By Bill Golden
After over 30 years in real estate I sometimes forget what it’s like to be a first-time home buyer. It’s quite refreshing to work with them.
Still, things have changed a lot over those years – for the better: First-time buyers are far more knowledgeable than they used to be, mostly thanks to the internet. As the saying goes, however, sometimes a little bit of knowledge can be dangerous. I always assess my buyers’ level of knowledge about the real estate process and then build on that. Most are quite open to learning more about it.
To begin with, the real estate process, as well as the laws, vary widely from state to state, and sometimes even city to city. For instance, when I helped sell my parents’ home in New York a few years ago, I learned how vastly different the process was and how different the REALTOR’s role is in different markets.
- There are a few very important steps that every first-time home buyer needs to understand about home buying. This is by no means an exhaustive list but covers some important basics.
- Engage a buyer’s agent. In most markets, the seller pays the commission, so it doesn’t cost a buyer anything to have a buyer’s agent, and it could save you thousands of dollars. More importantly, having representation could save you from making a big mistake.
- Know thy agent. Don’t just hire a stranger off the internet. Ask your friends, family and co-workers for a trusted referral with whom they have direct experience. You need to know that someone is looking out for your best interests and is qualified and engaged in doing so. It’s also important that you and they set expectations; for instance, about the type, frequency and style of communication that works best for you.
- Get prequalified. This is an essential step that too many people skip or wait too long to do. Talk to a mortgage broker or bank (again – get a known, trusted referral) before you start looking at houses. You may think you know what you can qualify for, but the reality could be different, so save yourself – and others heartache by making this your first order of business. You will need to have a prequalification letter from a reputable lender to present along with any offer you make on a home, so be prepared.
- In a hot market where competition is fiercer, it may even be wise to go a step further and get pre-approved. Your mortgage pro and Realtor can tell you if this is necessary where you are at the time you are buying.
- Research the neighborhood. Your REALTOR can help you get a lot of information about any particular area you’re interested in, but there’s no substitute for spending some time driving around the neighborhood at different times on different days. If you have kids that will be going to school there, make a visit to the school. They’re always happy to talk to prospective new parents; it helps if they know ahead of time that you are coming.
- Negotiate with your head, not your heart. It can be tempting to overpay for a home because you get caught up in the “game,” especially if there are other offers on the table. Winning a bidding war doesn’t always equate to an ultimate win. On the other hand, if a home is well-priced, don’t hesitate to pay full price (or somewhat more in a multiple-offer situation). I’ve heard too many people say, “I won’t pay asking price.” That makes sense if the asking price is too high, but if it’s a fair price, you may be unwise to follow a blanket, cursory rule.
- Get the home inspected by a professional home inspector. Saving some money by getting your Uncle Joe, who has owned many homes and is very handy, to “inspect” it for you is extremely short-sighted. A home is a huge purchase with many different working parts – mechanical, structural and cosmetic. Don’t get caught up on the cosmetic issues. You can fix those over time. Focus on the big-ticket items – roof, HVAC systems, electrical and plumbing systems, and the structural integrity of the home. Your REALTOR can help you parse those items from an inspector’s report so you can make an informed decision. For one, you likely will not ask for repairs, compensation or remediation on every single item.
- As is? If the home is being offered “as is” or in some similar scenario in which the seller states up front they will make no repairs or adjustments, get an inspection anyway; you still need to know exactly what you are buying and the inherent flaws or challenges involved.
- Set your expectations of the process. While you can make the process as smooth as possible by following the above steps, the truth is that issues do arise over the course of the process, whether it’s with the mortgage, home repairs, title issues, or something you never even heard of. That’s where the help of a professional REALTOR really pays off. Almost any issues that come up can be solved through knowledge and perseverance.
Don’t forget to enjoy the process. If you are working with the right professionals and cover basics like those noted above, your home-buying experience should be informative and even fun.