Home Buyers Guide: Hints From Pros, Owners

CLOSING COSTS. Escalation clauses. Softening markets. Hardened sellers. If you're a first-time homebuyer, it helps to be able to speak real estate-ese. It also helps to hear what pros and other recent buyers have learned. We asked several in-the-know sources, from a seasoned Realtor to young home buyers, for their advice on what you should know before plunging into the home-hunting maelstrom.

THE BUYERS: For Michele and Scott Lyons (pictured at left), finding their first home was a bit like looking for love. They briefly flirted with $500,000 condos in Dupont Circle, but realized they could get more for their bucks if they explored options in other parts of the city.

Infatuation set in when they found an old church near the U Street in November 2005, but it faded quickly. The property didn't have a bathtub or much of a kitchen, so it would have required a commercial loan (with a higher interest rate), plus thousands of dollars to bring the building up to code.

They put their hearts on the line in early 2006 when they made an offer on a Columbia Heights house they now call the "Leaning Tower on Spring Street." They probably knew the house wasn't a good match: The structural damage was so bad Scott said the uneven floors and doorways made it feel like being on a boat. But like many first-timers, their anxiety at potentially being left behind trumped their common sense. "The fear was if we didn't get in then, we were never going to get in," said Scott, 30, a lawyer with the American Society of International Law. Their contract only fell through because they couldn't get the warped property insured.

Demoralized, they took a break from the search until fall 2006. The market had changed drastically during their nine-month hiatus and they were able to find many more places in their price range as they trolled through online MLS listings on ZipRealty.com. They made unsuccessful offers on two properties before finding the three-bedroom house with a big backyard they now call home for their 5-month-old daughter Calla.

Negotiations on this house were complicated. An inspector uncovered minor structural damage in this house as well, but it was far more manageable than the Leaning Tower so the decided to proceed and asked for $19,000 off the price.

An attorney with the Justice Department's antitrust division, Michele knew that some real estate agents agree to give buyers a percentage of their commission back after the sale. Since they didn't have a strong recommendation for an agent, they decided to go with one who advertised that he would give them some of the commission back. The agent gave them $2,000 back after closing.

But because they didn't know the agent well, they clashed with him over negotiations. The agent, who gets a bigger commission on a higher sale price, advised the Lyonses to accept $5,000, instead of the $19,000 they'd requested.

"I really had to stand up to my own real estate agent," says Michele. The seller eventually knocked $17,000 off the price, but only because Scott and Michele were prepared to walk away from the deal.

Big-decision paranoia sets in with most home buyers, but first-timers have an especially acute case. "It's not like renting, where you can bail out," says Amanda Glazebrook, a 26-year-old geospatial engineer who closed on her Alexandria condo March 9 (that's her at pictured at right). "You can't bail out of a house — not without losing a lot of money — and that was pretty intimidating for me."

The two-level, townhouse-style condo Glazebrook purchased was actually the first property she looked at. But she did slog through 15 other prospective homes before making an offer. Going to extra open houses gave Glazebrook a chance to figure out what she really wanted. "I looked at a lot of condos that were in high-rises, and a couple of those were attractive," she says. "But when it came down to it, [this condo] had that home feel rather than the apartment feel."

Besides the condo's new appliances, walk-in closet and red door, Glazebrook was also attracted its relatively low condo fees; at $239 a month, they're less than half of the fees at other places she looked. "The condo fee is what got me in the end. When I called my mortgage company, the condo fee would make a lesser-valued condo actually more as far as a mortgage," she says. "And you're not getting any tax deduction."

Looking back, Glazebrook says she should have paid more attention during her home inspection. Her inspector caught a few structural flaws, but he missed some biggies: The hot and cold water lines were reversed on her washer and dryer, and her bedroom door doesn't close. Now that she's in, she'll have to pay a contractor to fix both problems.

"I really blew through that guy not really thinking it was a big deal," she said. Her condo was recently converted and had never been lived in, so she didn't think anything could possibly be wrong.

"You get so exhausted in the process" of looking at houses and negotiating and amending contracts and that you overlook things like this, she says. She advises prospective buyers to check "all the things that you think are redundant to check." It's not as much fun as admiring the shiny appliances, but it could save time and money in the long run.

That hassle aside, Glazebrook couldn't be happier with her decision to buy. "I've gone through so many years of renting," she says. "It's a relaxing feeling to be able to go home and know it's yours and know you're not going to move in another year."

THE GURUS: About a year ago, real estate investor Sasha Mehra and real estate agent and settlement attorney Noreen Qureshi decided to bring their know-how to the masses in the form of a class called "Smart Homebuying: Buying Property in Washington, D.C." (The next class is May 12; for information see takeaclass.org.)

The two-hour seminar covers making the decision to buy, selecting an agent, looking for homes, financing, writing a good contract and the settlement process.

Mehra and Qureshi want to make sure first time home buyers are equipped with the tools to ward off predatory parties. "Folks should be educated because then they'll be empowered to understand the transaction and not be so dependent on the information they're getting from outside sources," says Qureshi, 31.

Financing is perhaps the trickiest part of the equation. "Shopping for a home is half the battle," says Mehra. "Shopping for a mortgage is basically just as important." Mehra and Quereshi advise home buyers to look closely at what they can afford: Buying more home than you can afford is a dangerous risk.

Even the shopping process is tricky for first-timers. "Sometimes, prospective home buyers are willing to gloss over things because they now have an emotional attachment to property that they are going to put an offer on," says Mehra, 31.

Take condo documents, for example. You only get three days to review them before deciding whether to go for a property. Some buyers assume there's nothing important in that boring stack of papers. But condo docs can reveal an upcoming heater or roof replacement that might end up costing $400 more a month in condo fees, a deal breaker for most first-timers.

Qureshi and Mehra also advise their students and consulting clients to look into nonprofit organizations like ACORN and city and county governments who offer tax incentives to first-timers who buy in their districts.

Many first-timers worry about whether this is the "right time to buy." Before she bought her first home, Mehra remembers being intimidated by all the chatter at her gym about escalating costs. "Nobody can predict the market," she says. "But what you can do is do your research and comparison shop. Every weekend, I'm at an open house. I think it's really important to know what else is out there."

THE REALTOR: Brian Logan has been in the real-estate biz since 1972, and even though he doesn't deal personally with as many first-time home buyers as he used to, 20 to 25 percent of his firm's buying clients are seeking their first place either in the District or the close-in suburbs.

Logan, 60, advises newbies to spend some time sifting through listings on the Multiple Listing Service (MLS) to get a feel for what they can afford in neighborhoods they like. "Real estate is an investment, but it's also and more importantly a home," he says. "Location is a very important aspect of that. You want a location that you're going to feel comfortable in."

But clicking through a few online listings and ogling photos of townhouses doesn't make you an expert. That's why Logan recommends working with a Realtor, who can help sift through properties for sale — and teach you a bit about the business in the process. "A first-time buyer or a buyer who's not looking at houses as a piece of merchandise every day, they get carried away with the decorating or the ambiance and they're not looking at the important things," he says.

Experienced agents know whether a property is a good value in a certain neighborhood. They know whether a fixer-upper's quirky charms will hold up on resale. And since they trek through six or seven properties a day, agents also have a good eye for structural defects that could cause the owners big financial problems down the road.

The complicated negotiating process can paralyze some first-time property purchasers. "People get so wrapped up in trying to get the lowest possible price or the best possible deal that they let a good value or a good property go by," says Logan.

Financing is another stumbling block. Logan advises sitting down with a loan officer from a reputable company who will go over financing options and pre-approve you for a loan, so you "know how much you have in your pocket to spend" while shopping around, he says.

Today's cooler market is a boon for would-be buyers. "It gives you a chance to reflect on different houses," Logan says. "You're not being herded through like cattle."

Written by Express contributor Julia Beizer
Glazebrook photo by Gabriela Bulisova for Express