1. What are the most important questions you should ask your broker or real estate agent when looking for your first home?
I love working with first time buyers simply because they tend to ask very good questions. When interviewing an agent, buyers should be confident in his/her responses and qualifications, and should also feel comfortable in dealing with him/her. Some important questions for the agent are:
- 1) Will YOU be the agent who shows us the homes personally, or will we be working with another buyer’s agent?
- 2) How do we get a hold of you and are you available after standard office hours (text, direct call, email)?
- 3) How many clients do you have right now? Expert tip: Look for a number between 1 and 5. If the agent is running with 25 buyers, he/she may not be able to serve you adequately.
- 4) What experience do you have in the real estate business? Most real estate licensing courses do NOT teach agents about what problem areas to look for in homes. That comes with experience.
- 5) Are you an Accredited Buyer Representative (A.B.R.)? Wishful thinking but worth asking. About 5% of agents hold this designation, which means that they have received additional training and testing in the specialty area of buyer representation.
2. How should I budget for my first home? What are some hidden costs that people forget to include in their budgets?
In addition to the down payment (typically 5 to 20 percent) buyers need to set aside money for various taxes, legal fees, insurance costs, and moving costs. In general, it is advisable to set aside at least 2.5% to 3% of the cost of the home, and have this available in cash.
3. What are some bargaining and negotiation strategies I can use when looking at homes? When is an appropriate time to negotiate price?
- 1) Depending on the price range of the home you’re looking for, you may find yourself in multiple offer situations, or “bidding wars.” In some places, these are quite common in the lower price ranges, i.e. under $300,000. One strategy is to look for homes that have been on the market for two weeks or more, meaning that they did not receive any offers right away. This way, you will likely not be competing against several other bidders.
- 2) The best time to negotiate price is when you are NOT competing. A good strategy is to write an offer with as few conditions as you can manage and at a a lower price. Sellers will have a tougher time turning down an offer that is fairly clean, even if it is not the full asking price.
4. What are the true costs of home ownership other than just a monthly mortgage?
Maintenance of the home will now fall completely on the buyer’s shoulders, so it is advisable that they start a separate savings account for emergencies. Start by putting in $500, and then set up automatic deposits of $100 per month, so that it grows over time. Unexpected repairs or purchases such as a new roof can cost at least $5,000, while a new hot water tank will cost about a $1,000. When these types of things break down, you will need to replace or repair ASAP, so it’s important to have those emergency funds readily available.