For almost everyone, buying a house is the largest financial transaction you will make. This also impacts many other important aspects of your life, as this will likely be your new home. This How To will walk you through a few simple steps on buying a house through Craigslist.

In a major market such as the Washington DC area, there are hundreds of “real estate for sale” ads daily, with well over a thousand active ads at any given time.http://washingtondc.craigslist.org/rea/ Depending on how hot the market is when you begin your search, you may need to resort to various tactics described in the steps below when making your offer, to beat out competing offers.

Craigslist was started in 1995 as an email newsletter by Craig Newmark, telling his friends and associates about upcoming events in the San Francisco Bay Area. In the intervening years Craigslist has grown into the seventh highest-traffic English language worldwide. With over 700 regional websites covering different cities/regions, chances are you can find a Craigslist site covering the area where you’re looking to buy a house. ref>http://www.craigslist.org/about/factsheet</ref> With the exception of brokered apartment ads in NYC, Craigslist doesn’t charge for posting real estate ads, making this site a highly popular venue for sellers. ref>http://www.craigslist.org/about/factsheet</ref> Craigslist topical forums cover more than 100 topics, from 1099 tax forms to writing.http://washingtondc.craigslist.org/ These forums include over 120 million posts.http://www.craigslist.org/about/factsheet

Craigslist hosts many different types of ads, including used cars ads, new car ads, jobs ads, housing rental ads, etc. You can also find free stuff on Craigslist. You can even make money on Craigslist by selling used computers or other items you no longer need, or by buying them at garage sales, thrift stores, etc. The secret to doing this successfully is writing compelling ads that receive more attention from other Craigslist users.

Craigslist Terms of Use (TOU) explicitly state that Craigslist does not have any responsibility or liability for the contents of ads or for how users treat each other.http://www.craigslist.org/about/terms.of.use Craigslist users are well advised to read and follow the advice posted by the site on avoiding Craigslist scams.http://www.craigslist.org/about/scams

In real estate, as the saying goes, there are three things that matter most - location, location, and location. Where you live determines who your neighbors are, what schools your kids go to, what property tax rates are, how convenient shopping will be, and how long a commute you will have when going to work. Defining the one or two towns or neighborhoods you wish to live in is the first and critical part of any house hunt.

The type of house you’re looking for is also an important consideration. Are you in the market for a condo, with the reduced expense and effort that entails (no gardening, minimal concern for roof replacement, etc.)? Are you in the market for a townhouse instead, assuring you will not need to worry about someone complaining that you’re making too much noise stomping around your home? Finally, is a single family house more along the lines of what you want, with the freedom from (almost all) noise from the neighbors, and a wide open yard where you can throw a baseball with the kids? Whichever it is, you also should decide how many bedrooms and how many bathrooms you need, as that will be a significant item in your search.

Finally, and perhaps most crucial, is your price range. Depending on the market, and your other choices above, you may find that you cannot afford what you’re looking for, requiring you to either modify your requirements, or up the price you’re willing to pay.

In the Craigslist site of the region you wish to buy in, click on the “real estate for sale” link in the “housing” section.http://washingtondc.craigslist.org/ Next, if applicable, select the sub-region (e.g. in the Washington DC area you might select Maryland). Then, enter in the search bar area the number of bedrooms you need, and a minimum price to throw out obviously bad matches (such as rentals that are mis-categorized in the for sale area or houses in much worse condition or less desirable locations than you’re looking for). For example, on February 2, 2010, in Maryland, there were 337 ads in a search for a 4 bedroom house for sale with a minimum price of $250,000.

In the search bar, type in the name of a town or neighborhood you’re looking to buy a house in. Adding the words “Silver Spring” to the above search narrowed down the results from 337 to 58 ranging in price from $250,000 to $995,000. If your price range is in the middle of the range you see, modify the search to have both a minimum and maximum price to narrow down results further. It is advisable to set the limits a bit wider than your actual limits, as you do not want to miss your dream house simply because it was posted with a price higher than your limit by less than 1%. Thus, if your range is, say, $350,000 to $400,000, set the search for $325,000 to $425,000. In a buyer’s market, you may want to up the high end even higher to $450,000 or $475,000, with the reasonable expectation that you may find a seller willing to drop their asking price by 10% or even 20%. In the sample search described above, this price range returns 23 results.

When a house is sold, there is almost always a seller’s agent who lists the house in the multiple listings, helps the seller make the house more appealing, helps the seller determine a good asking price, prepares the contract, etc. Such a seller’s agent looks after the interests of the seller. For all this work, the seller pays his/her agent a commission, frequently up to 6% of the sale price, once the house sells.

If a buyer is not represented by a realtor of his/her own, the seller’s agent helps the buyer with many details of the paperwork, with no compensation from the buyer. However, this is still the seller’s agent, and as such, while s/he will not lie to the buyer or defraud him/her, the seller’s agent is not required to tell the buyer things such as that the house is over-priced, how long it has been on the market, how desperate the seller is, etc.

For you as the buyer, being represented by a good buyer’s agent is key to having your interests in the transaction be protected. A buyer’s agent gets paid a cut out of the commission that would otherwise all go to the seller’s agent. Thus, your having a buyer’s agent does not cost you or the seller anything. It simply the realtor’s work and commission between two agents, each looking out for his/her own client.

A good buyer’s agent can help you refine your search, let you know about local market conditions, potential pitfalls for houses built during specific decades in the area (e.g. is the electrical wiring all aluminum – if so, you want to make sure that all the electrical sockets have been modified to use copper with special Cu/Al wire nuts, etc.). Since all this doesn’t cost you a dime, and could save you from making extremely costly mistakes, getting a good buyer’s agent is as close to a no brainer as financial transactions ever get.

Thus, using recommendations or reviews, find a good buyer’s agent who is familiar with the area you’re looking to buy a house in. Some agents will require you to sign an agreement to work exclusively with them, guaranteeing them a commission as long as you find and buy a house. Others will agree to let you work with other agents or on your own, and only get a commission if you end up buying a home they found for you, or if they helped you with the transaction. The only thing to be careful about such an agreement is to make sure you don’t get stuck with an agent who does not do much for you.

Find a good mortgage lender (usually your friends, family, or acquaintances can be a good source for recommendations). Then, discuss your financial situation with the lender to find out how much of a house you can afford to buy (if this is significantly less than the price range you had in mind, you may need to reevaluate your criteria and restart from Step 1 above).

Then, with the lender’s help, get pre-approved for a mortgage loan. In most cases a 30-year fixed loan is best. If you expect to move in just a few years, an adjustable rate mortgage or ARM may work better, but in these cases it may make more sense to rent rather than buy. Regardless of the type of mortgage, sellers are more likely to work with you and accept your offer (see Step 6 below) if you are preapproved, and especially if you will be making a down-payment from your own money of at least 10%, and preferably 20% of the sales price.

Craigslist real estate for sale ads in a major market can number in the hundreds per day, with over a thousand active ads at any given time, making it a good place to include in your search for a house to buy.http://washingtondc.craigslist.org/search/rea

The Craigslist search tool allows you to include search terms for both inclusion and vetoing. However, this tool is not as helpful in hunting for houses as it is in other types of searches, meaning that you may need to browse through many ad titles to find the ones you may be interested in. However, with 100 ad titles per page, you can scan quickly, making the process reasonably painless. Note that this search tool distinguishes between e.g. “condo” and “condos” so if you want to veto buying such a property, you need to veto both terms.

Whether you search for a house to buy on Craigslist or anywhere else, you would do best to find a good real estate agent to serve as your buyer’s agent. Since buyer’s agents are paid by the seller, but are responsible to look out for your best interest as a buyer, this is a no-brainer.

Craigslist users post mostly legitimate ads. However, there are many Craigslist scams out there so follow Craigslist’s tips on how to avoid such scams.http://www.craigslist.org/about/scams

While violence between Craigslist users is extremely rare, you should still exercise prudence when responding to Craigslist ads.http://www.craigslist.org/about/safety When going to view a property you may buy, make sure to have someone with you.

No matter how good a house looks on paper (or in the Craigslist ad) you must visit it in person to decide if you want this to be your next house. Things such as what you see out the windows, will your furniture fit, are the closets big enough for your needs, do the floors creek too much, etc. are all things that you can best decide in person. Have your buyer’s agent contact the sellers or their agents to set up appointments, and go with your agent to see the houses you think you may be interested in. Setting up multiple appointments in one day will minimize your time spent per house and increase the likelihood of finding your dream home.

In fact, it is a good idea to go visit some houses in the neighborhood you’re interested in, even if they are not quite what you have in mind. One frustrating fact of house hunting is that you will rarely if ever be able to decide to buy the first house you see, even if it fits all your criteria. This is why it makes sense to see several houses, even if you already know they aren’t perfect matches. They will still serve as useful benchmarks when you visit the one house you’ll end up buying.

Once you find the house of your dreams, it’s time to make an offer. Depending on whether you’re in a buyer’s market or a seller’s market, your strategy will be very different. When sellers are motivated, you can hold out for a lower price, seller assistance with closing costs, expensive repairs if needed, a home inspection, and various contingencies (e.g. sale of previous home, appraisal agreeing with sale price, etc.). To the extent that you can (this is where a buyer’s agent advice can be especially useful) hold out for all the assistance and contingencies you can reasonably expect, and make an offer that matches market conditions.

In a seller’s market such as the US experienced in the late 1990’s and the early 2000’s a buyer was much more constrained, especially in high-demand areas such as the Washington DC region. In such situations, buyers had to give up on many traditional contingencies, accept houses in as-is condition without recourse to revising prices or even walking away from a contract should a home inspection find significant problems, etc.

Two strategies that savvy buyers employ in a seller’s market helped them close a deal that would otherwise go to someone else. The first is known as an escalation clause in which a buyer offers to automatically increase his/her offering price to a fixed amount (say $500) above any other legitimate offer, up to a pre-set maximum. The second, and more effective, strategy is to offer a price above the asking price, plus a quick-reply bonus. In this case, the buyer offers a significant extra amount (e.g. $10,000 or even $20,000 in expensive markets) if the seller agrees to the offer quickly (e.g. by noon of the next day). What this last strategy does is force the seller to decide quickly, without having the luxury of waiting for any other, possibly higher, offers to come in. This strategy works best if the buyer sees the house on the first day it comes on the market, and makes the offer that same day. Few other buyers are likely to react so quickly, giving the early responder a big edge in closing the deal.