Real Estate: "8 Tips For First Time Home Buyers" By Alx.O

I wanted to share my insight on what I think are 8 things that all first time home buyers should keep an eye out for and tips on how to successfully navigate through the process and minimize any potential pitfalls along the way.

So here we go.

1: Be selective about your real estate agent: Something to keep in mind is that not all agents are the same. Interestingly enough, a real estate agent and a Realtor are not the same things. An agent is someone who is just licensed to work in real estate. A Realtor is a licensed real estate agent that is a member of the National Association of Realtors, who is also bound a code of etiquette set forth by the association. This means that all Realtors have sworn an oath to work solely in the benefit of their clients and not for self-interest. I’ve found this to be a crucial thing for first time home buyers because you want to work with someone you can trust but more importantly, someone who has your interest in mind; not just their next commission.

2: Mortgage with a reputable professional: It’s important to know and understand where you are financially, especially with regard to buying a home. And just like with agents and Realtors, not all mortgage professionals are the same and neither are banks. You want to use someone who has a good reputation, someone who doesn’t mind educating you on the process, someone with patience, and most importantly a solid track record for closing on time. Ask any Realtor and they’ll tell you how many times they’ve had last minute, completely preventable, hiccups from mortgagors because of missing documents or incomplete packages. It’s unfortunate but it happens. Which is why it’s important to work with reputable people. If you don’t know of any, just ask the Realtor you’re working with. I’m more than sure they have someone they can recommend. The same goes for lawyers (which it’s crucial to have a real estate lawyer, not just any kind of lawyer) insurance agencies, title companies, home inspectors, plumbers, etc…

3: Getting pre-qualified: Once you’ve found the right mortgage professional now you have to get pre-qualified and I’ll explain what that is. A pre-qualification is a process by which a financial institution assess your eligibility to get a loan. In real estate, this is a crucial first step because it tells the Realtor exactly what your buying power is and therefore your target purchase price range. However, that’s not all this process is good for. During this process, you can also design the mortgage to fit a monthly budget that you're comfortable with. In other words, just because you have $500K in buying power doesn’t mean you’re comfortable paying $3,000 a month in mortgage. Tell the mortgagor where you want to be monthly and make them work. Once they’ve done their job, they’ll able to tell you what they can or can’t do for you.

4: Once your pre-qualified: STOP ALL FUTURE USE OF YOUR CREDIT!! I’m sure it sounds obvious but you’d be surprised how often people get pre-qualified, become excited with the results and then soon after ruin it by taking on a loan for a new car or making some big purchase on credit. Doing so dramatically changes your entire financial stance with regard to buying a home. So be sure not to set yourself up for failure here and just stop using the credit until you’re already in your dream home.

5: The reality of the search: Perhaps one of the hardest parts of being a first time home buyer is not having a reference point to judge how the market works. It’s very common that new buyers enter the marketplace expecting it to be like buying food. You know what you want from the menu, so you order it and it arrives. The hard truth is that it’s not that simple. For starters, the real estate market price is determined by whatever any given buyer is ready and willing to pay at any given moment. So what that means, is that the real estate market price fluctuates. In one instance that may work in your favor, in another, it may not and that’s why it’s crucial to work with a good Realtor who will be honest and tell you how the market is moving. Moreover, what you may want and what the marketplace has, may not be the same but that doesn’t mean you can’t still have the home of your dreams. It simply means that you have to find what I call “The closest and absolute best possible option that the marketplace can provide.” In many instances, that may mean finding a home that may not check all of the boxes at first but has all the potential to do so in the future. For example, an old fixer-upper home with a solid foundation, no structural, plumbing, or electrical issues on a large piece of land. It may not be the perfect home today, but with the right guidance and imagination, it can be perfect in the future. The major key here, which I tell all my clients is the lifestyle. If the home fits the criteria for the kind of lifestyle you want to live then it can be molded into a perfect home, if not, then that’s an immediate red light and sign to keep searching.

6: Remain calm and don’t get discouraged: The home search can be either a really easy process or it can sometimes be a long frustrating one. The keys here are to understand that 1) You want to find something you can live with and not regret within a few months of buying 2) Since the market is in constant flux sometimes time is the best thing with regards to finding the right home. As time passes new inventory goes onto the market which only increases your chances of finding the right one. 3) However, with that said, once you find the right home you have to act fast. There is nothing worse than missing out on a great opportunity because of buyer hesitation. So, a rule of thumb here is to have all the decision makers present and if you loved it, make an offer immediately. There is no upside to hesitating, especially if you’ve been searching for a while.

7: The offer: Now with the particulars of the offer I’d refer back to the Realtor your working with because they have a better understanding of that market and how it’s been moving. However, generally speaking, you want to make what’s called a competitive offer. A competitive offer is any offer under the full price that is both appetizing to the seller and beneficial to the buyer’s wallet. So naturally, I couldn’t tell you what that number is for any particular property without doing my own homework first. However, in this instance, your Realtor is the best-qualified person to get you within a competitive range. With that said, if you’re prepared to pay full price then you can disregard this and just make the full price offer. However, if not then the reason why a competitive offer is important, is because it places you in the best position to be accepted in the event of other buyers being interested as well. In which case, you may enter into a bidding war for the home. The key here is to decrease the chances of triggering a bidding war by making the best possible competitive offer, as soon as possible. And then respond accordingly from there on.

8: Attorney Review: The attorney review process is the step after an offer, in contract form, has been signed by the buyer and has been formally accepted and signed by the seller. The signed contract then goes to both the buyer attorney and seller attorney for a 3 day period of review. A few things to know about this 3 day period, 1) The home can still be shown and the seller may still entertain any other offers that come in, 2) The buyer can still withdraw the offer at any time without penalty and 3) Once the 3 day period is over the contract becomes fully binding and the deal can securely move forward.
At this stage, like with getting pre-qualified, it’s crucial to work with reputable professionals that specifically focus on real estate law. Again, this may sound obvious but you’d be surprised how many times people use other kinds of lawyers for real estate transactions and it doesn’t always end well. In many instances, other kinds of lawyers ruin deals and make things harder than they need to be, not out of malice but out of sheer inexperience in the field of real estate law. And again if you don’t know any real estate lawyers, your Realtor can definitely make some recommendations.

Now naturally the whole process entails a little bit more than that but for the most part, these are the areas that I find most first time home buyers get caught off guard with. Moreover, I would still suggest that you have a sincere conversation with your Realtor and have them walk you through the process in their own way. Hey, I don’t claim to know it all but I absolutely know what I know from my own experiences in the field. That being said, I wish you the best of luck and I hope you find the home of your dreams. Also, let me know if you found this post helpful or not in the comment section. I’d love to hear your thoughts and feedback.