Buying a home, especially for the first time, can be an overwhelming and intimidating process. It is often filled with terms and situations that are unfamiliar and questions that can’t be answered without the help of a professional. It is also most likely the largest financial decision someone has made at this point in their life. To say that purchasing a home for the first time is stressful would be an understatement, but it doesn’t have to be!
First and foremost, it is important to make a plan. Finding out what you can afford to spend on a home begins with looking at your financial portfolio as a whole; this includes your current income, debt, credit score and savings. Taking the necessary steps towards homeownership starts here.
Real estate is one of the best investments you can make towards achieving long term wealth. Paying your own equity instead of someone else’s is the most responsible benefit of buying a home and having the peace of mind knowing that you proudly have a place to call your own is the most rewarding benefit. Here are a few tips to help you achieve that goal.
Determine what you can afford.
Scheduling appointments to look at homes without truly knowing what you can spend is equivalent to window shopping without your wallet. Working directly with a lender can help determine what you can afford and what loan programs are available based on your financial situation.
Nearly all mortgage loans and lenders require some amount of money as a down payment and the amount you’ve set aside could determine the kind of mortgage for which you qualify. It will also impact how much you can afford to borrow for a home. But no need to fret! There are many different types of loans and programs that allow for a smaller down payment amount if you haven’t yet stashed aside a good amount of cash.
Talking to a lender is more important than ever. They can help explain different types of financing available. They can recommend ways to improve your credit. They can introduce you to the types of programs they have available through their brokerage and answer any questions you may have about lending including what you’ll need to put aside for a down payment and closing costs.
Today, buyers face a difficult task in current market conditions due to a lack of inventory for sale and high competition from other qualified investors. Homes that are affordably priced are going under contract at an extremely active rate and prices, although they are slightly slowing down, are still on the rise. However, interest rates are the lowest they’ve been in over a decade while showing no signs of rising anytime soon and homes rarely depreciate in value. Regardless of suggestions that say it’s currently a “buyer’s” or “seller’s” market, finding the right time to buy a home for you should never be predicated solely on an opinion or variable and is something you should consider when building your plan. You may be ready tomorrow, or you may be ready in a year or two, but being prepared when that dream home does hit the market is extremely important.
Walking into a showing or open house with a pre-qualification or pre-approval letter from a lender gives not only you, but the seller confidence that you’re a serious buyer. Being able to present an offer on the spot can place you in a better position when purchasing. There are many great lenders right here on Aquidneck Island that are available to help you see where you stand and answer any questions you may have about what type of mortgage is best for you.
I always encourage my clients to work with a local lender because of the personal service they provide and the first-hand knowledge of the area they serve. Being able to pick up the phone and talk directly to a mortgage broker in the neighborhood is much more convenient than the automated response calls that many larger lending corporations use today. There are some great lenders right here on Aquidneck Island and if you need a recommendation, please don’t hesitate to ask.
Work with an agent.
Working with an agent is one of the best ways to alleviate the “I don’t knows” and “I don’t understands” of purchasing real property. Having buyer representation gives you leverage and finding the right agent for you is incredibly important. What exactly is a buyer’s agent and why is it important you ask? Here are some key points to understanding that relationship.
A buyer’s agent is a licensed real estate professional who works directly with a buyer as their representative in a real estate transaction. Working directly with one agent, rather than working with multiple agents, and signing a representation agreement is the best way to ensure that your interests are protected and your time (as well as theirs) is goal focused and well spent.
First and foremost, a buyer’s agent’s main objective is to help you find homes that suit your needs and preferences. These needs can include details such as specific neighborhoods, size of the home, yard space, driveway, etc. When you find specific properties that catch your eye, you can rely on your buyer representative to schedule showings and gather information about the listing on your behalf. Real estate agents, especially here on island, work together often and your agent can act as a liaison to get you into homes that fit your desired criteria.
Your buyer’s agent will also help guide negotiations through the home buying process including any requests for repairs, reductions in price and stipulations within the purchase and sales contract. These types of discussions are difficult conversations to have but you should feel much more confident going into a deal with that type of expert knowledge and experience on your side. It’s also important to note that working with a buyer’s agent means that all the paperwork associated with the transaction will be handled by a licensed professional with your best interest in mind.
During any real estate transaction, you want to work with someone that represents you and your family to the best of their abilities and understands your personal goals as a buyer. And believe it or not, working with a real estate agent when buying a home doesn’t cost you anything! You’ll never be asked for any sort of payment by your buyer’s agent.
How do buyer’s agents get paid you ask? Compensation is commissioned by the seller of the house and not out of your own pocket. The seller pays the listing agent a percentage of the total sale, less any seller credits for closing costs, prepaids, or repairs. This commission is then split accordingly, based on what’s offered to the buyer’s agent by the cooperating brokerage. So next time you pick up the phone to call a listing agent about a property, consider that they are working directly for the seller and the seller’s best interest.
Qualified agents have and overwhelming amount of experience when it comes to the home buying process. They have the ability to negotiate deals on your behalf, they can recommend home inspectors, contractors, attorneys and insurance agencies. They understand the inspection process and what to point out when looking at a property. They can negotiate repairs and price reductions. They have familiarity with local neighborhoods and the ability to access information that is privy when deciding whether or not to craft an offer. Working directly with a buyer’s agent is an extremely valuable asset to have on your side.
Find your home & make a competitive offer.
Now comes the fun part. You have your pre-qualification letter in hand and your agent by your side. It is finally time to start searching for the perfect property. The beauty of technology means that you can start searching without changing out of your sweatpants or leaving your couch. With a plethora of resources available online and websites such as Zillow, Trulia and many more similar pages you can view properties and their details with the click of a button.
Finding the right city, town or neighborhood that you prefer is important to help narrow your search. Multiple factors should be assessed when determining where you want to live, including school systems (if you have children), taxes, demographics, housing prices, traffic, accessibility to work, etc.
Your buyer’s agent should set you up with an automated email campaign that notifies you of any new listings that may be of interest to you. That way, when something new hits the market, you’re the first to know and can schedule a showing as soon as possible with your agent.
Don’t rely solely on the online search. Be sure to get up off the couch and attend some open houses! Plan to see as many properties that fit your price range and that are located in areas you prefer. This will help you better evaluate exactly what you’re looking for in a home and seeing a property in person is completely different that examining through an online portal. Plus, some open houses can be really fun! Who could turn down fresh baked cookies, muffins or complimentary mimosas on a Sunday morning showing?!
Once you’ve found “the one,” it’s time to craft an offer to purchase. Your buyer’s agent can pull comparable properties that have recently sold or are currently on the market to give you an idea of how the house was priced and what others have closed for in the past. Whether you’re buying or selling a home, comparing similar homes can yield a wealth of information. Comparable sales are extremely important and will help dictate what price you are willing to offer.
Don’t play games! If you want the property, be sure that your offer is prompt and competitive. Low-balling listings with the hopes of bartering your way to some undetermined ‘middle ground’ isn’t the best (or most well-received) way of negotiating real estate deals. Your agent will work with you to create a purchase and sales agreement that includes any and all conditions you want to include in the offer and present it to the listing agent on your behalf.
Don’t get frustrated, enjoy the process!
Buying a house should be an enjoyable experience! As a licensed real estate agent, it is my responsibility to help guide you through the journey and any answer questions you may have along the way until we get to the finish line.
You are buying not just a house, but a place to call home. A place where you may one day start and raise a family. It is an exciting time for all parties involved and there’s no better feeling than seeing the excitement on a client’s face at the closing table when they are handed the keys to their new home. For new home owners, a sense of self-pride, immense happiness and a deep sigh of relief usually follow shortly after (along with a stiff drink or champagne to celebrate!)
However, in the event that your offer on a property does get rejected in favor of another, don’t get frustrated. Take a moment to reflect on why the offer was rejected by the seller. Was the offer too low? Was the offer full of contingencies? Were their seller-required terms that you were unable to meet? Knowing why your offer was rejected gives you that much more information that can help with your next offer to purchase.
‘There’s plenty of fish in the sea’ is a bit cliché, but it rings true not only in relationships but in real estate as well. Searching for the right home can take weeks, months and even years. It’s important to remember that it is a process, a word that’s been referenced many times in this editorial, and takes time to ensure that it is the right investment for you.
Don’t take rejected offers personally. The seller is making a judgement based on what’s best for them and their family. Stay optimistic, remain attentive about new and current offerings on the market and most importantly, remember to have fun finding the home of your dreams!
If you have any questions about this editorial, the home buying process or if you are in the market for a new home and are unrepresented, please contact Tyler Bernadyn at 401-241-1851 or Tyler.Bernadyn@Raveis.com.