Start Your Home Buying Search with the Internet

By Elizabeth Wasserman

Moving a family of four from Monterey, Calif. to Fairfax, Va. was not an easy task. But Rachel Kros managed to research schools, target a neighborhood and even find her dream home by using the Internet. Before Kros traveled 3,000 miles east to look at homes in person, she had narrowed down her search for a new family home to several listings she found on such web sites as REALTOR.

Most of the time, Kros was able to rule out -- or include -- homes based on what she found on the online listings. The listings she favored had photos of the interior and exterior, as well as the floor plans, and a list of updates or renovations. "If I looked at a house and saw that there was no photo available, I immediately thought, 'What's wrong with it?'" Kros recalls.

Along with the World Wide Web has come a new world order for home buyers. Especially in a buyer's market, as home sales have stagnated, home buyers are able to gather information and do comparison shopping over the Internet -- before they even set foot in one home. Gone are the days when a real estate agent is the only one who looks at listings of homes on the Multiple Listing Service (MLS), a regional realtor database of homes for sale, to figure out which properties to show buyers. Instead, buyers have turned the tables by scouring the web for attractive listings and then emailing those prospects to agents.

"We've seen a big uptrend in buyers using the Internet to search for homes," says Stephanie Singer, a spokesman for the National Association of Realtors (NAR), which undertakes an annual survey of home-buying trends.

So, if you're in the market for a new abode and you're not sure how to use the Internet to your advantage, check out these ideas:

1. Figure out what you can afford  The first step for most home buyers is deciding on a budget. The web can help you come up with some rough figures. HOMES, a popular real estate web site, has a calculator that lets you plug in your income, current debt, down payment and interest rate to calculate what you can afford to pay in a mortgage each month. Many banks, lenders and mortgage brokers offer similar tools, such as Quicken Loans and Lending Tree. Lending Tree also allows you to compare what your payments would be using different types of mortgages.

2. Pinpoint a neighborhood  Once you set your price ceiling, you'll need to decide where to live. Before flying in to search for a home in Virginia, Kros used the Internet to narrow her search to two neighborhoods. She wanted to find a neighborhood with a good school district that was near public transportation to Washington, D.C., where her husband works. She found out about the schools by looking at GreatSchools, a site that lets you search by city or zip code and compare schools according to such factors as enrollment and student-teacher ratios.

Many real estate web sites also include links to information about local schools. REALTOR, which is affiliated with the National Association of Realtors, and ZipRealty both have sections on how to find a good family neighborhood, taking into consideration crime rate, schools and other data. Neighborhood Scout helps suggest possible neighborhoods through a plug-in menu feature that allows you to list the criteria important to you when looking to relocate. Other helpful sites include Trulia and Home Fair.

And the FBI maintains a searchable National Sex Offender Registry if you're concerned about the potential offenders who might live in your potential new neighborhood.

3. Tour properties with mouse clicks, not mileage  It used to be that prospective home buyers had to physically visit scores of homes before narrowing their choices. Now, say realtors, many buyers get a head start by touring homes online via digital photos, maps, layouts or video.

"The percentage of buyers who found the home they bought online is also increasing," says Singer.

The NAR study found that 80 percent of home-buyers in 2006 used the Internet to search for a home, compared with only two percent in 1995. In addition, Singer says, nearly a quarter of buyers that year said they found the home they purchased online. Choice sites to check out home listings include REALTOR, HOMES, local realtors and agencies. Don't forget the growing number of for-sale-by-owner (FSO) web sites, such as For Sale by Owner America, For Sale By Owner, Help-U-Sell and Owners.

4. Close the deal  After finding your dream home, you need to make an offer, find a lender and close the deal. Realtors most often earn commissions from sellers, not buyers, but make sure your agent is working on behalf of you before you discuss your finances and start negotiating. To arrange a loan, banks, lenders and mortgage brokers often have detailed information about different types of mortgages and interest rates on their web sites.

CNN Money has a loan center, where you can keep tabs on rates, choose the best loan for you and learn to protect yourself from possible fraud. Some lenders allow you to apply for a mortgage online, as well, but make sure you understand the company's privacy policy before providing anyone with your personal financial data. When it comes to closing the deal, Zillow, a real estate site, offers detailed guidance in a wiki format to what you need to know about contracts, contingencies and disclosure -- although rules sometimes vary from state to state.

But in a harkening to the days before the Internet, most real estate deals still need to be "closed" in person, with buyers and sellers signing paper contracts.