Buying a home is probably the biggest financial decision you will ever make in your life and buying your first home can come with a mixture of emotions, everything from excitement, to just plain stressful. In order to put you on the right footing here are a number of tips that will help you minimize the stress and smooth the way to your first home purchase.
Know What You Want
It goes without saying that in order to buy a home you need to know what you want from that home. You need to carefully consider your requirements, everything from the number of bedrooms, baths, garage spaces, lot size, to the neighborhood. Try to come up with a list of must haves and nice to haves, these can always be refined during the house hunting process. Coming up with this list makes it easier to identify suitable homes and helps reduce time wasted looking at homes that are of no use to you. Providing your Realtor with a clear picture of your requirements will make the process a whole lot easier for everyone.
Know Your Budget
Before you buy anything you will need to know how much you can spend. The best way of doing this is to get pre-approved by a mortgage professional. This will tell you how much of a mortgage you can qualify for, and also puts you in a stronger position when making an offer (a lot of buyers/Realtors are reluctant to accept offers unless you have been pre-approved). Remember just because you qualify for a certain size loan does not mean that you have to spend that much, it just gives you an upper limit. The result of getting pre-approved may mean that you cannot get the size of loan you expected and you may have to revise you home requirements to meet your new budget. It will also identify any credit issues that need to be addressed.
Remember you will also need money for closing costs, down payments and inspections. All this money needs to be available before you ever make an offer.
Take Advice from the People Who Know
While family members may mean the best, they don’t always know the best when it comes to real estate. You should take advice from the professionals who are working with you on your home purchase, rather than friends and family members. The people you should take advice from includes your Realtor, Mortgage Broker, and Home Inspector. They are real estate experts and are there to help and advise you, so use them.
Pick a Good Realtor
It is really important that you pick a good Realtor. You should select someone with plenty of experience, and someone who you can get on with and feel comfortable with. Don’t be afraid to interview potential Realtors. One thing you should watch out for are part time Realtors (we call them family and friends Realtors), they won’t be able to dedicate the necessary time to you and are not used to dealing with real estate transactions on a day to day basis. It’s to your advantage to have an experienced, professional Realtor on your side during your purchase process/negotiations.
Make a Good Offer
If you pick a good Realtor then they will be able to advise you on what a good offer is under different circumstances. For example, in a highly competitive market it may well be going straight in with a full price offer. They will also be able to tell you if the home is overpriced, if needed the Realtor can present an offer and also an argument to why this is a good offer for that home. This is the art of negotiation.
Often buyers want to put forward a low ball offer for their first offer, knowing that they can always up the offer later. This may well be OK, but too low an offer can upset the seller, who may just ignore the offer, and worse still refuse to deal with any future offers from the buyer. At the very least it will give them a bad feeling about the buyer and may cause other complications further down the line. For example, what if you find some issues during the home inspection that you want fixed, the seller maybe less likely to want to fix these issues.
Always Have an Inspection
While it is not a requirement to have a home inspection, in practice you should always have one, even if you are buying a new construction home.
Once your offer has been accepted the next step is to have a home inspection performed. The inspector examines both the outside and inside of the home to find any potential problems. They will then give you the opportunity to meet them at the property so they can go through their findings and lastly produce a written report with the findings. You should always take the opportunity to meet the inspection at the property; it gives you the opportunity to see what they found and of course ask questions. Remember even if you are totally in love with the home, sometimes serious problems mean that it’s just better to walk away. Serious problems can soon turn your dream home into a nightmare. On the other hand it is very rare for a home not to have some sort of problem, and the older the home the more issues you can expect. Talking with the inspector gives you the opportunity to see if the issues found are minor/normal or something that are more serious and need to be addressed.
If the problems found are not deal breakers for you, then your Realtor will guide you through the various options open to you. This may include asking for the issue to be fixed or renegotiating the purchase price.