as a buyer, if you leverage it correctly. As a tenant, you have nothing to sell AND you can often be quite flexible with your closing date. As a seller, having a buyer with flexibility is of great advantage.

{PRO TIP} Please, please, please check your renewal status. Most leases renew automatically and it is the tenants responsibility to notify the landlord of their intent to vacate. Don’t let your lease renew without your knowledge.

So, if you are looking to make the jump from enter to owner, the first order of business is to find a copy of your lease and read it. 

If the language in the lease seems vague or confusing, send a copy to your agent and let them read it. They can quickly give you insight as to what you need to do in order to begin the process of buying.

If you cannot find a copy of the lease, ask the property manager for it. By law, they are required to keep a copy.

Now that you have the copy, take the time to read it. The most important clauses for you to understand are the ones regarding RENEWAL and DEFAULT.


Most landlords include language that automatically renews the lease for another year at either 30, 60, or 90 days from the lease anniversary.

If you do not tell your landlord you’re going to terminate by a specific date, then most leases automatically renew, oftentimes at a higher rate. And generally, notice to terminate is the burden of the tenant so remaining quiet will lead to auto-renewal.

I have seen so many tenants miss their notification and have their lease automatically renew for another 12 months, which can obviously wreak havoc on the home buying process. 

We strongly suggest a month-to-month option, even if slightly more expensive, to give you flexibility to find the correct home and to allow for some flexibility in the event of delay. Being under time pressure does not make for good decision making and often having 30 extra days in your pocket pays you back in spades when the inevitable last minute issue comes up with the lender, title, or inspection.


While the word ‘default’ sounds onerous, it’s just a legal term that means failure to comply with your lease. 

Typically, a landlord will have language in the lease outlining the penalty if you wish to break a lease. While breaking a lease is never the preferred option, if a good enough deal presents itself then it may be the best strategy. Make sure you understand your particular property manager’s stance on breaking the lease before taking this approach.

Typically, a landlord will have a 1 to 2 month penalty for a tenant who wishes to break a lease. Please consult your lease to confirm your lease contains this clause.

Landlord Tenant Act

It is also important to know that landlords who own more than a few units are governed by the Landlord Tenant Act (LTA) in Virginia and are very aware of their requirements. 

A landlord cannot treat different tenants differently (for a myriad of reasons mostly related to Fair Housing) so generally they have a standard policy for lease breaking.  In most cases, they are willing, for a penalty, to release you from your lease without impacting your credit.

{ PRO TIP } Accepting a penalty to break your lease is different from deciding not to pay your lease (Not Paying is NOT a good idea). It is simply buying your way out of the lease. Do not create a scenario where your credit rating is impacted. 


Reading the Market

One of the taglines at One South Realty is that we exist where the art of real estate and the science of real estate collide. 

In other words, understanding what is going on in the market at any given moment requires not just having access information (science), but also knowing how to apply the most advanced and intelligent contract techniques in order to secure the property at the best possible price AND the best terms (art). It takes both.

At the end of the day, buying a home –– especially your first home –– is about decision making. Making sound decisions gets you to where you want to go far faster than you could ever imagine, and making poor decisions puts the ultimate dream home further from reach.

Let’s talk about how to best read the market.


One of the terms you will hear tossed around by agents, lenders, builders, and the business reporters on the nightly news is ‘inventory.’

Inventory is nothing more than the available number of homes for sale at any given moment. 

Inventory is generally stated in terms of ‘months’ meaning that if no new listings come to market, how long will it take to absorb the existing homes for sale. The calculation is made by dividing the number of total homes for sale by the number of homes sold in the last 30 days. 

Why is knowing the inventory important? It tells you where pricing is headed. As one would suspect, as inventory levels fall (i.e. –– fewer homes for sale), prices tend to rise. Conversely, as inventory rises, prices tend to fall. 

{ PRO TIP } Inventory levels vary by region and price point. In areas of a region where there is a lot of new construction, inventory levels tend to be higher. Areas that are largely developed and at lower price points tend to have lower inventory levels. If you are looking for a home in a low inventory area, be prepared to act fast and bid high.

The key to remember is that inventory measures TWO things –– the number of houses available AND the number of houses being purchased. So when you see inventory dropping, it means that either fewer houses are being put on the market or the number of homes being purchased is rising (or both!)

So the best way to get a feel for the market is to look at inventory and compare it back in time to see the historical trend. 


Bidding Wars

Most people don’t realize this –– the asking price of the home and the sale price of the home equal each other anywhere from about 30%-50% of the time. The rest of the time, the price that the seller asks and the price they receive are far different. 

{ PRO TIP } When pricing is rising quickly, it poses a lot of problems at the entry point in the market, mostly due to appraised values lagging current values. Appraisals look to the past for comparable sales and past sales in a rising market are lower than where market values are currently. A good agent and an experienced lender can help you understand how to best overcome the appraisal issue in a market with rapidly rising prices. 

As you would expect, when you are in a market where inventory is low, homes tend to sell for MORE than the asking price. In areas where the inventory is normal (or even high), then sellers tend to take discounts from their asking price. 

{ PRO TIP } For years leading up to the market crash in 2008, people assumed that sellers would negotiate their price and that a smart real estate investor was a good negotiator. But buying a bad home at a big discount is still buying a bad home. Don’t mistake getting a discount with a good decision. 

Understanding the disbursement of offering prices is key in understanding how to go about securing a home in the area you want. When discounts are higher, you may want to look a bit above your price range knowing that you can negotiate down. When sellers are consistently getting more than the asking price, you might have to look at housing below your maximum price range knowing that you are going to have to negotiate higher in order to purchase it. 



Markets move up and down –– it is what they do. But the reasons why they move tend to break down along two lines:

  • National trends such as interest rates, tax rates, stock market values, commodity prices, etc.
  • Local trends such as investment pathways and local development

The national trends are well beyond our control and are set more by government policies and / or the state of the US economy. National trends tend to affect everyone’s home values more or less equally.

The local trends, however, are within our control and recognizing the pathways of development can provide opportunities for greater appreciation when the overall market is rising (or slower depreciation when the overall market is falling.) 

Color mapping past sales can show pathways of development and opportunities to buy in areas where micro trends are causing pricing to move more quickly than the local average. 

Recognizing emerging trends is one way to leverage your position as a buyer and to position yourself to benefit at rates greater than the overall market.


Making a good decision on buying a home is both harder and easier than it might seem on the surface: 

  • What makes it harder is taking the time to understand the forces that drive the market and letting go of preconceived notions about how the market used to work.
  • What makes it easier is that few people take the requisite time to understand the market and if you are willing to spend the time to learn, you have a huge advantage. 

Shrewd buyers see the market as it actually is –– and not as they wish it to be –– and use modern tools to help them understand the best path forward. Be the shrewd buyer. 


    The Contract Process

    Once you have done your research on housing, found a home you like and understand how they are valued, and you have your mortgage ducks in a row –– you are ready to make an offer.

    Writing an offer seems simple in that it is more of a fill-in-the-blank exercise, but it is how you fill in blanks that matters. 

     In the past 20 years, our industry has evolved from a 3 page contract with 1 standard addendum, to closer to 10 pages with numerous addenda to cover the increasingly complex market we now need to navigate.


    The Purchase Contract

    Below we will go through the elements of the typical purchase contract.

    The purchase contract used by the local Realtors was written by the legal representative for the local association and is written in such a way that it does not conflict with State or Federal laws. 

    { PRO TIP } Verbal offers for real estate are not enforceable. A buyer and seller can agree to just about anything and can transfer property with only a handshake if they both agree. But if a dispute arises, that which is written will be what is enforceable. The bottom line is that anything that is agreed to verbally needs to be written and signed by both parties. 

    It is important to know that the base contract has well over 100 different addenda that can be added to handle any number of scenarios, some of which are quite obscure (Defective Drywall Notification Addendum, anyone?)


    This is where you state the names of the seller and purchaser.  

    Typically the buyer will just be you, but in some cases a parent may also be listed as a purchaser in order to help you qualify. There may be the case of putting the property into a business entity such as an LLC, but an LLC cannot be the borrower for most forms of traditional mortgages. 

    Legal Description

    This where the property being purchased is described using the legal description found in the tax records. Often it will be a subdivision name and the lot number. This legal description is different from the street address and it essential for identifying the correct property for the contract.

    Personal Property

    This is the section that addresses anything that will convey with the sale of the property that is not considered part of the real estate.

    { PRO TIP } The best way to think about personal property vs real property is that if you turned a home upside down and shook it, whatever fell out would be considered personal property. Lenders expect to see refrigerators and washer/dryers referenced in contracts, but don’t like to see boats, lawnmowers, furniture, or other items that can be easily removed from the property mentioned in a contract –– unless it is typical for the region (beach houses, for example) 

    Items that are attached physically to the property are usually considered to be part of the real estate, while other items that are not built-in or screwed down are called personal property. 

    Certain appliances you may want are not permanently attached such as refrigerators or washer/dryers and should be asked for in the personal property. 

    There is a long list of items in this section of the contract that are considered to be fixtures and will automatically convey such as dishwasher, stove, window blinds, ceiling fans.  

    If you want to purchase furniture or electronics, you would typically write a separate agreement called a ‘Bill of Sale.’ The lender does not want to see personal property items of large value as part of the contract price because they could be removed from the property after the sale and lower the value of a property.


    One of the biggest decisions you will make is the sales price for your offer. We discuss in other sections of this guide how you arrive at this number. This is one of the most important elements of writing a winning contract but not the only way to compete.

    { PRO TIP } A contract is a 15-20 page document when completed, but only one section is dedicated to price –– which should tell you how many different ways there are to construct an offer. A shrewd purchaser and agent can use the remainder of the terms to craft the winning contract.  


    When there are multiple offers on a property and you are trying to write the most competitive offer you can, the escalation clause can be used. This clause says that you are willing to increase your sales price if there are other offers higher than yours. You set the parameters for the escalation of the price with your terms.  

    { PRO TIP } Most people feel that the highest price always wins –– this is not true. A seller is under no obligation to accept the highest price. A seller may accept (or reject) any offer presented and does not have to give a reason as to why. Losing to a lower offer can be frustrating, for sure, especially when you feel as if you made the highest offer –– but realize that the other terms have value to sellers, too. 

    Typically you will agree to match the highest written bonafide offer net of any concessions (like a closing costs credit). Not only do you match the price, but you also agree to beat the highest offer by adding a margin to the price. You also establish a maximum price with your escalation cap.  

    For example, your starting offer may be $300,000 but you have an escalation clause to match the highest competing offer plus a margin of $2,500 up to a maximum sales price of $325,000. If the highest offer is $315,000 your sale price will be escalated to $317,500 because you add the $2,500 margin to the highest competing offer. You are only triggered to the amount of the highest offer plus your margin.  

    You will only go to your maximum if the triggering offer plus the margin take you that high and you will get a copy of the triggering offer to verify the terms of the competing offer that triggered your escalation.


    The financing type is a key aspect to your offer. 

    { PRO TIP } Often, purchasers will write the offer as if they are paying cash for the home, even though the plan is to obtain a loan. This is legal to do, the difference is that if they are unable to obtain a loan, they have no rights to use the financing contingency as a way to extract themselves from the contract without penalty. 

    Offers can state that the purchaser will be obtaining a mortgage, or that the purchaser will pay cash for the home. Of course, sellers love all cash offers because it means fewer steps and potential roadblocks to closing on the sale.  

    Most first time buyers will need a loan to purchase a home and there are many different loan types that you can choose from depending on your financial situation (e.g. credit score, cash available).  

    Sellers tend to prefer offers with conventional financing with larger down payment amounts to the lower down payment loans. 

    In addition to the loan type, the financing section of the contract includes the terms of the loan such as the percentage of the down payment, the cap for the interest rate, the cap for discount points used to reduce the interest rate, and the time frame during which the purchaser will be allowed to secure the loan.

    Closing Costs Paid by Seller / Seller Concessions

    This is a section that allows the purchaser to request that the seller pay a portion of their closing costs. 

    Any closing costs paid on behalf of the purchaser will be viewed as a concession by the seller, meaning that the seller will view closing costs paid the same as a price reduction.  

    Seller closing costs assistance can be a good way of reducing the cash needed by a purchaser to qualify for and close on a home, just know that the concession paid by the seller affects the seller’s bottom line. 

    { PRO TIP } You will often hear an agent refer to a ‘Net’ offer, meaning that the price offered needs to be adjusted by the amount of the concessions requested. An offer for $350,000 that also requests $5,000 in closing costs and a $2,000 allowance for painting is the equivalent of a $343,000 offer to the seller. 


    If you are obtaining a loan, the lender will require an appraiser to offer an opinion of the value of the property to make sure that what you are paying for the home is consistent with market values. 

    This is critical to understand –– the maximum loan amount that the lender is willing to lend is set by the appraised value or the contract price, whichever is LOWER. 

    The appraisal contingency section of the contract essentially states that if the appraised value of the property is lower than the sales price, then the seller can agree to lower the sales price, but is under no obligation to do so. If they do not agree to do so, the purchaser can legally withdraw from the contract without penalty. 

    If the purchaser wishes to continue without a price reduction, then the difference between the sales price and appraised value will need to be made up with additional cash in the form of a down payment.

    { PRO TIP } In competitive markets or where multiple offers are likely, many buyers will elect to waive the appraisal contingency and know that they have the cash reserves to make up the difference in the event of an appraisal that is low. However, if cash is a constraint, the appraisal contingency unfortunately needs to be left in place.

    Earnest Money Deposit (EMD)

    The EMD is a portion of the sales price that is offered by the purchaser at the time the contract is offered. It typically is a small percentage of the offer (say 1 to 3%, but can vary greatly) and is the money that can be considered ‘at risk’ of forfeiture if the purchaser breaches the contract. 

    The EMD is applied to the purchase price at settlement but it is paid when the contract is written and held by either the buyer’s broker or the settlement agent. The deposit is not to be confused with the down payment.   

    The size of the deposit can indicate a buyer’s level of commitment.

    HOA / COA

    Properties located within a homeowners association that is covered by the Virginia Property Owners Association Act will be required to provide a disclosure package to a purchaser.  

    This package is required to have several elements including rules that govern the association as well as the budget. 

    Once the purchaser receives the package, you have a 3 day review period and a purchaser has the right to rescind the contract during this 3 day period if they find anything unacceptable in the disclosure package.  

    There is a similar law for condo associations –– any purchase of a condo requires the seller to provide the purchaser with a package of information (the Declaration, By Laws and the budget) sometimes referred to as the resale certificate. The purchasers have the same 3 day review period and right to rescind the contract if they find anything unacceptable in the condo resale package.


    Many contracts require additional documents in order to fully express the intent of the contract. The addenda section is where you reference any addenda that were written and merged into the contract. Possible addenda include:

    • Escalation
    • COVID 
    • Short Sale
    • Sight Unseen 
    • Lead Based Paint
    • New Homes
    • As-Is
    • Right of First Refusal
    • Post / Pre Settlement Occupancy
    • Bill of Sale

    Each of these addenda can be added to the base contract in order to provide additional clarity to the purchaser’s offer. 


    The place and the date for the settlement to take place is written in the contract.  

    The date should be a solid target but can have some flexibility if the contingencies cannot be satisfied by the date stated in the contract. If difficulties are encountered any change to the settlement date should be communicated to all parties involved. The settlement agent is also named here.  

    It is a good idea to select the settlement agent when writing the contract so the closing process can be started as soon as possible. 

    The settlement agent can be an attorney or a title company. Using an attorney, especially for your first home purchase, can be a good idea because they can give legal advice and explain legal documents while a title company is not able to give legal advice. 


    When you make an offer on a home, you need to include a date and time at which the offer expires. Once an offer expires, the seller cannot accept the offer and bind you to it. 

    Often, especially after protracted negotiations, the offer / counter-offer back and forth has caused the offer to expire and unless the deadline is extended, the contract is not valid –– meaning either party can walk away without penalty.

    { PRO TIP } Note that the expiration date does not mean an offer must be presented by that time, only that the offer is no longer valid after that time. Far too many uninformed agents (and their clients) feel that an offer that expires by 5:00 pm on Tuesday must be presented by then –– which is not true. The listing agent is required to present all written offers within a reasonable timeframe, not by the expiration date. 



    The takeaway from the contract section is that a contract, in the hands of an experienced agent, is a flexible document that can be written to capture any number of possible scenarios –– despite being ‘fill in the blank’ type instruments. 

    { PRO TIP } Each geographic area uses contracts that capture the generally accepted methods of property transfer. The Northern Virginia region, the Richmond region, the Tidewater region, and the Bay and Rivers region all use similar contracts but with subtle differences. Using the contract that is customary in the region generally results in smoother and less protracted negotiations. 

    The contracts agents use are written by the legal team of their respective associations and are fully compliant with the legal code of our commonwealth.

      06.1 The Purchase Contract



      While the inspection clause is a standard part of any purchase contract, we felt it actually warranted its own section in this post due to the importance of understanding how the inspection process works.  

      One of the first time homebuyer’s biggest fears is buying a home that will end up being filled with problems –– and that is a legitimate concern. And yes, while there is risk associated with buying, hopefully, through proper inspections, the risk can be minimized.

      In most cases, a buyer has the home they are buying inspected by a professional inspector. The inspector’s job is to go through the home –– including on top of the home and under the home –– and check for problems. 

      Once the inspection is completed, the inspector furnishes the purchaser with a report of all of the defects found as well as a cost to cure the issues. Most good inspectors will also include pictures of the issues for clarity.  

      { PRO TIP } There are some items your inspector may include in your report that will not meet the definition of defect in the contract. Some inspectors will also make suggestions for improvements. It is important to note that suggested improvement will not be considered a defect as defined by the contract. Inspectors may also point out items that are not up to today’s building code but are not considered defects because at the time of construction, were built to code.

      The cost to remedy is a key part of the inspection.



      From the National Association of Certified Home Inspectors –– “A material defect is a specific issue with a system or component of a residential property that may have a significant, adverse impact on the value of the property or that poses an unreasonable risk to people.”

      The buyer (and agent) can then go back to the seller with a list of defects they wish to have remedied or receive a credit to repair. If the seller refuses, the buyer can request to be released from the contract, get their deposit back and begin the search anew.

      { PRO TIP } Make sure to see inspections as part of the overall process of buying a home, not as an event that stands alone. If you have negotiated a good deal for a good home in a market that is short of inventory, digging in your heels over a few thousand dollars of repairs might not be a good idea if the risk is losing the house and starting over. We have seen for too many cases where a seller refused to make repairs and the purchaser’s emotional reaction meant that they started over and ended up with a worse house at a higher price. Be wise to the big picture. 

      That was the simple version.

      The reality is that every inspection is different and outcomes differ greatly depending on the defects found, the type of loan, the personalities of the buyer and seller (ok, and agent) and the number and seriousness of the defects.

      First, the inspector’s job is to find DEFECTS. The fact that the system or component is near, at or beyond the end of its normal useful life is not, in itself, a material defect. Unfortunately, despite clear language that defines a DEFECT, much about a home’s condition can be considered in a gray area. Sellers, for obvious reasons, tend to feel differently about repairs than purchasers do. 

      Is a 25 year old roof that does not currently leak, but shows obvious signs of repair, a defect? Are the stairs to the basement without a railing a defect? Is the soft siding under the window that is at the beginning stages of rot a defect? You can see how this goes…

      Here are common items that cause ‘interpretation’ issues:

      • Rotten Wood – Where does ‘rot’ officially begin and when does it end? This is especially true on wood siding
      • Older Big Ticket Items (HVAC, Water Heater, Roof) – If it is on its last leg but working, is that defective? Legally, no. But buyers / agents still tend to request these issues are addressed as a part of the inspection even though they don’t have the legal right to do so
      • Not Built to CURRENT Building Codes – Building codes change and over time, what was once allowable is no longer. Older homes often have multiple issues that would not pass current building codes, but are not considered defects because of the time they were constructed
      • Poor Workmanship – ‘My brother’s cousin finished the 3rd floor…’

      Additionally, the cost to remedy the repairs always causes some conflict.  

      { PRO TIP } Inspectors estimate the cost to cure defects as if the defect was going to be repaired on its own. In other words, you might see a charge for $200 to fix a leaky faucet and a $200 charge to fix a wobbly commode –– even though one plumber would probably fix both for $250. When you see the cost to repair the items found, make sure to realize that often, one or two contractors can take care of all of the items on the list and the cost will be far lower than the estimate. 

      The inspectors always estimate high (or put it in a range) and thus the sellers always complain that the cost to remedy the broken doorbell is 4 times as high as it should be.  

      The inspector is really giving a cost to cure that is published in some type of matrix by some type of inspectors guidebook and it is designed to cover the inspector’s rear end. 

      But I digress…

      A few things to note/remember about inspections:

      • You have a finite time period to get the inspection done so get it done early. If defects are found, you need to figure out if you are going to proceed or not because the other tasks that need to be done before closing (appraisal, survey or title insurance) cost money and take time. If you are not going to buy the home, you don’t want to spend additional money on a home you are not going to purchase
      • Many inspectors now suggest that specialists come in to look at specific items like HVAC or old roofs. Make sure to allow time to get these inspections done, too, if they are needed. 
      • Other than the whole house inspection, other specialty inspections are often done depending on the age and location of the home. Radon, sewer line camera, fireplace/flue inspections are also commonplace but are typically performed by someone other than the home inspector. 
      • If agreed upon, purchasers can receive a credit (or price reduction) in lieu of having the seller make repairs. Just note that taking a credit can trigger loan issues. Talk to your loan officer about how to structure the repair credit.
      • Furthermore, lenders do not like to see language about repairs to be done after closing so if you are going to receive a credit, make sure to take the credit in the form of closing cost or other item NOT labelled as ‘repair credit.’
      • Know your inspector. Suburban inspectors are less versed in older city properties. Similarly, an inspector who works older properties may not be as versed in the country building codes.

      At the end of the day, the inspection process is a small renegotiation between buyer and seller and in 90% or more of the cases, inspection items get addressed and the deal stays together. But each year, every agent has several deals that end up blowing up due to the inspection. It is part of our industry.

      07.1 Defects


      Closing (Settlement)

      Ok, so you are under contract, through inspection, through the financing contingency, and now are simply waiting on the appointed day and hour where you will show up at the settlement agent’s office (attorney or title company) and sign complex legal documents for an hour –– and then they hand you the keys and wish you good luck.

      Settlement, despite the fact it represents the end of the journey to being an owner, can also be stressful as the sheer volume of paperwork seems overwhelming. Documents come at you so fast that you really don’t have a lot of time to really review everything that you are signing. Despite being called ‘settlement,’ it can feel quite unsettling.

      Here is what to expect.

      The Closing Disclosure (The CD)

      By law, you should receive the Closing Disclosure (CD) 3 days prior to settlement for your review.

      The CD will detail where every single penny in the transaction is going –– all of the fees you are being charged, the loan amount you are borrowing, any credits you should be receiving, your escrows, your prorations –– everything. Any fees associated with the mortgage that appears on the CD should have been disclosed to you at the time you made the loan application.

      { PRO TIP } In the old days, less than reputable lenders would wait until the last moment to show the old version of the CD to the borrower and stick additional fees or other charges knowing that the borrower really didn’t have time to do anything about it. If they didn’t close, they could literally be homeless and thus they had little choice. The lender was in effet extorting the borrowers for more money or (sometimes) even a higher interest rate by leveraging the inability for the borrower to do anything about it. 

      Just know that some charges on the CD will be impacted by the date of closing (taxes, insurance, other prorations) so if the day you close has been changed, some numbers might change too and thus the CD might differ slightly from what was shown at loan application. The key is to make sure that the LENDER is not the beneficiary of the changes. 

      The Pre-Settlement Walk Thru

      Typically, a day or two (or sometimes the morning of), the buyer and the agent will do a walk thru of the property to make sure everything is in order.

      It gives the purchaser the chance to inspect repairs, make sure any personal property that was a part of the transaction has not been removed, to make sure that all of the systems are still working properly, and to make sure the property was not damaged when the seller moved out.

      {PRO TIP } In a shocking number of cases, systems seem to break between the inspection and settlement –– especially if the home has been sitting vacant for several weeks. This is especially true if the seasons are changing and both the heating and the cooling is getting triggered on the same day. 

      In far more cases than not, everything goes well –– but not always –– especially when repairs are involved and the seller has been difficult. 

      { PRO TIP } You can always tell when you have a difficult or slack seller. If you get the sense that the work is not being done as agreed to, do the walk thru early. There is little you can do on the day of settlement other than not close, and that can bring in a host of other issues. Walk the property early and/or multiple times if you sense something isn’t being done.


      If repairs are being done, make sure to get the receipts from the seller and make sure that if the repairs were supposed to be done by licensed contractors, the receipts are shown to be from licensed contractors. It is also wise to ask for repairs in difficult places to see (roof / crawlspace) are photographed as proof. 

      { PRO TIP } A license is a contractor’s lifeblood and can be taken away for a myriad of reasons. Using a licensed contractor is an insurance policy for you that the work performed was done in a workmanlike manner and to current code requirements. How an addendum for repairs is written is key and should include the language like ‘All repairs to be completed prior to closing by licensed contractors in a workmanlike manner that would pass without exception within the trade. All receipts and/or warranties shall be provided to the purchaser prior to closing.’


      Any credit you are to receive for whatever reason (closing costs, repairs, other allowances) should appear on the CD. Make sure to consult with your lender on how these credits are to be legally inserted into the contract. 

      Certain loan types have a cap on the amount of credits that a purchaser can receive and if you have agreed to a $5,000 credit, but your loan type only allows $2,000, then the $3,000 credit is lost. 


      Depending on the type of home you are purchasing, often a warranty (or warranties) accompany the purchase. 

      {PRO TIP} A product called a ‘Home Warranty’ is often provided by the seller as an insurance policy for appliances or mechanical equipment if it has a bit of age on it. The policies can be valuable if a purchaser’s cash reserves were used in the down payment and a major repair is required soon after closing. In new houses or recently renovated homes, a home warranty can be redundant if manufacturer’s warranties already offer coverage for most of the major systems. 

      A new home comes with numerous warranties on both the home itself, as well as the manufacturer’s warranties on the mechanical equipment. 

      Other times, a seller can purchase a 3rd party ‘home warranty’ that covers the existing mechanical equipment for up to a year.

      You should receive a copy of any warranties at settlement.


      The actual act of settling occurs when you sit down and sign all of the paperwork it takes to transfer property.

      Make sure to bring a driver’s license or other picture identification in order to prove it was actually you that signed the documents. 

      Block about an hour or even a little more if you like to ask questions. 

      When you are done, you get the keys!

      Cashiers Check

      The CD should detail the check you will need to bring to the closing table. In effect, the check you will need to bring will be the difference between the price of the home and the amount of the loan after you adjust for credits and deposits.

      Wiring Funds

      Some purchasers would prefer to have the money wired to the settlement agent in lieu of bringing a cashier’s check or other certified funds from the bank.

      If you prefer to wire funds, DO NOT RESPOND TO EMAIL WIRING INSTRUCTIONS. Scammers and other internet thieves have sophisticated algorithms that scan emails and identify you as a purchaser of a home. Once they have figured out you are buying a home, they will send false writing instructions and steal your money.

      It happens far more often than you realize. 

      If you are going to wire funds, please speak directly with a representative at the settlement office for instructions.


      Possession begins at settlement, unless otherwise agreed to, in writing, prior to settlement.

      In certain cases, a buyer may require possession before closing (called Pre-Settlement) –– and this always seems to happen at the last minute. Typically, a delay in settlement pushes the closing date beyond the time where the purchaser needs to vacate their property. With a seller’s approval, possession can be granted until settlement occurs.

      In other cases, a seller needs to maintain possession after settlement has occurred. This is most common when the seller is building a home and it won’t be ready by settlement. Again, it can be agreed to by both parties. 

      { PRO TIP } A lot has to happen to make settlement work on the appointed date. A shrewd purchaser will leave a bit of a gap between when they settle on their new property and when they have to vacate the old one. Yes, it costs a bit of money to extend a lease or have some other option, but 1 in 3 settlements have some sort of delay and if you, as a purchaser, have nowhere to go and are forced to put your stuff into storage, it gets expensive and annoying quickly. Don’t assume that everything will go off as planned because so much is beyond one person’s control. 


      Home Ownership

      You’ve finally closed and the keys to your new home are in your hands! You’ve moved into your new home, you’ve unpacked boxes and put all (ok, most) of the stuff away –– but you still have things to do.

      Here are some additional things to consider once you move in.

      Change the Locks

      At closing, the seller is supposed to give you all the keys they have/ 

      However, even if it seems like you got a key chain that would make your high school janitor jealous, you just never know if there is a key that hasn’t been accounted for. 

      For a nominal fee, a locksmith can come and set all of the locks to open with a single key. 

      We highly recommend it.


      Make sure you changed the utilities to your name. We cannot tell you the number of times a new owner called in a panic because the power is off and they don’t know what happened. 

      Turning any utility back on is far more expensive (and annoying) than changing it over without interruption of service –– so invest the time several weeks in advance of settlement in getting the bills changed into your name as of the date of closing. 

      Yes, sitting on hold with the power company is annoying, but having a dark home for a few nights is more so.

      Pest Contracts

      The Mid-Atlantic region is a humid region and instances of wood destroying organisms is fairly common in our market.

      Part of the seller’s legal responsibility (unless otherwise waived) is to have a pest company inspect the home and make sure it is free of wood destroying organisms.

      It is a good idea to have a regular (yearly) pest company come and check your home for termites or other pests that, if unchecked, can do significant damage. 

      For not that much money, a contract with a licensed pest control company is a smart move. 

      Associations (HOA / COA)

      Make sure your Homeowner’s Association (or COA if a condo) knows you are now the owner. 

      You will want to know about meetings, officer elections, by laws modifications, capital expenditures, maintenance, and / or other community news so that you can participate or be notified.

      The HOA should know you are the new owner, but it is always a good idea to double check that they have your contact information.


      Nothing is time proof –– so make sure to stay ahead of maintenance. When you are a tenant, you get to call the landlord when something breaks. As the owner, maintenance is now your responsibility. 

      So make sure to keep exposed wood painted, HVAC serviced, gutters clear, siding power washed, drains cleaned, mortar filled, grout clean, filters changed, and trees limbed up and away from you home (to name a few).

      { PRO TIP } Your home inspection report is a great resource here. Most inspections note the useful life of the different materials on your home and will also list items that are still functioning, but you need to keep a close eye on. Take this list to heart. 

      The benefits of ownership are many, but come with responsibilities, too. Don’t assume that houses last forever without your participation.  

      Your agent probably has a team of people who can help you stay ahead of maintenance so that your home will last and big ticket repairs will be minimized. 


      If you got a survey done on your home, keep a copy. 

      Fences, utilities, yard maintenance, sheds, additions –– all of these become far easier when you know your property lines. 


      Keep a copy of your appraisal, too. 

      If you want to contest your assessment, open a credit line, or defend your home’s size to the next purchaser, the appraisal is super convenient to have laying around. 

      Don't Be A Stranger

      After you’ve settled (and hopefully written your agent a great review online), your relationship with your agent doesn’t have to end. Homeownership is a big responsibility and although it’s an important investment and an exciting next step, there may be items that show up along the way that need repairing or replacing, an HVAC that breaks or roofing that needs fixing, and you may feel overwhelmed. Your agent can continue to be a great resource to you. They have a list of vendors that they’ve worked with who they trust and recommend. 

      Even if you’re two years into living in your home and you just want to know your home’s value and/or the value of other homes in your neighborhood, you can always reach out to your Realtor for their expertise. 


      Common Mistakes

      While our goal for this site is to provide you with tips and things to know when buying a home, there are few more pitfalls we suggest avoiding:

      Not Doing Your Homework

      Falling in love with a home is easy and unless you understand what you are buying, it is easy to take the love for a home and try to make it yours.  Spend some time looking to gain understanding about market values.  If you look at a good number of houses in a structured way, you will begin to build a model in your mind.  Don’t rush into a decision.

      Doing What Your Buddy Did

      ‘Well, my friend bought a home in Midlothian and loves it, so we have decided to buy there too.’  

      Don’t do this.  Each person’s motivations are unique. Just because friends live somewhere, doesn’t mean you should too.

      Under Buying or Overbuying

      Remember, transacting a home is expensive. 

      When you go to sell your home, it is safe to say you will lose 10% of the value of the home in commissions, repairs, closing costs, and other expenses. 

      So if you buy a home today that will get you through the next three years before you will outgrow it or have to move again, you should consider skipping a step. Is this risky? Perhaps, but it is also risky to buy a home today and then in three years buy another one and lose much of your equity in the transaction. 

      Think forward as much as possible and buy for the long term. I am not suggesting you stretch yourself beyond reasonable comfort, but just know that each time you sell and buy, you lose thousands of dollars in the transaction.

      Using an Online Lender

      In case you couldn’t tell in the earlier section on using online lenders, we strongly suggest that you don’t do this. 

      If you want to use Quicken Loans or USAA, then you had better make sure you won’t experience a penalty for a missed closing date. Penalties for missed closing dates come in many shapes and forms; from moving companies, to rate expiration, to seller lawsuit to Realtor commissions –– these penalties can all be your responsibility. 

      Is this an attempt to scare you? Yes. Is it legitimate? You bet. 

      Quicken and USAA can be decent option refinance, just not for purchase. 

      You have been warned…

      Incorrect Use of Zillow and Trulia

      Trulia and Zillow are not MLS.

      They are chocked full of inaccuracies and over-reliance upon these sites will cause you to receive information late or not at all. They have some neat tools and they rank well, but once again, they are not MLS.

      Here are some things to know:

      • Search results are not organic
      • Search results are not policed for accuracy
      • The Agents in the sidebar pay to appear there
      • Agent reviews are controlled by the agents so you only see the good ones
      • Zestimates are within 10% of the value only 66% of the time (in the good markets)

      Use these sites at your own risk.

      Calling the Name on the Sign in the Yard

      The name on the sign represents the seller and it is their job to get you to pay as much as possible. Likewise, when you call the name on the sign, you can get yourself in a pickle with commissions owed (this topic is too complex to be discussed here as ‘Procuring Cause’ legal precedent is extremely nuanced and hard to summarize), but just remember that you should call YOUR agent for info, not theirs. 

      If you are out and about and you do call a sign, let the listing agent know you are working with a buyer’s agent.

      Not Disclosing Fully to Your Agent

      I have been in several situations where clients didn’t really come clean and it came back to bite them. If you are struggling with your loan, don’t be afraid to say so. Even if it’s embarrassing or disappointing, hiding and hoping can really put you in a bad situation and potentially get you sued. 

      As agents, we all know the leverage points to get you out of a contract, but these points disappear the closer you get to the targeted closing date. Always disclose fully to your agent and you will receive the best representation.

      Looking Backwards

      Markets are rarely static.

      Real estate valuations are largely based on looking backwards to find values, despite the fact that time moves forward. 

      A comparable sale is by definition an event that happened in the past, and while it is an indicator of where the market was, it offers no guarantee where the market actually is. 

      Don’t use comparable sales exclusively in your analysis, you won’t land on the correct value.