Cold, Hard Facts About Buying a Home
It’s an exciting time; you’ve finally decided it’s time to buy a home! You start looking online for homes and call a Realtor and ask to see the home that looks amazing in the pictures. Hopefully you’ll love it, your offer will be accepted and you’ll move in a few weeks! That’s all there is to it, right?? Not quite.
Jumping into the homebuyer market is fun but here are some cold hard facts buyers should know before starting their home search.
1) If you’re looking at houses before getting pre-approved, you are putting the cart before the horse. Why?
-First, let’s get this out of the way. Use a trusted, reputable lender. Not online app. Local lenders will ask pertinent questions and give you a pre-approval amount based on your credit, debt to income, etc. They’re also there when you really might need them during a transaction.
-You might be surprised on what you can or can’t afford. There are other fees associated with buying that you may not have considered: Closing costs, PMI, taxes, insurance. These add up quick and may influence the price point you’re looking at.
-Realtors submit pre-approval letters with the offer to purchase to make an offer stronger. If you are competing with other offers, which one looks stronger…the one with a pre-approval from a reputable lender or one without a pre-approval? Which leads me to my next cold hard fact….
2) You will probably be competing with other offers.
In this market with such a lack of inventory, there can be 3, 4, 5 offers on a property within the first 24 hours! Prepare yourself that you may lose out on a couple homes. When competition is thick, it’s always a chance we take. Talk with your lender and Realtor to see what you can do to make your offer stronger and make you stand out amongst the other offers. Which leads to the next cold, hard fact…
3) You should work with a buyer’s agent.
Ask friends and family if they have a Realtor they would recommend and interview that agent to see if they’d be a good fit. If so, they can be invaluable. They see homes immediately when they’re listed, they’re community and market experts and can give advice on pricing, condition, etc. (agents working for the seller can’t do that). As they get to know you, they also get a firmer grip on your needs and wants and can find homes that might work for you that you didn’t think of. Also, to my point above, they’ve been living in this inventory crisis for 2 years now. They know how to navigate it better than anyone. They know how to negotiate with the listing agent directly and have tricks up their sleeves to make your offer stand out.
4) Sometimes a seller will not contribute closing costs.
We all see it on HGTV and we see it in many offers now, but there is an older generation selling their homes that think buyers should be able to contribute 100% of the cost of buying a home. Sometimes we can negotiate to keep that in by increasing the purchase price. It’s something to keep in the back of your head.
5) Buying a home costs more money than just the down payment and loan.
Buyers have to pay for the home inspection and any follow up inspections they may request, the appraisal, closing costs, and loan fees. Make sure your finances are in order (and you’ve talked with your lender) before submitting an offer on a home.
6) Stay on top of the process.
When your offer is accepted you have entered into a binding contract. Your Realtor should be keeping you informed on what the next steps are but don’t drag your feet. When your Realtor asks you to sign documents or your lender needs items from you for underwriting, get on it right away. Nothing makes the process harder than missing deadlines.
7) Unless you are buying new construction, expect there to be some repairs.
Home inspections are meant to find defects that can significantly affect the value of the home, and the safety and health of the inhabitants. The home inspector will find items that don’t fit under those standards and may fall on the buyer to repair if you move forward.
8) Don’t change anything once your offer is accepted.
Great, you are moving forward on your new home and will move in in a month. Time to go out and buy/finance new furniture and appliances! WRONG! This can greatly affect your loan, even after you’re approved. We’ve seen it happen and the deal doesn’t close. Also, during a transaction is not a good time to change jobs…best to wait until after. However, if it’s an opportunity you just can’t pass up (let’s face it, life happens) talk to your lender (this is where the reputable and local lenders shine), they may be able to work it out.
Want more home buying info? Check out our other blog, Choosing a Buyer’s Agent.