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You can file but the procedure is very large and you should have some documents claiming that whatever you are saying is the thing they said while taking the admission……You can file and fight your own case in a consumer court without a lawyer. The Consumer Protection Act, 1986, is a central government act applicable in all states of India, to provide for the protection of the interests of consumers (including investors). If there is any deficiency in services by any service provider in any sectors like manufacturing, hotels, transport, telephone department, electricity department, hospitals, banks, educational institution etc, then you can approach consumer courts/ forums for speedy resolving of matters.A Consumer does not include a person who obtains any goods or service for resale. Also, consumer courts cannot entertain issues of rates or fees charged by a provider.1. Basic points:Do not make an emotional decision to go to the consumer court, as it could be a time consuming process, requiring a lot of patience and determination.Try to approach a consumer organization (as listed below) to complaint on your behalf, before deciding to a consumer forum.Before opting to file a case in the consumer court, please read prior judgements. Please also consider filing a complaint online at the new government portal or the old central government portal.Send a notice to the opposite party, before filing a petition, thus giving them a chance to rectify their mistake.A complaint can be filed within the period of two years from the date on which the cause of action has arisen. However, a complaint may be entertained after the period of two years, if the complainant satisfies the Forum that he has sufficient cause for not filing the complaint within such period and the Forum records its reasons for condoning such delay.The Consumer Protection Act says that a complainant can either personally appear or be represented by an authorized agent or an advocate, by giving such a person the necessary authority on a Rs 100 stamp paper.The burden of proof of defense of a false or misleading warranty or guarantee shall lie on the opposite party.The first duty of a consumer is to get a receipt whenever he buys something, either goods or services, as proof that he has paid. In a judgment favourable to the consumers, the National Commission ruled (IV (2005) CPJ 207 (NC)) that terms and conditions on the receipt are binding only if they are signed by the customer. The National Commission has also held that contractual terms (even if consumer has signed) which have not been individually negotiated shall be regarded as unfair (and hence null and void) if, contrary to the requirements of good faith, they cause a significant imbalance in the rights and obligations arising under the contract.The Department of Consumer Affairs in Delhi has issued a D.O. (D.O. No. 11(11)99- CPU/1647 dated 22-12-99) prohibiting the printing of the condition “Goods once sold will not be taken back” on receipts. Unfortunately, a large number of businesses are still flouting the D.O. and many consumers who are not aware of the law are being cheated. If you are dissatisfied with any merchandise you have purchased, you can return it and get a refund of your money even though the receipt says that goods once sold will not be taken back. If the shop refuses to take it back, file a complaint before the consumer forum and you will get your money back.Download a sample Notice to opposite party; consumer court petition; Affidavit and Authorization.2. The District Forum details:A Consumer Disputes Redressal Forum to be known as the District Forum was established by the State Government with the prior approval of the Central Government in each district of the State under Section 9(a) of the Act. The district forum shall have jurisdiction to entertain complaints where the value of the goods or services and the compensation, if any, claimed is less than rupees twenty lakhs. The District Forum consist of one president (District judge) and two other members (one of whom is to be a woman).The specific fee for filing the case, should be in the form of crossed demand draft or crossed Indian postal order addressed to “President, District consumer dispute Redressal Forum”. Cost of filing a case with effect from 10/2/2005:Up to 1 lakh – Rs.100Rs.1 lakh – Rs.5 lakh – Rs.200Rs.5 lakhs – Rs.10 lakh – Rs.400Rs.10 lakh to Rs.20 lakh – Rs.500Procedure to file a petition:Jurisdiction is territorial and monetary i.e. either the office of the respondent or address of the complainant can be used. One must try to find out at which forum the backlog is less and file accordingly, as per our convenience.Petition must ideally be in EnglishFull name & address of the complainantFull name & address of the opponent (respondent)Information about when and where cause of the complaint arose.Detailed particulars and nature of complaintPrayer of reliefs sought including monetary claims, compensations; and its total value.Certified true copies all relevant documents on which complaint is based and to be attached as Exhibits (in TRIPLICATE keeping one copy for your record with one extra full set for each of the opponent/s).The complaint can be submitted by hand delivery or Registered AD or Speed post to the office of the forum. Do not forget to take receipt of acknowledgement of your copy.For Mumbai city (Colaba to Sion)Bombay District Consumer Disputes Redressal ForumPlot CS No 4 /296, Administrative building1st Floor, SS Rao Road, Near Mahatma Gandhi Hospital, Parel East, Mumbai 400012Tel.: 022-24171360For Mumbai suburbs (Bandra to Dahisar and Chunabhatti or Kurla to Mulund)Bombay Suburban District Consumer Disputes Redressal ForumNew Administrative Building3rd Floor, Bandra (East), Mumbai 400051.Tel.: 26551625Thane District Consumer Disputes Redressal ForumThe Collector Office Building1st Floor, Thane, Dist. Thane.Tel.: 25345042 or 25344069 or Konkan Bhavan at CBD Belapur Navi Mumbai 27574074.3. Findings of the District Forum:Rules framed by different State Governments lay down different time limits it is generally 90 days from the date of the first hearing. Every proceeding before the district forum shall be deemed to be a judicial proceeding and shall have the same powers as are vested in a Civil Court for the summoning of any defendant or witness; production of any document producible as evidence; the reception of evidence on affidavits; the requisitioning of the report of the concerned analysis or test from the appropriate laboratory or from any other relevant source.If the district forum is satisfied that the goods complained against suffer from any of the defects specified in the complaint or that any of the allegations contained in the complaint about the services are approved, it shall issue an order to the opposite party directing him to take one or more of the following things, namely:to remove the defect pointed out by the appropriate laboratory from the goods in question;to replace the goods with new goods of similar description which shall be free from any defect;to return to the complaint the price, or, as the case may be, the charges paid by the complaint; to pay such amount as may be awarded by it as compensation the consumer for any loss or injury suffered by the consumer due to negligence of the opposite party.Section 10 of the CP Act can make the respondent produce relevant records of the matter pertaining to other similar consumers, thus converting the matter into a class-action suite.4. How the orders of Forum are enforced?If the interim order of a Forum is not complied with, the relevant forum may order for attachment of the property of the person concerned, which shall remain force for three months, and if the non-compliance continues, the property so attached may be sold and out of the proceeds thereof the damages may be awarded to the complainant and the balance amount paid to the parties entitled thereto. Further, if any amount becomes due to any person under the orders of a Forum, he can make an application to such forum for issuance of a recovery certificate to the collector of the district to recover the same as arrears of land revenue (section 25 of the Act). Further, if any person fails or omits to comply with the order of a Forum, he may be punished with imprisonment up to three years (section 27 of the Act) or with fine of Rs.2,000, which may extend to Rs 10,000 or both.5. First appeal (State Commission):State Commission can hear the cases involving the amount more than rupees twenty lacs and up to rupees one crore. It has also jurisdiction to hear appeal against the orders of District Forum of that particular State, within a period of thirty days from the date of the order. The State Commission is formed under Section 9(b) of the Act and consists of a president (ex-High court judge) and two members one of whom is to be a woman.Send four sets of the appeal petition and the accompanying papers when making an appeal to the State commission. The number of copies should be increased correspondingly in case there is more than one opposite party.Procedure to file a petition:If there is a delay in filing, an application for the condonation of delay must be made along with the appeal and supported by an affidavit setting out adequate reasons for the delay and accompanied by necessary evidence. There is not limitation period for filing a revision petition under the CPA but it appears that such a revision petition can be filed within 90 days.If the applicant has to pay any compensation as per the order of the District Forum, then the State Commission will entertain the appeal only if the appellant deposits 50 percent of that amount or Rs. 25,000/- whichever is less with it.Appeal papers can be sent by Registered AD Post or in person.The payment should be through a Nationalized Bank Demand Draft duly crossed, drawn in favour of “Registrar, State Consumer Disputes Redressal Commission, Maharashtra State”. Cost of filing a case with effect from 10/2/2005: 20 lakhs – 50 lakh is Rs.2,000 and 50 lakhs – 1 crore is Rs.4,000Maharashtra State Consumer Disputes Redressal CommissionOld Administrative Staff College,Room No. 102, Behind Capital Cinema,Waudby Road, Mumbai 400001Tel.: 22852097.6. Second appeal (National Commission):A National Consumer Disputes Redressal Commission can hear cases against orders of the state commission, as long as they are filed within 30 days of the order. NCDRC was established by the Central Government is established under Section 9(c) of the act. The National Commission consists of a president (ex- Supreme court judge), and four other members (one of whom is to be a woman). It has all India jurisdiction, and is for matters above Rs. 1 crore.Procedure to file a petition:If a person wants to appeal against the order of the State Commission to the National Commission and he is the party who has to pay the compensation, then the appellant will have to deposit 50 percent of the amount or Rs. 35,000, whichever is less with the National Commission.If the respondent has lost has appealed against the order of the state commission, then the appellant would be summoned only if they find merit in the case.The appellant must enclose the original copy of the order against which an appeal is made along with the main set of the appeal and copies of the appeal.The petition of appeal should also be accompanied by such other documents which an appellant would require to support his grounds of objection mentioned in the appeal.While filing an appeal, a memorandum of grounds has to be set out. The appeal petition should be presented in a paper-book form typed on one side of the paper with double spacing. The grounds of appeal should be set forth concisely under distinct heads which should be numbered consecutively. Give an index of the documents attached to the petition on the first page and paging should be done to all papers filed.The appeal should be signed by the appellant or by authorized person (along with the authority letter of appellant). The person having an authority in this behalf may sign it and indicate the reasons as to why the appellant himself is not able to sign the appeal. As for example when the appellant is out of India.Send six sets of the appeal papers including the additional documents when appealing to the National Commission. The number of copies should be increased correspondingly in case there is more than one opposite party.Appeal papers can be sent by Registered AD Post or in person.The payment should be through a Nationalized Bank Demand Draft duly crossed, drawn in favour of “Registrar, National Consumer Disputes Redressal Commission”. Cost of filing a case with effect from 10/2/2005 is Rs.5,000.The President – National Consumer Disputes Redressal CommissionA-Wing, 5th Floor,Janpath Bhavan, New Delhi 110001.7. Procedure to appeal to the Supreme Court:An appeal can be preferred against the order of the national commission to the Supreme Court.Send seven sets of the appeal papers along with the documents if the appeal is to be filed in the Supreme Court. The number of copies should be increased correspondingly in case there is more than one opposite party.While filing an appeal from the National Commission to the Supreme Court, there is a court fee of Rs. 250/-.Helpful consumer organizations and other resources:1. Mumbai Grahak Peth Panchayat (MGP)Grahak Bhavan, (JVPD Market)Sant Dhyaneshwar Marg, Juhu Vile Parle Scheme,Juhu (W), Mumbai 400056Tel.: 26209319/ [email protected]. International Consumer Rights Protection CouncilB-9/55, Vijay Nagari,P.O. Kasarvadavali,Thane (West) [email protected]. Consumer Guidance Society of India (CGSI)A Block, Mahapalika Marg,Opposite Cama Hospital, Mumbai 400001Tel.: 22621612/ 238147874. Council For Fair Business Practices (CFBP)Great Western Building130/132, Shahid Bhagat Singh Marg,Opposite Lion Gate, Fort, Mumbai 400039Tel.: 228447835. Consumer Complaints Cell (Mohan Siroya)Tel.: 282077886. Consumer Daddy7. Association for Consumers Action on Safety and Health Lawyers Chambers, Room 21,RS Sapre Marg, Mumbai 400002Tel.: 23886556/ 7354

Step 1: Figure Out What License You Need For Your StateAs you see below, you’ll first need to identify a number things like license type, availability, etc. To do this you’ll need to visit your state’s department of Alcohol Beverage Control (ABC), which can provide you with all of the relevant data for a liquor license. Here are a few of the popular state sites:State Alcohol Beverage Control (ABC) BoardsNew York CityLiquor LicenseNew York State Liquor Authority(518) 474-3114317 Lenox Ave.4th FloorNew York, NY 10027IndianaLiquor LicenseAlcohol and Tobacco Commission(317) 232-2430Indiana Government Ctr. South302 W. Washington St., Rm. E-114Indianapolis, IN 46204OhioLiquor LicenseOhio Department of Commerce Division Of Liquor Control(614) 644-24116606 Tussing RoadReynoldsburg, Ohio 43068-9005CaliforniaLiquor LicenseCalifornia Department of Alcoholic Beverage Control(916) 419-25003927 Lennane Drive, Suite 100Sacramento, CA 95834TexasLiquor LicenseTexas Alcoholic Beverage Commission(512) 206-33605806 Mesa DrAustin, Texas 78731FloridaLiquor LicenseFlorida Department of Professional Business Regulations Division of Alcoholic Beverages and Tobacco(850) 487-13952601 Blair Stone RoadTallahassee, FL 32399IllinoisLiquor LicenseIllinois Liquor Control Commission(312) 814-2206100 West Randolph StreetSuite #5-300Chicago, IL 60601Your state’s ABC board will know exactly what is required for each business to sell liquor and be properly licensed. It will be able to tell you which license(s) you need and how much they will cost.While license types vary significantly among states, the type of license you’ll need typically depends on your answers to the following questions:What kind of establishment are you? (e.g. bar, restaurant, hotel, etc)Does drinking happen off premises (retail) or on premises (bar, restaurant)?What kind of alcohol do you sell?Are customers bringing their own alcohol (BYOB), or will you store and serve the alcohol?What hours do you sell? (the later you stay open, generally the more expensive the permit)Will you sell on Sundays? (Some states like Ohio charge an extra fee for Sunday sales)Do you manufacture, distribute, or sell alcohol, or any combo of the three?Determine Permit AvailabilityMany states and localities have a limited number of liquor licenses. They are already pushing their license limits and have few, if any, new liquor licenses available. You may have to check availability at the state, county, or city level depending on which state you are located in. This includes making sure the area you’re targeting is a “wet” location (alcohol sales are allowed) and not a “dry” location (alcohol sales are prohibited).The ABC board or possibly your local county or city can give you information on availability limitations and whether or not there are any of your class of liquor licenses available. They can also explain how new requests are handled, which also varies by state. For example, California holds a lottery in some parts of the state if there are more applicants than available licenses.You May Need to Buy From an Existing BusinessEven if your county is all full and there are no new liquor licenses, there may be other ways to attain a liquor license. In many cases, other businesses in the area will be looking to sell their license. Your state’s ABC often tracks that and can inform you of those options. For instance Illinois makes contact information available for all existing licensees.Buying an existing liquor license or a business with an existing license requires many of the same steps as if you were buying a new liquor license. You still must go through the same application process as a new liquor license. However, you can apply for a temporary permit that will allow for continued operation while your application is being processed, usually 120 days. Fees tend to be lower for a transfer than a brand new license.You can read more here regarding buying a business in general.Step 2: Prepare for Application ProcessRegardless of whether you are getting a new license or buying one from another business, the next step is to make sure you have all your ducks in a row before you actually file your application. Properly preparing for the application process can save you months in processing time.One of the main ways to speed up your application for a liquor license is to make sure all your general business licenses and documents are in order.Here are some examples of the elements you should have in order before you file for your liquor license:Employer Identification Number – Apply at IRS.GovZoning permit – Check with your local zoning commission (contact info on state website)Business License (Can also be at multiple levels of government depending on what you sell) – Check with local small business commissionSales Tax Permit – Apply Online via your State’s WebsiteAlcohol Tax Permit (sometimes included in sales tax form) – Get in-touch with your state’s business taxation departmentFood handler’s permit (if you are selling food) – Check with your state’s health commissionBuilding permit – Check with your local zoning commission (contact info on state website)Signage permit – Check with your local zoning commision (contact info on state website)Health permit – Check with your State Health CommissionMusic license (if you are going to be playing copyrighted music) – Available from a variety of online companies, including License Suite.If you do not have all of these things figured out, your liquor application will be put on hold until you do.If you’ve been in business awhile, you should also make sure you are up-to-date on all tax payments. If you are behind on your taxes, the state will not look favorably on your liquor license.According to James Henry Dunne, Professor of Hospitality Studies, NYIT School of Management,“During the start-up phase the application for a liquor license should be submitted as soon as is feasible, since license approval takes two to three months, or more. Also, since a fully executed lease agreement (or deed/proof of ownership of the real property where the license will be used) is also required along with your license application (along with many other requirements), start-up operators are faced with the stressful predicament of signing a lease before being approved for a license. Since this is clearly a danger, start-ups should seek concessions from the landlord, if the landlord is agreeable (reduced or free-rent during building renovations — or until license approved — or an Escape Clause providing an exit for the leaseholder if license not approved).”Step 3: File Your Application with the ABC BoardOnce you have your prep work done, it’s time to actually file your application with your state’s ABC Board. This is generally done via a mail-in form that you can print from your state government website. When we reviewed a sample of state government sites, none of them provided a way to apply online.What to Include With Your ApplicationIn most cases, there are additional items that need to be included with your application in addition to the government-provided forms (using Ohio’s requirements as an example):Processing fee – Nearly every state has a non-refundable processing fee. Some are just deposits against the license fee. Ohio charges a $50-100 processing fee depending on the type of permit you need.Background check forms – A background check will be performed at least on the business owner and sometimes also on the top 5 officers of a corporation and possibly even the landlord (if landlord is making a commission on alcohol sales).Fingerprint(s) – Some states, like Ohio for example, require fingerprints for the background checkSigned Lease Agreement – You will need to provide a signed lease agreement of your business location and take into account the time between signing the lease agreement and the potential months before getting your liquor licenseFinancial Verification Sheet – Some permits depend on how much expected alcohol income your business will have.Certificate of Good Standing from the Secretary of State – This is a certificate that your corporation or LLC is complying with state regulations such as taxes and corporate filings. Partnerships and sole proprietorships normally don’t have certificates of good standing, but you’ll have a Doing Business As (d/b/a) fictitious name certificate if you operate under a name that’s different from your legal name.Copy of food handler’s permit or license – This certifies that your food operations are in good standing with the state, county, or city.Other applicable licenses/formsThe Approval ProcessOnce you send in the your form, the approval process varies for each state. As we discuss further below, it can take 5-6 months to get your license. For reference, here is an example of what happens in Ohio once you submit your application:Application is logged into the system and sent to local legislative bodies and authorities in the areaThe ABC board will work with local officials to determine wet/dry status and whether or not any new licenses are availableThe ABC board works with the Ohio Bureau of Investigation to process background checks (generally looking for criminal record)A Division Compliance Officer will come do a physical check of your premises, also noting what schools, churches, etc. are within 500 feet of your location (they will then be notified and have 30 days to object). If your business is not in operation or does not pass inspection you’ll need rectify the issue, assuming you can, and then request that the compliance officer recheck your establishment.Public Hearing is conducted if any complaints were filed.If no complaints were filed or complaints were resolved, then your application should be accepted and the permit issued to you within 4-8 months.Other Things to Know Before Applying for a Liquor LicenseBefore heading into the licensing process there are few things you should probably be aware of.1. Zoning Laws for Your BusinessOf course, your building has to be zoned commercially. But, there are often other restrictions as well, regarding proximity to local schools, churches, and other similar establishments.For example, to obtain a California liquor license you need to contact a city or county zoning department to see if a zoning permit is needed. If so, you’ll need to prepare and file a zoning application locally, which includes specialized maps, research, notification of local residents of your application, and preparation of a written application. You may need a public hearing and answer any questions raised by local community groups or neighbors. Only after you’ve got the appropriate zoning permit can you apply for a California liquor license. Other states have similar processes.2. Liquor License AvailabilityLiquor licenses are highly regulated and each county has license quotas, many of which are already maxed out. In Indiana, for example, 98% of residential areas are at their liquor license capacities (see Step 1 above for info on finding out your county limits).3. BYOB Restaurants/Businesses Have to Be LicensedSome people mistakenly believe that BYOB businesses do not require liquor licensing. That is simply false. Although there may be a different class of license since you’re not storing the liquor on premises, a license is still required because you’re serving the liquor and it’s being consumed at your location.4. How Long it Takes to Get a Liquor LicenseYou better be planning ahead because the liquor licensing process is not quick. Factor in at minimum a 5-6 month buffer between sending in your application and when you plan to open.The licensing process is complicated. It is rare that you just send in your application and everything is good to go. In most cases, there are multiple correspondences back and forth requesting various documents and confirming information. It is an in-depth and ongoing process that takes time.5. Other Details You Need to Be Prepared ForLocal businesses within a certain distance of your proposed location often have the right to file an objection. You often need to be of a certain age or a U.S. citizen. For many states, liquor licenses are accompanied with very specific restrictions on when you can sell alcohol such as time of day, which days, or the required food percentage of volume that you sell in addition to alcohol.Renewing Your LicenseGenerally, the term or length of your liquor license is 1-3 years, but it depends on your state and local regulations. There is no automatic guarantee that your license will be renewed, particularly if you have had issues or been reported for serving to minors. But, if you have operated reputably and have not had any major complaints, then you should be able to renew your license fairly easily. Depending on your state, the renewal fee may be similar to or significantly less than your original fee. For example, in California, a new license is around $14,000, but the annual renewal fee is $876.Bottom Line on Liquor LicensingGetting a liquor license is a pretty extensive process, and at the end of the day there is no guarantee you will even get a license. But, the only way to find out what you are up against is to get into the process and start digging around.Curious to know if you need to protect your business against alcohol-related damages or injury? Click here to learn everything you need to know about liquor liability insurance.If you need assistance with the document preparation for your licence, check out LawTrades. They are an online legal service provider with a team of experienced attorneys who will prepare and review your application for you.Source: Liquor License Costs + How to Get One in 3 Steps

Buying a home has always been the ultimate symbol of the American Dream.If you are overwhelmed, confused or downright scared of buying your first home (or perhaps even a second home), you've come to the right place. Here I will streamline the entire home buying process into simple actionable, logical steps.I GOT NOTHING TO SELL HERE. TAKE THE FREE INFORMATION FOR YOUR OWN BENEFIT.STAGE 1 - Get Pre-QualifiedThe very first and perhaps the most important step to buying a home is to determine what you can truly afford, just as you'd likely do for any other major financial decision.You want to hit the pavement. I know it's exciting. You want to open up doors and tour properties and you have your checklist. But, the first thing before we get on your checklist of what you want in your house is to get financially qualified. Any sort of other activities, going on property tours, going on Zillow, open houses, showings, that's going to be a waste of time. It will allow you to streamline your house search by not having to tour houses that you can't afford.Getting pre-qualified for a mortgage is an informal process where you are typically interviewed by a mortgage professional about your assets, income, and expenses. From this you will get a general idea of the price range you can afford.However, I believe pre-qualifying yourself is also a wonderful alternative. It will not give you a true understanding of the circumstance that's unique to you, as well as intuitive insights into ways to increase your purchasing power.When you self-evaluate your finances, you will need to look at three key areas in your finances: cash reserves, cash flow and credit score. This is all that matters when determining your budget. How much you can afford also ties into what your future cash flow looks like, and that ties into rates and points.Cash Reserves (Upfront Costs)When purchasing a home, you will be expected to have a down payment and this is essentially the money that you pay upfront to secure the transaction. Whatever you put down forms the initial equity in the property.Banks like to see that you are willing to invest and risk your own money in the deal. The amount that you pay will typically be anywhere between 15-20% of the price. This gives banks some cushion in the event they need to foreclose the deal in which case you take the first 15-20% of the loss on that deal. In some sense, down payment acts as a collateral.Although there are down payment rates below 15% and even as low as 3%, in such cases you will most likely have to pay private mortgage insurance. This is basically an extra cost that you will pay on top of your monthly mortgage payments, to ensure that you don't foreclose on the deal (since you have less money tied up in the property). You can always refinance to eliminate the PMI later.It's recommended that you save up a minimum of 20% for your down payment in order to avoid having to buy private mortgage insurance .Other upfront costs include closing costs which are typically around 3% - this includes fees like attorney fees, title services, etc. (more on these later) - and your emergency fund. Being a homeowner often comes with surprises, like a burst pipe in the middle of the night that needs to be fixed right away. So you need to be financially ready for these surprises.You will also want to account for at least 6 months worth of mortgages (more on that later), interests, insurances, taxes in your reserve. Remember the great recession in 2008? The economy is cyclical; there are ups and downs. You may lose your job, become redundant, or your business might fail in bad times. It's important to always have a financial safety net to weather the rainy days.Finally, you'll want to make sure you have enough savings left over to help pay for any home improvements, decorations or miscellaneous moving and maintenance costs that may pop up—in full. You should not be using your emergency fund to cover these costs.Now that you have an idea of the upfront costs, calculate your cash reserves. Include checking accounts, savings accounts, liquid assets (that you intend to cash out).If you feel that the amount you have in reserve is not enough, it's time to buckle down and start saving. Before you undertake any sort of home purchase it's also important to develop strong financial discipline. Get in the habit of putting aside a certain amount of your money every month to go towards your savings. Put it into a separate savings account and never touch it. Out of sight, out of mind, they say.Cash Flow (Monthly Costs)The bank will typically fund the remaining 80-85% of the property costs. Obviously this isn't free money. This is what's called a mortgage, which is a loan you agree to pay back within a specified time plus interest.The French word mortgage "death pledge" refers to the pledge ending ("dying") when either the obligation is fulfilled or the property is taken through foreclosure. Foreclosure is a situation where you default on your loans and the bank takes possession of the property. This is why it's so important to make sure that you are able to pay back the loan (even in an economic downturn) to avoid foreclosure at all cost.Once you fulfill the loan obligation, the property deed is officially transferred under your name. Only then, you become the true owner of the property. But until that time, the bank owns the property. This is an important point to remember.Typically people pay their mortgage with their monthly paychecks. But the size of your paycheck alone cannot determine how much you can afford. Your expenses must be taken into account. You need to track how much is coming AND how much is going out. What is your net disposable income after expenses and taxes?Expenses can include your bills like rent, car payments, utilities, insurance, taxes and living expenses like food, fuel, entertainment. Keep track of all your expenses for several months and see how much is left over at the end of every month. This figure will give you a good idea of how much mortgage you can accord.As a general rule of thumb, you should be looking at home prices that are two to three times your annual income. This helps ensure that you're not taking on a larger mortgage commitment than you can afford.The bottom line is that the more disposable income you have the more you are able to put down in mortgage payment for your home. There are two levels to increasing your net disposable income: increasing your income and cutting back on your expenses.Ask yourself what sacrifices are you willing to make to increase your income? Perhaps you can work on an online side hustle, take on a second job. And what can you do to cut back on your expenses? This could be eating out less, giving up on that dream car.Whatever that you decide to do, make sure it's something that you can stick to long term. It takes a lot of discipline, consistency and patience to increase your disposable income. Is it worth it? You bet it is.Credit ScoreCredit score is something that's absolutely essential when it comes to buying a home. It shows the bank how likely you are to repay back any money that's lent to you. It's calculated based on our history with credit car loans, car loans, student loans, etc. The more you were able to make timely payments, the better your score will be. It's a scorecard or report card or your grade.Typically speaking, 740+ is the ideal score you want to have when buying a home. This is the range where banks will give you the lowest interest rate possible and you get the most money back in your pocket.Any score that is 760+ the banks will bend over backwards to start giving you loans because you are less likely to default on that. With a strong credit score they can also rebate you on certain items, offering you slightly better terms in the deal.If you start to go below 720, they start to raise the rates. The deal becomes more expensive.It’s free to receive your credit report once a year through http://annualcreditreport.com, where you can access reports from the three major credit bureaus, which will provide you with all the information a lender will see about your financial history.So you got your credit score back and it's below 740. What can you do to improve this score? First thing you've got to do is pay off loans with high interest debt - credit cards, personal loans. These kinds of loans will severely limit the type of money you can get.STAGE 2 - Get Pre-ApprovedNow that you've nailed down your numbers (and hopefully improved them), it's time to get pre-approved with a local lender. Knowing how much you have in reserves and how much net income you make every month will give you a fair idea of what you can afford, what kinds of loans and interest rates you may qualify for. But a bank still has to conduct their own evaluation before approving any loans.There's going to be options in the home buying process where you can go this route or that route. But your budget and what you pay, that's not your choice. That's the lender's responsibility to determine. Remember, in real estate you don't know what you can truly afford until you are told what you can afford.But a word of caution. A bank may approve you for a larger loan than you've determined you can afford. So don't be seduced by their findings—and stick with the number you landed on in step one. Remember, the reason why so many people lost their homes in the 2008 crisis was that banks approved way too many unqualified loans.Pre-approval LetterIn the pre-approval process, the lender looks closely at your credit and verifies your income (unlike pre-qualification, in which your information is not verified). If you’re granted a pre-approved mortgage loan, the lender gives you a pre-approval letter, which says your loan will be approved once you make a purchase offer on a home and submit the following documents: the purchase contract, preliminary title information, appraisal and your income and asset documentation.Keep in mind, though, that mortgage pre-approval does not completely guarantee your loan will be approved and is typically only valid for 60-90 days.Pre-approval is basically a promise from the lender that you’re qualified to borrow up to a certain amount of money at a specific interest rate, subject to a property appraisal and other requirements. With this meaningful promise, you’ll be likely to get the home you deserve due to your creditworthiness.The appraisal is an important concern as the lender needs to make certain the property’s value offers sufficient collateral in relation to the loan amount. In other words, the home must be appraised for an amount more than or equal to the purchase price.Benefits of Getting Pre-approvedWhen you’re making an offer to purchase a home, both your real estate agent and the seller will want to see a pre-approval letter. This document proves you’ll likely be able to make the purchase and, therefore, can be taken seriously.Anytime you find a great property chances are you're not the only one that's looking at it. But at least having everything sorted with the lender gives you a small advantage over everyone else who hasn't done that yet. Consider this scenario. A home seller gets two similar offers. One is accompanied by a letter from the buyer's bank that states she is pre-approved for a mortgage in the amount of the offer. The other has no supporting documents. Which offer do you think the seller will consider first?With a pre-approval letter at hand, you will also be able to move quickly on a deal. Once the offer is accepted, the bank will just have to appraise the home—not your finances. Timeliness really matters because the quicker you can move, generally speaking, the better deal you're going to get.RequirementsThe process of getting pre-approved for a mortgage is actually quite simple. All you have to do is provide your lender with the several documentations they require. Among those of particular importance are the following pertaining to your cash flow and cash reserve:1-2 years of tax returns - A lot of lenders will require that your income is consistent. Don't deduct too much from your tax return. Lenders look at net income after all of your deductions. Try to show as much income as possible.2-6 months of bank statements - The whole point is to track and trace exactly where your money is coming in and going out. Banks also look for suspicious activities. If they see a large sums of money coming out daily they might suspect poor spending habits. They also closely look at the sources to make sure someone is not feeding you money to pump up your income. e.g. Parents might pretend to employ their kids to just pad their account. Banks want to make sure your money comes from legitimate source, recurring and stable.Other documents they will require include:● Pay stubs● W-2s● Documents that show additional sources of income (a second job, commissions and bonuses, interest and dividend income, Social Security, alimony or child support) ● Documents showing additional assets (inheritance, stock portfolio, retirement accounts, etc.)● Documents showing liabilities (car loans, )● ID (Driver’s license, passport, Social Security number)Remember, your lender will pull your credit information on their own, so you don’t have to worry about bringing it with you.Beyond this, the ball is in the underwriter’s court. Pre-approval typically takes two weeks to a month, but with automated underwriters it can sometimes be complete within a day, or even an hour. It all depends on the underwriters and the lender’s pre-approval process.Approaching LendersSo how do you find lenders (or loan officers)?If you are working with an agent, ask him or her for recommendations. Most good agents should have one two or three entrusted loan officers that they do work with. You can also approach credit unions and banks which can also provide the same services to you.It's important that you don't corner yourself to one lender. Interest rates will differ from lender to lender and program to program. It's your responsibility to shop. Keep in mind that the interest rate offered to you based on your financial situation can be completely different from what’s in a mortgage rate table.That’s why the interest rates advertised online are meaningless. If the lender doesn’t know essential information such as your credit score, your debt-to-income ratio or the size of your down payment, it’s impossible to provide you with an accurate rate quote.Which brings me to my next point. Avoid online lenders.In addition to the inaccurate quotes, although online lenders may offer lower rates, you will have to deal with call centers where you might get different representatives every time. Whereas with a local lender you are working with the same person throughout the whole process, saving you a ton of time and stress.Some listing agents also do not accept pre-approval letters generated from online lenders. just because it's so preliminary.You've given such little information that it's not considered a legitimate letter.Credit InquiriesA hard credit pull, or a credit inquiry, is one that is performed when you attempt to open a new line of credit. When you apply for a loan (including a credit card), your credit report and score are checked. Hard pulls are recorded in your credit report as an action that indicates that you are looking to open more lines of credit. In such cases, your credit score is impacted because your desire to open more credit is an indication of your credit habits.Don't be necessarily afraid to have your credit pulled by as many institutions as possible. Lenders will know that you’re only trying to buy one home. This is another reason why rate shopping is encouraged. Your credit report will only show a single hard inquiry so long as all of your lenders do their research within the forty-five day period and within the same category. By category I mean real estate. Don't pull credit for different categories like credit card, car loans, etc. within the same period. As a rule of thumb you don't want to open new lines of credit as early as 6 months before buying. Don't give the bank any reason not to give you the full amount as promised. Always get the mortgage first before you take on any other loans. Take it in steps.If you only want a quote, you can just tell your credit score and they can work with that. When it comes to issuing an approval letter and completing the pre-approval process, they will have to pull credit.Mortgage TypesEvery home buyer has their own priorities when choosing a mortgage. Some are interested in keeping their monthly payments as low as possible. Others are interested in making sure that their monthly payments never increase. And still others pick a loan based on the knowledge they will be moving again in just a few years.Decide on a mortgage that makes the most sense for you. In a mortgage there are three factors to consider.Type of Loan:Conventional loan (private) - 15-20% down payment.FHA (government sponsored loan) - ideal for lower credit qualifications. Typically comes with low down payment, but with higher interest rate and PMI - because you are statistically more likely to default on the loan.Type of Interest:Fixed rate mortgage - typically comes with a slightly higher rate in exchange for the guarantee that the payment amount won’t change for the duration of the loan.Adjustable rate mortgage (ARM) - typically comes with a slightly lower rate than fixed but, it fluctuates to reflect market changes.7/1 - 7 fixed, adjust every year5/5 - adjust every 5 yearsARMs can be a good option—but usually only if you plan to live in your home no longer than the original fixed period. Otherwise, if the interest rate rises, you could find yourself with a mortgage payment that's higher than you planned and, depending on your budget, may not be sustainable.If you are tight for loan qualification standpoint with your debt to income ratio and you really want the property, ARM could be an option.Length:As for the length of your loan, there are two main types: 30 year and 15 year. Generally speaking, it's better to go for 30-year term over 15—even if you think you can pay off your home faster.Building equity in a home can be a good way to grow your wealth, but it's important that you do so in a way that doesn't stretch your finances too thin. Things can get really ugly when the housing market declines, so it may be a good idea to take out a 30-year mortgage but accelerate your monthly payments as if you had a 15-year mortgage. If you ever need to lower your payment in the future, you'll still have that option.TipsYou cannot lock in an interest rate until you have a ratified contract with agreed upon terms: sales price, settlement price, down payment, financing contingencies, earnest money deposit etc. (more on that later).The earlier you get pre-approved the better. Main reason being, it allows time to identify any potential pitfalls that come back in the underwriting process, last week before closing. Last minute surprises are the worst. Nobody wants that. It allows time to figure out if there are any extra hoops to jump through. It gives you better peace of mind and it will make yourtransaction much more transparent, seamless and less stressful altogether. It helps when everything is lined up, expectations are set.Remember, if you are not pre-approved, you are not a serious buyer. Other buyers will beat you to the punch and get their offer in before you. But it will also save you tons of time and energy from not looking into homes out of your affordability range altogether. You don't want to fall in love with something you are not qualified for.Credit ScoreGenerally you need a minimum of 640 to get a mortgage. Having said that there are programs out there that will allow scores below 640, but they come with slightly higher terms. For example with lower the credit score you might be asked to pay larger down payment.As a rule of thumb, the less you put down, the more you’ll be required to pay each month.A blemish or two on your credit report can be a problem when it comes to getting approved for some mortgage programs. But fortunately there are options aimed at homebuyers who don’t have a perfect credit history. For example, if you're a borrower with a credit score of at least 580, you may be considered for an FHA loan.Bad credit doesn’t have to keep you from homeownership. Lenders are more likely to look past a low credit score if you’re planning to make a high down payment or have solid proof of a high income that will be consistent for a long time, for example.Homeowner's InsuranceYour lender will likely require the name of the agency providing you with home insurance, which is why you should shop around for a quote while you're still house hunting.Basic insurance typically covers fire, theft, storm damage and liability should someone get injured on your property and sue you. But you can also add on things like expensive jewelry, furniture and home office equipment, as well as choose to get additional flood insurance if your home is in a flood-prone region.To find a provider, you can shop around online, from agency to agency, or use an independent agent, who can provide several quotes to review at once. It varies based on your area and, of course, the value of your home, but you can estimate your costs here.STAGE 3 - Set Your CriteriaNow that you have a general idea of what you can afford, it's time to create your shopping list. It's the rare lucky person who finds the perfect home within their budget, so before you go house hunting, brainstorm a list of what you absolutely must find in a home—and which features are simply nice extras.Doing this will really clarify your home search when it comes to beginning to look at properties because it's very easy to otherwise get overwhelmed. This also helps you from going in blindly without any idea on what you're looking for and it's going to help you set on a path to finding what's best fit for you and minimize buyer's remorse afterwards.Must HavesFigure out what's going to be a deal breaker for you. These are things that must be there or they can be things that must not be there, things you absolutely cannot live without and things that you absolutely cannot stand.Generally you need to be considering the following ...Location - This is something you are stuck with. so make sure you are 100% on what location you want to buy. You can't change no matter how much money you have.Proximity to work and other places you frequentAccess to your preferred school districtsOutdoor spaceOpen floor planNext to a busy street?Next to a freeway?Floor plan - This is something you can change depending on what you want to change and how much money you have. If you're buying a property $200k under market value for example it may make sense to change the floorplan or do full gut jobs on minor changes to the floorplan. But if you buy something at retail level and just hate the way the kitchen is laid out or you want the bedroom on the other wise of the house, at that point it might be best to just move on.Minimum number of bedroomsKitchen sizeStoreysThese are things that cannot be changed or are very hard to change. Once you get them you are stuck with. Things that shouldn't be on your must-have list are the way a house is decorated, the color of the wall pain—or anything else you can easily fix or install yourself.Don't worry about minor cosmetic details. Too many buyers out there who can't seem to overlook these things for what otherwise would be the perfect property, things that can probably be changed out in a weekend. And they miss the chance just because they couldn't envision themselves changing out a kitchen.Nice to HavesAfter you have identified your deal breakers, come up with a list of things you would like to have such as a pool, a view, fireplace, etc. These are things you can change with very minimal effort.KitchenFlooringBrand new paint.Just understand that if the property fails your criteria in this compartment it's not the end of the world. Just about every single property will have something you will want to change out.Don't Look for the UnicornThat perfect house with granite kitchen tops, magnificent skylights and chandeliers doesn't exist. Be prepared to make adjustments to your nice to have checklist. As a general rule of thumb, your house should meet about 70% of your criteria.There's more value to buying something outdated and slowly upgrading it along the way rather than exclusively and only considering houses that fit your criteria.Keep in mind that in markets where housing inventory is low especially, you may have to compromise on your vision of your dream home to help ensure that you have enough properties to tour in your price range.You need to look at the big picture when you go looking at properties. The house is not the end-all, be-all. While super important, it is the neighborhood and the lifestyle that you are trying to purchase by going out and buying that house.Refer to this list if you need help down the line making an objective decision between two or more houses—as well as to remind you of what's really important, versus what could be luring you to pay more than necessary.STAGE 4 - Find a RealtorThis is also a prime time to decide whether you'll hire a real estate agent, if you haven't already. While you're under no obligation to do so, there are several potential benefits to working with one.First of all, an agent can provide access to more home options than you'll likely find yourself, as well as set up viewing appointments. Since home-buying can be an emotional process, an agent can also act as a mediator between you and the seller. But most importantly, there are so many intricacies that you have to navigate in the whole home buying process that it's better off using an agent. It may as well cost you tens of thousands of dollars if you choose a bad agent or do it alone.How Commissions WorkFor any home that's listed the seller is obligated to pay 5% commission. And the way that's split is that 2.5% of that goes towards the listing agent which is the agent representing the seller. The other 2.5% goes toward the buyer agent which is the agent representing the buyer.The seller pays 5% regardless of whether or not you use an agent. From that perspective you might as well. You are at a severe disadvantage if you don't use you own agent torepresent you exclusively in a deal. At that point you are relying on the listing agent to hopefully cut back on their commission and get you the lowest price on the home.Remember, as a buyer you technically do not have to pay for a buyer agent. The seller pays for both commissions.Never Use a Listing Agent to Represent YouIt may be convenient to just cut a deal with a listing agent that might happen to be around at the open house. Heck, they may even offer a discount. This is called a dual agency (one agent representing both the seller and buyer) and it's a big no.Remember that the listing agent represents the interest of the seller. When something goes wrong that listing agent will always side with the seller. They have no legal obligation to disclose certain details such as defects etc. And the thing is, you don’t know what you don’t know. Easy way is not the best way.Get a buyer agent with expert negotiation skills. You may save $2k but what are you actually losing? This is going to be the biggest purchase in your life. It makes sense to have someone in your corner to look after your interests. A good buyers agent will help you save more than a listing agent could have ever discounted.Keep in mind too that dual agency is illegal in some states.Choosing an Buyer AgentWhen choosing an agent to work with, make sure it's someone who understands your needs and makes you feel comfortable. This is the most expensive transaction we are about to undertake here. You want to be absolutely sure that you choose someone you can trust.You can start your search on Google, Facebook. Look at some of the agents near your area. Go to their websites or business pages and assess them in the following key areas ...Experience - How many years have they been in this profession? Remember that 80% of real estate agents quit in the first year. You definitely don't want to be working with that rookie who's just got their license and dabbling in real estate part-time.Track record - How many homes have they sold? What do the clients say about them? You can check reviews online (Facebook business page).As a final step, check your state's real estate licensing board's website to ensure they're registered, and don't have any complaints or suspensions logged against them.Once you have several candidates in hand, start interviewing them one by one to find the one that's the best fit for you. Make sure the agent has good negotiation skill (ask them them about their bargaining techniques) and is someone you can trust to advocate for you in thedeal. You shouldn’t feel you have to withhold details about the reason you're moving or what’s included in the right home for you.And yes, be ready to answer questions from your real estate agent about how many bedrooms you need, your preferred neighborhoods, etc. Share with them your list of must-haves and nice-to-haves as well as your budget range.Buyer's Broker AgreementsAsk any buyer's agent who has been practicing real estate for a while and you'll hear sad stories from those who wished they had signed a buyer to a buyer's broker agreement. When the buyer finally decided to make an offer, he ended up writing it with a different agent.An agent typically works with a buyer for a few weeks to several months or longer. His efforts include introducing the buyer to lenders and obtaining loan pre-approval letters. He might email listings that fit the buyer's requirements and call listing agents to determine availability.He'll make appointments with sellers to show homes and drive the buyer from one neighborhood to the next, sometimes touring up to 10 homes a day. He'll show potential homes to buyers and research comparable sales. It's a lot of work.Then the buyer calls one day in breathless excitement to announce that he and his wife drove by a new subdivision, stopped to look at a model home, and signed a contract to buy a new home from the builder right then and there. Sometimes a buyer adds, "Isn't that fabulous?"Sure.. for the buyer. It's not so fabulous from the perspective of the agent who has just put in months of work he won't be paid for. Given that this is a common occurrence, don't be surprised or afraid when your buyer agent asks you to sign a formal agreement.The term of a buyer's broker agreement is negotiable. Many agents request a 90-day commitment at a minimum, but you're always free to ask for a 24-hour, seven-day, or 30-day term. It's whatever you can negotiate.These agreements provide compensation to the agent if you switch agents midstream but end up buying a home that was actually introduced to you by the first agent. It protects the agent by establishing a procuring cause, but you're free to pursue other homes with another agent.You can tell the agent that you'd prefer to spend a little time getting to know her before signing an exclusive agreement. It's perfectly reasonable to say, "Let's spend an afternoon looking at homes and if I think we can work together, I'll sign an agreement with you before we go out again."STAGE 5 - Start House-HuntingGreat. You've got a good sense of your budget, a pre-approval letter from a lender, a criteria list and a trusty buyer's agent at your side. Now for the fun part: house hunting!For the most part, you can rely on the agent to do the searching for you, as they will usually have access to way more listings than you can possibly imagine, including access to MLS. But that shouldn't stop you from doing your own independent searches.Carefully evaluate the homes that's introduced to you by your agent using the criteria that you've set. Keep tabs on the ones that you really like. But the key is to look at as many properties as possible! As Robert Kiyosaki has wisely said, you should be looking at at least 100 houses before you close one deal.The more properties you see the more you're going to recognize the good properties when they pop up and the best property that is the right for you. House-hunting might change the criteria of what you think you need. The more you see the clearer you're going to get on what exactly you want.Real estate is a long and slow game. Don't feel rushed. If you don't see a deal that suits you, just wait it out. Listings come and go. Something will come up eventually.SeasonalitiesAs far as seasonalities are concerned, spring and summer tend to have little bit more inventory in the market. This means that if you are a really picky buyer looking for a very specific property or you just want the widest variety of home options to choose from, chances are you're going to be looking when there is most inventory in the market and that usually happens in the spring and summer.However, the thing with this is that many people will have the exact same mentality and wait until spring and summer to start looking to buy. And that means you typically end up competing with more people during those months. More competition means that you will pay a slightly higher price.On the flip side, winter might be a better time to buy as it is the off-season. There are less people looking for homes and because of that there are less sellers listing their homes for sale. This means that the sellers that do list their homes for sale are typically way more motivated which means as a buyer you will have the leverage to negotiate a slightly better price. Secondly, fewer people tend to look for homes so this means there's less competition. And with less competition you can usually get a lower price.On the downside of course, you’ll have fewer houses to choose from, but you may be less likely to find yourself in a multiple-offer situation, which can make it easier to get a seller to take a serious look at your offer.So, to summarize, best value or deal = winter. perfect niche = spring/summer.Market ConditionsShould you wait for the crash before you buy your home? Are we in a bubble? We can talk all day about what the market may and may not do in the future. There are economists out there who dedicate their entire life time to try to figure this stuff out. But the truth is, none of us know what's going to happen in the market in the short term.If you are trying to find a home to live in longer than 7 years, then trying to time the market and waiting for the lowest price possible doesn't really make much sense. Wait until you find the right deal on a property you intend to keep long term. This way if the market goes down it doesn't matter that much because you didn't have plans to sell it anyway if you've got a property that you like and fits your criteria.The absolute best time to start shopping for a house, however, is when you’re ready, both financially and personally. If you have children, for example, closing on a house during the summer months is ideal because you don’t have to worry about packing up while kids are doing homework or making a rough adjustment due to mid-year school transfers.The most important rule of thumb is to wait to start house hunting until you’re actually in a position to make an offer. If you do that beforehand you’ll end up finding the house of your dreams, you won’t be ready, and someone else will buy it.Where to Start House HuntingAs I said before, your buyer's agent will be the primary source for listings. But you can supplement that with your own independent searches on sites like Zillow, Trulia, etc. However, a word of caution: take online search results with a grain of salt. Do not get caught up with the prices online.Remember, these online portals don't send people in to appraise these houses. You need to ask yourself, how can they accurately calculate the house's value if they've never been inside the house? Algorithms do not determine prices. And Zillow even admits that their "zestimates" are wrong.Let's say someone bought the property for $500k and spent $100k fixing it up. How will Zillow know that there's been a new kitchen done, a new roof, a new foundation? It doesn't, so it will spit out a low estimate. So, users will scratch their heads wondering why this is selling for $750k when zestimates says it's worth $520k. Home valuation must be done on a case by case basis.Having said that, online searches are still a good place to start, especially for filtering location and floor plan. Just always make sure to follow up your searches with inquiries and consultations with your agent.Hidden SnagsIn real estate, as said before, you don't know what you don't know. It's always essential to look at every detail from every possible angle when you are buying a home. These are some important details to consider when viewing homes ...Street traffic - It's important to see the home at different times periods throughout the day. What could otherwise be a pretty quiet residential street could become a gridlock of traffic on particular hours.Neighbor noise - Spend some time in the neighborhood to check for really loud noises. Perhaps your neighbor has a habit of throwing wild parties every weekend, or there's a kid that likes to play the drums in the morning. Is this something you can live with?Commute times - Try simulating commutes from the property at about the same times you would depart and return from work. How is the traffic situation during rush hours?Look for Good ValueAs a home buyer, you need to have a good sense of judgment in order to get the best value for your money.Next to construction - Units next to any current or future developments tend to struggle to sell. People don't want to deal with the dirt holes, blocked views, the noise. Because they are struggling that could be an opportunity for you to scoop a deal.Long DOM (Days On Market) - Look for properties that have been on the market for a long time, over 100 days or 200 days. These are properties other buyers have passed over and at a certain point a buyer is not going to even get off their couch to go see that property because they're going to think that something is wrong with it. There very well may be something that's wrong with it, but this can be an opportunity.Poor-quality pictures - Believe it or not there are still agents that take low-quality pictures with their mobiles. They may have pictures with low resolution, poor lighting, or even a finger covering part of the lens. If it looks bad online, buyers are not going to bother checking it out.Foreclosed homes - Banks are in the business of handling money, not managing properties. Thus, in general you will see banks selling foreclosed homes at a price slightly lower than the market value just to get rid of them fast.Motivated sellers - Sellers with high motivation to sell will usually put their house up at a slight discount, if not you can always bring the price down during negotiation. These include absentee owners, pre-foreclosures, evictions, probates, vacant properties, etc.Next to school - Homes next to schools can also sell at a discount. Lot of people exaggerate the negatives such as noise and traffic which occurs in limited hours throughout the day. And it's something you have to deal with only half the year when the school is in session. Consider the positives also. Schools zones also have higher police presence; schools also have great outdoor facilities like track and field; not to mention easy commuting if you do have kids.STAGE 6 - Build a Negotiating PositionSo you've fallen in love with a property that meets all of your needs and some of your wants—and it's within your price range. Great. Now, you have come to the final preparation stage before you make the final offer.Buying a house involves a bilateral contract and that means that as a buyer you need to build up your position in a negotiation. By "position" I mean any leverage and information that's going to help you negotiate a better deal. You can't just accept the asking price at face value.The MarketUnderstand what market you are in. Is it a buyer's market or a seller's market. If you're making an offer in a buyer's market, you will have less competition for the home. Sellers will be more likely to be receptive to any offer because there are fewer buyers. If you're buying in a seller's market, sellers might not consider any offer that is less than list price. In fact, sellers could very well receive multiple offers, which means your offer should be as attractive as possible to win acceptance.Also consider the geographic conditions. What's the market like in the neighborhood? Is it like New York City, where condos get snatched up with all-cash offers, or are you in a Las Vegas-esque location, where empty homes are a common site? In the former situation, it may be a good idea to start with a strong offer to beat out an army of other suitors, whereas you may have more leeway in a market like Vegas.Details About the HomeFind Out How Much the Seller Paid - If the seller purchased a few years ago in a depressed market, with little appreciation since, the asking price should be closer to the seller's purchase price. Although you may not be able to figure out the condition of the home when the seller bought it, nor whether the circumstances were extenuating, you can adjust for increases due to appreciation and remodeling improvements.Ask for the Home's History and DOM - Sometimes agents take listings off the market and resubmit them as a new listing. Find out if the home was an expired listing and then relisted. DOM is important because if homes have been on the market longer than 30 days, the sellers might be more motivated to reel in the deal.Ask yourself how incentivized the homeowner is to sell. For example, if the seller is living in a transition home while waiting to sell, you may have a better chance of getting the seller to accept a discounted offer. But if he's casually putting the home on the market to see how much he can net, the seller may be more apt to wait for the perfect price.Determine the Seller's Mortgage Balance - Unless the seller is in default and willing to participate in a short sale, the seller is unlikely to accept an offer for less than the mortgage, plus closing costs. If the seller has an extremely high mortgage balance, and the property is vacant, you can assume the seller is making those mortgage payments out-of-pocket, probably paying on two homes. If the mortgage balance is very low, the seller might not be motivated to immediately sell and can afford to wait out the market to get list price.ComparablesIn order to determine whether the asking price is a fair price, look at other home sales in the area. Is the house you want priced reasonably in comparison? Did other homes sell for less or more than the asking price? If they sold for an amount that's comparable to your seller's list price, that's a good indication you should be offering a number close to asking.Comparable sales are not active listings nor pending sales. Those values don't carry the same weight as a home that has already sold. Comparable sales are used as an example to justify why a buyer doesn't want to pay more than the last occupant for a similar home.Ask your agent for a trend report covering the last three to six months. Look up the prices of the homes as they were listed and compare them to the prices that have sold. Ask how much is the gap? Are homes selling over list price or under? If under list price, by which percentage? If many homes are selling at 2% under list price, for example, that percentage could indicate the price the seller will or should accept.When looking at comparable sales, use only the properties that are similar in configuration, age, and location to the home you want to buy. Below are the main components of a comparable sale:● Recent time frame of sale - Within the last 3-6 months● Close proximity - Within a certain radius, typically within a one-quarter to one-half mile of the subject property. The closer the better.● Similar square footage - Homes within 10 percent of your subject property's square footage. The per-square-foot cost of smaller homes is higher than the per-square-foot cost of a larger home.● Similar age and construction - A tile roof, for example, can enjoy a 50-year life over the 25- to 30-year life of a standard composition shingle.LeverageThe most important advantage in any deal is leverage. Take the time to research the other side of the transaction. Who you are doing business with? Arm yourself with information to know who you are actually working with.Look at their social media accounts for any sort of hints of desperation of clues into where the other side is at, finding pertinent relevant info at hand. So many people have no idea about their privacy settings, that when they post "OMG I need to sell this house asap" the buyer's agent will find that tweet and go ahead and use that for their client's advantage during negotiations.Figure out their underlying motivation. Do they have kids? Is this an investment? Is there a baby on the way? Are they going through a divorce? Are they moving because of their job? Rookie mistake is sending an offer first without getting to know the seller. There many times when buyers will send offers out of the blue.On the flip side, beware of any potential red flags. Is the seller prone to litigation? Is there something extraordinary going on linking them to something you want nothing to get involved with? It's a huge headache for going onto a contract with unstable sellers or buyers who are in current litigation.Be SocialBeing nice and kind is a very great way to glean intel, and also to let the seller's guard down. One way to do it is by telling a story. You can say something casual like ..."Just wanted to let you know. I just saw your property on my way to see these other properties we were going to see. It was around the corner at this property which was listed for $315k and the other property which was listed for $320k. Saw the sign in the yard. Decided to stop by since it was vacant and noticed it was at $340k. I also saw that it has the same floor plan, same bedrooms, same square footage, same parking situation, etc. I'm just curious what makes up for the price difference between yours and the ones that we saw."The goal of this story is to elicit some sort of a price justification. Instead of saying "why are you priced so high?" you paint the picture first to segue into the core question. Use words that are gentle and humanizing. At that point you will be surprised, the floodgates will open. Some listing agents will start sharing everything. Let them talk as much as possible, ask open ended questions and with luck you will glean leverage points like two mortgages, vacant property, out of state seller, etc.Be CerebralFinally, act logically and rationally when it comes to buying a house. If you are emotional, you will end up falling in love with the house and you will end up overpaying. This is why having an agent is important because he/she will put things in perspectives for you.Have a short memory when it comes to houses on the open market. Someone else is going to buy it, houses are going to disappear, go under contract. And guess what? A better house is always going to come up. Don't waste your energy falling in love with a fairy tale.On the flip side, don't take things personally and let deals fall through. In the heat of the moment you might act and do something emotionally, perhaps you say something, leave the scene. When you finally have a moment to think about it and look back on that situation you will be saying to yourself "Gosh, I wish I hadn't done that."STAGE 7 - Submit Your OfferNow that you have armed yourself with information and, hopefully, some leverage points, it's time to write up your offer. And don't worry, if you are working with an agent, he/she will draft the offer for you. But, you need to determine what goes inside the offer.Common question that first time buyers ask is "what is the difference between an offer and a contract?" They are two very different things.Offer vs ContractAn offer is what a buyer makes to a seller, or vice versa. It is all the terms under which the buyer would like to purchase the property. It has been accepted in writing by only one party, the one making the offer.The seller can counter-offer those terms, making changes and sending them back to the buyer for review. Again, if this were the case, the terms have been changed and the changes have only been accepted by one party.You don't get to the point of contract until all parties have agreed to all the terms IN WRITING.As a buyer you make offers on properties. You do not write contracts. You are putting forth the terms under which you would like a contract to exist. When accepted by the seller your offer will become a contract, but not until it is accepted in writing. Knowing the difference can be critical when explaining a multiple offer situation.When a contract exists both parties to it have obligations to perform. An offer has no such obligation until the terms of the offer are accepted by all parties.PriceThe most important consideration when making an offer is obviously the price. And yes, you can quote a lower figure to the asking price. That's the whole point of a negotiation.But here's where it can get tricky: You don't want to low-ball your offer, and risk losing the home to another buyer or insult the seller—but you also don't want to pay more than is necessary. So how do you land on the ideal figure?While there are no hard-and-fast rules, a few factors can help inform your decision. First of all, take all the leverage points we talked about earlier into account such as seller motivation, market conditions, comparables, etc.Also take into account how badly you want the deal. If it's your dream house that ticks all the box that's going to be a long term hold, you might want to consider offering a little bit more than risk losing the deal. Ask yourself 10 years from now are you going to care that you paid an extra few grand for the house? Chances are, ten years from now it's not going to really matter.In order to allow some leeway for errors when it comes to negotiation, make sure you have at least 5 properties lined up that you are going to submit offers to. The more the better. This will provide you with options to fall back on in case the deal falls through. Think about it. If you were only working on one deal, wouldn't you be more inclined to make price concessions just to ensure that the deal is signed? Whereas if you have 5 or 10 properties you were interested in, you would take a much tougher negotiating stance. Because you know that in the back of your mind, at least one of them will succeed. This is why it's so important that you look at ALL the properties that are out in the market. Let statistics work in your favor.Finally, as I've mentioned before, it dramatically helps to have an agent assisting you who's not going to get overly emotional about the property who maybe axle to talk you down from doing something stupid.ContingenciesA buyer will often include a set of contingency clauses in an offer. A contingency clause defines a condition or action that must be met for a real estate contract to become binding.Contingencies are important because they give you ways to back out of a contract without legal consequences. If your real estate agent helped you draw up a good purchase offer, it should be contingent on several things which include:● Obtaining financing at an interest rate not to exceed a certain percent that you can afford.● The home inspection did not reveal any major problems with the home. ● The seller fully disclosing any known problems with the home.● The pest inspection did not reveal any major infestations or damage to the home. ● The seller completes any agreed-upon repairs.Contingencies must be removed in writing by certain dates which should also have been stated in your purchase offer. However, in some purchase agreements, contingencies are passively approved, if you don't protest them by their specified deadlines. It therefore becomes important for buyers to understand the approval process and abide by taking necessary actions by the mentioned dates.Earnest Money DepositIn order to show that you are a serious buyer, it's advised that you prepare an earnest money deposit. This is essentially a good faith deposit that you submit when you're writing an offer on a property. But remember that you are merely sending a copy of the check. Money is not exchanging hands yet.The reason why earnest money deposit is important is because when you are sending in a legal document with so many contingencies that you can back out on, there's really no real clout, no real strength behind that offer. If the deal is sealed this money will go towards your closing costs.Keep in mind that some listing agents will not even consider an offer that does not come with an earnest money deposit with it. Usually the deposit should be around 1.5% of the price. You can always go higher and make your offer look stronger but 1.5% will suffice.Escalation ClauseBuyers can also add an escalation clause to make their offer a little bit stronger. An escalation clause is an addendum that states the buyer will increase their offer at certain intervals up to a max offer also known as the escalation cap. It's only in play when another offer can be used to trigger the escalation clause.As an example, let's say you put in an offer of $550k for a property and another buyer comes along and puts in an offer. You do not know the figure, but you don't want to risk losing out by the other person outbidding you, so you add an escalation clause of $20k with $1k intervals to your offer. Let's say that another buyer offered $560k for the property. In that scenario, your bid will automatically "escalate" to $561k, enough to beat your competitor's offer.Remember that another offer has to be there to bid up your offer. It's like Ebay in a sense where you are willing to bid the highest but your initial offer is the lowest. You always want to pay the least, but you are also willing to pay the most.Do not include escalation addendum unless you are 100% sure that another offer is in play. If you add an escalation clause prematurely, the seller might as well counter your offer by outright asking for the price that they know you can pay. Therefore, always ask your agent to check if there's another offer in play.Also use unique intervals. Everyone likes to use $1,000 or some round figure. Use some random figure like $1250 instead, a few hundred dollars over the typical round figure. Everybody likes nice round numbers, but every seller likes bigger numbers.Fine-Tuning Your OfferOne critical part of your offer involves the items that you expect to find at the property when you take possession. Some of these items are fixtures.Fixtures are items that are permanently attached to a house, such as a built-in range, the heating, and cooling system and kitchen cabinets. They are considered part of the real estate and are normally left in place for the new homeowner.Many common fixtures are listed in the pre-printed forms that are used for real estate transactions, but nearly every house has decorative fixtures, and they're the items that often create disagreements between home buyers and sellers.Don't take chances--decide which items should stay or go and make sure the seller agrees with you now, before it becomes an issue when you find it missing at your final walk-through.Your list might include:● Outdoor storage buildings● Window treatments and hardware● Garage door openers● Window or portable air conditioning units● Ornate chandeliers and other special light fixturesOn the flip side, make a list of items you want to make sure the sellers remove, such as an unused oil storage tank or an old car that doesn't appear to run.Competing OffersIn a hot market or popular neighborhood where you will be up against competing offers, you want to make sure your offer looks as attractive as possible. You can do this using the following strategies.● Earnest money deposit● Pre-approval letter● Clean contract. No wild addendums like sale of home contingency (contingent on you selling your own property). termite inspections, etc.● Close on their terms.A pre-qualification letter is also an option, though pre-approval tells the seller that the lender has already done a deep dive into your finances and hasn’t found any surprises.Writing a personal letter to accompany the offer can also provide some additional insight to sway the seller, since people like to hear their house is going to someone planning to make memories in it. Especially if the seller has lived in the house for a long time, sharing your plans to raise a family in the house could make him feel comfortable selling the house to someone looking to make similar memories. Perhaps add a picture of your family in the letterto humanize your offer. Or let's say you saw on Linkedin that the seller went to the same college as you did. You can mention that. Find a common ground where you can connect.There are also scenarios when a personal letter won’t have much of an impact. Some sellers are more focused on the financial details. Sometimes personal things can sway someone, but a lot of times in big urban areas like New York it’s a financial thing.STAGE 8 - Go Under ContractIt may take a few tries with different houses or it may require a little back-and-forth negotiation, but eventually the right seller will accept your offer. Before you sign on the dotted line, make sure to review the contract thoroughly and understand every single item. And after you sign, make sure to write down all your contingencies (home inspection, financing, appraisal, etc.) in your calendar.Your next most common question buyers may ask at this stage is "Can I back out of a contract? What if something goes wrong? What are my outs?" Those contingencies we talked about earlier are going to give you the best chances of backing out. And this usually boils down to home inspection (major defects) and financing (written rejection letter from lender) contingencies.Home InspectionOnce you sign the contract, the very first thing to do is to do a home inspection. A home inspection is where a professional inspection team or individual will come in and inspect the conditions of the house (sewer line, foundation, mold, roof, electrical, plumbing, etc.) to find any code violations or maintenance issues that you should be aware of. Once they are done the home inspector will provide a written report with pictures of things that need to be fixed, things that might need to be fixed in the future and things that are in good working order.The inspection is key to catching any existing problems the seller may not know about or hasn't yet disclosed, and it's often a required step by the lender. Also if you find any dealbreakers, such as an unstable foundation or serious mold, you have the option of backing out now (home inspection contingency).It's super important to get this done as quickly as possible before anything else because if we were to wait for say 10 or more days, you're going to pay other fees not associated with the home inspection, during that time. Things like the appraisal and other fees associated with the home buying process. And if you get that report back after 10 days and it's terrible, you've already come out of pocket with all these other expenses. You don't want to put in an offer, pay the fees and back out. You want to only move forward once you're comfortable with the home inspection.Finally, home inspections give you an opportunity to potentially save several thousand dollars on the deal. This is why you should not skimp out on your inspections. My advice is to do ALL of them. If there are issues, such as a non-functioning fireplace or an old boiler, you will be able to renegotiate the costs off the purchase price. And when you spend $1500 on inspections, it's almost guaranteed that you're going to find more than $1500 of repairs that you can deduct from the final price.Remember, sellers usually get tired from showing the property and they don't want to keep it any longer in the market. You as a buyer has the leverage at this point. By the time you finish negotiating and signing the deal, sellers will probably be so worn down that they will just give you the credit and be done with.Typically a buyer will itemize the inspections report and go through each item line by line and show the costs. This is not such a great idea because it gives the seller an opportunity to find little things they can disagree with. Just give them a total figure of say $24k, but then ask for a little bit less say $19k. Usually at that point they will just accept your demand. They might as well take the discount then go through the hassle of scrutinizing each item.You could also keep the purchase price the same but try to get the seller to pay for repairs (if you really don't want to deal with it). Though you may not have much scope to demand for repairs or a price reduction in case you're purchasing the property "as is," there is no harm in asking.A pest inspection is separate from the home inspection and involves a specialist making sure that your home does not have any wood-destroying insects, like termites or carpenter ants. The pest problem can be devastating for properties made primarily of wooden material, and many mortgage companies mandate that even minor pest issues be fixed before you can close the deal. Pest inspections are legally required in some states and optional in others.Mortgage ApplicationOnce your inspector confirms that there are no big defects that could affect the home's value, you'll go back to your lender (remember the one that gave your the pre-approval letter?) to submit a formal mortgage application.Before you decide on a lender, you will want to negotiate. And the best way to go about this is to go back and forth between lenders to get them to lower their rates as much as possible. Go to bank 1 and have them give you an offer for whatever loan you want. Then take that tobank 2 and ask them for an offer. Once you get that writing you go back to bank 1 and say "can you beat that offer?" They usually will or at least match the offer. Then you take that to bank 3 and ask "will you beat that offer?" Keep doing this until you get the best possible deal on your loan. Best case scenario, the lender will waive the fees, and even give you $2k in credit, and possible other benefits.The application process will include an appraisal on the property to ensure the lender feels comfortable with the sale price. If the appraisal comes up short, you may have to re-negotiate again with the seller to see if you can lower the price, or you may have to come up with the difference in cash to follow through with the deal.EscrowAlmost any type of real estate transaction will occur in an escrow. An escrow is essentially an account held by a third party on behalf of the two parties involved in a transaction. Since home sale involves multiple steps which takes time that can span weeks, the best way to mitigate the risk of either the seller or the buyer getting ripped off is to have a neutral third party hold all the money and documents related to the transaction until everything has been settled. Once all procedural formalities are over, the money and documents are moved from the custody of the escrow account to the seller and buyer, thereby guaranteeing a secure transaction.Within about 3 days of ratifying a contract, you will want to transfer your earnest money deposit into an escrow (hence it's advisable to open this account before you write the check). And this is where your deposit will remain, protected by that neutral third party until it is credited to you when the transaction closes (or is dispersed in other ways if the transaction fails to close).Your exposure to escrows does not end there. After you close the deal your lender will most likely set up an account so that you can pay your home insurance and property taxes when they become due. Tax and insurance bills are typically sent directly to your lender. Both of those bills are paid annually, but most lenders require you to pay 1/12th of the annual bill each month. The lender deposits the partial payments in an escrow account, where they'll accumulate until it's time to pay your taxes and insurance the following year. You'll begin funding your escrow accounts by making a payment into them at closing.STAGE 9 - Close the DealOnce your loan application moves forward without hiccups, your next main objective is closing the deal, the final conclusion to this long epic journey. Closing or settlement essentially happens when all the obligations of the contract have been fulfilled.Closing Costs & Other ExpensesOne important thing to do at this stage is to review all your closing costs - which is different from down payment. Generally speaking, your closing cost will account for about 3% of the purchase price. It's not going to be an enormous sum of money in the big scheme of things, but if you have a tight budget, this is definitely something you should put into perspective before signing the contract.Here is a list of approximate fee estimates. Keep in mind these estimates are very general and will depend on the location of the property and the services.● Home inspections ($400 - $1500) - See above.● Appraisal ($400 - $500) - Required by lender. This is done in order to make sure the property is worth what you are buying it for.● Loan fees ($700 - $4k) - See above● Homeowners insurance premium ($1k) - Required by lender. To protect against liabilities, fire, theft, etc.● Escrow fees ($1k - $5k) - See above.● Title insurance ($1k - $2k) - See below.● County/state transfer taxes ($2k) - Owed to relevant jurisdictions.● Property tax (1%) - Based on the value of your house. Annually or biannually charged.● HOA transfer fee ($300) - To put you in the system.● Title services ($550 - $600) - Title binder, settlement fee, title abstract, title closing agency, etc.● Attorney fee ($1k - $2k) - Prepares and reviews documents such as purchase agreements, mortgage documents, title documents and transfer documents.Your expenses certainly will not stop after closing. Even after the down payment and closing costs, you will have a lot of unexpected costs that pop up when you first move into a home. As the saying goes, "once you buy a house things start breaking." Expect the unexpected and make sure to budget for the hidden costs. General rule of thumb is to estimate about 1% of purchase price for yearly maintenance, repairs and major yard work. Besides maintenance, you will obviously also have to pay monthly mortgage, utilities and taxes.Title Search & Title InsuranceFor any property that you purchase, you will need to conduct a comprehensive title search and preferably obtain a title insurance. They will provide a peace of mind and a legal safeguard so that when you buy a property, no one else can try to claim it as theirs later on.A title search is an examination of public records to determine and confirm a property's legal ownership, and find out what claims, if any, are on the property. It searches to see if there was anything that should have been recorded with the land records but wasn't; if anyone was defrauded throughout the chain of title; If there was any loan or line of credit that wasn't leased properly. If there are any claims or discrepancies, those may need to be resolved before the buyer gets the property. Keep in mind that these records are managed by people. And people sometimes make mistakes, sometimes in the chain somethings happen when they're not supposed to.Part of the contract is that you get marketable insurable titles, but every once in a while you can have problems that can arise that were previously unknown. And this is why a title insurance is highly recommended. It protects both real estate owners and lenders against loss or damage occurring from liens, encumbrances, or defects in the title or actual ownership of a property that may come to light. You won't have to worry about anyone trying to take your property away from you throughout your natural life. And you don't have to worry about what the costs are to protect your interests. You just call your title insurance company and they will take care of it for you.Let's say a previous owner gave half of the property to their cousin but they never recorded it in the land records. Their cousin finds out that the property gets sold and now all of a sudden they want their piece of the property. So, they decide to sue you based on a piece of paper they've got. Now in this situation, If you had a title insurance you would not be obligated to bear any of the court costs such as hiring an attorney which can be expensive (we're talking upwards of $30k here). Your insurance provider would handle all of that for you.Is title insurance worth it? To protect that half million dollar property of yours the rest of your life, and to have a peace of mind. Paying $2500 (one time fee) seems like a reasonable expense when you put it in perspective. Also keep in mind that title insurances will be required by your lender to protect their interest.RecapFinal Walkthrough InspectionNow, we are close to the finish line. There's just one more thing you've got to do before the final settlement and that's the final walkthrough inspection.The reason why you would do this is to confirm that nothing has changed since the inspection. Final inspections are especially important if you had any repairs done and want to make sure they meet your expectations. It's usually done 3 to 2 days before the big day.When you walk through the house, do the following:● Turn on and off every light fixture● Run water and check for leaks under sinks● Test all appliances● Check garage door openers● Open and close all doors● Flush toilets● Inspect ceilings, wall and floors● Run exhaust fans● Test heating and air conditioning● Open and close windows● Make sure all debris is removed from the homeAfter that, make sure you have all the money required for the closing wired into the correct account. Ask the settlement agent for copies of all the paperwork you'll sign before closing, so you can carefully review them at your leisure.On closing day, bring your photo I.D., as well as any paperwork you received throughout the home-buying process, including insurance and home inspection certificates.Once you've signed the paperwork, you'll be handed the keys… it's time to pop some champagne bottles and celebrate. You've finally become a homeowner now!