First time home buyer? Here’s what you need to know
It going to be a rough summer for many wanna-be homeowners, especially the first-timers.
Buyers are facing stiff competition and bidding wars in the real estate markets that clearly favor sellers.
But that doesn’t mean you should abandon your dreams of home ownership.
Here’s what real estate agents from across the country want first-time buyers to know:
You know those HGTV shows that make home buying look fun and super fast? The buyers only look at three houses, find their dream home and get an accepted offer within their budget, all on the same day. Yeah, that’s not how it works.
“After seeing three homes, most buyers say, ‘wow, that is nothing that we want. We need to see more.'” said Alex Haried, a Redfin real estate agent in Chicago.
House hunting can be long, frustrating and exhausting. Open houses and home showings can take over your weekends and creep into your week nights, and checking for new listings online can become an obsession.
Don’t bite off more than you can chew
Experts recommended getting pre-approved by a lender before you officially start your search.
That can be a good starting point in figuring out what you can afford. But just because you were approved for a set amount doesn’t mean you have to spend that much. Creating a budget can help to determine how much money you’re comfortable spending each month.
Once you’ve figured out your ceiling, take the time to research the market to find out how far your budget will go.
“Get realistic about what your money can buy,” said Dana Bull, a real estate agent in Boston.
It can also be tempting for buyers to go above their budget when they fall in love with a house. But realtors say that can be a big mistake.
“I talk to them on a personal level,” said Stephanie Collins, a real estate agent in Denver. “I tell them, ‘If you want to be downtown where you can walk to restaurants, are you going to be in over your head with the mortgage? Will you be able to dine out?'”
Play it cool at the open house
You’ve finally found your dream house. It’s perfect and you start coming up with your offer.
It helps to establish contact with the seller’s agent to start a rapport, but oversharing can create problems.
“Some of my clients are bubbly, and I have to reel them in,” said Bull. “Don’t give the listing agent too much information, you never know what they will use to negotiate against you.”
For instance, saying you’re relocating to the area for a new job or telling them your parents are helping with the some of the costs could make the agent nervous about your ability to secure financing.
“It’s almost like a job interview — buyers want to come off as easy to work with and that the process will be smooth and that they are going to get to the closing table.”
Be prepared for rejection
In many housing markets, sellers have the upper hand, which means competition is stiff — especially for first-time buyers.
“A lot of people don’t get their first offer accepted,” said Haried. Most of his first-time clients don’t make an offer until they’ve seen at least 15 homes.
While it hurts to get rejected, the process will get easier as time goes on.
Lay low once your offer is accepted
Once you have an accepted offer, your lender will start the underwriting process on your mortgage. Banks will scrutinize your finances and any big purchases might affect your qualification status. So lay off the credit cards, and don’t suddenly decide to quit your job.
Bruce Elliott, president of Orlando Regional Realtor Association, once had a client’s closing delayed over a $300 purchase.
“That purchase could push your debt-to-income level too high and you wont be able to close,” he said.