A Must Read – Tips for First Time Home Buyers
First Time Home Buyers
Shelter is a basic necessity of life. Everyone wants to find a place to call home to feel secure and spend time with loved ones. Finding and financing a good home is not an easy job. It requires much due diligence. If you wish to buy a home for the first time, peruse carefully.
Do The Homework
If you are new to home buying, you must do detailed homework before meeting with potential house sellers and/or agents. First, you must decide why you want to buy as opposed to renting. Does it make sense? If so, you must decide the location, area, number of bedrooms and bathrooms, construction style, etc. These things will help you narrow your housing options.
Use an Agent
If you are new to house hunting, use the services of a buyer’s agent. Agents have great knowledge about the prices of the homes, their resale values and can show homes tailored to your requirements. Since the seller typically pays the commissions of both listing agent and buyer’s agent, you get the expertise and advice of an agent for free. However, be warned that the seller may pass the costs along to you in the form of a higher purchase price! Nothing is truly free.
But, beware of agents who put their commission checks above your interests. Since agents’ commissions are tied to a) the sales price of the house and b) executing a successful purchase contract between both selling and buying parties, be sure you are not pressured into buying a property above market value or buy on poor terms (ie having to pay all closing costs). Make sure you check references on your agent and any other professional BEFORE you commit to their services!
In a future article, more discussion will be made about the services of other real estate professionals.
Comparable Market Value (“Comps”)
You can get a list of available properties for sale as well as check comparable market values of houses recently sold. The best comparables for the property you wish to buy have the following characteristics:
1. sold within the last 3 months
2. within a 1 mile radius, ideally within the same block.
3. similar size (ie same bedroom, bathroom, square footage, etc.)
4. most important of all, ascertain that you are comparing SALES PRICE, NOT ASKING PRICE.
Of course, always use your best judgment and ask yourself why is the price much higher or lower than other comparables. Was there a recent murder at the property? Does the house have major defects?
After you have selected the location and area, you must collect the approximate funds needed to buy the home of your choice. There are many methods by which you can collect the money. A few of them are mentioned below.
1. Take out your savings
2. Take loan from the bank or credit union.
3. Take loan from your friend, family or colleague
4. Take loan from your retirement plan like 401K.
5. Seller or owner financing
Besides your agent, the Internet is also one of the best sources to get knowledge about all the homes that are offered. Below are some very useful real estate websites:
Visit The Homes Personally
You must select the appropriate homes from the given list and visit them one by one but it does not mean that you continue to waste time is waiting for the ideal home. Many first time buyers continue to search h for homes that don’t exist anywhere. Always remember that getting the ideal is not an easy job. You must compromise on small issues in order to get your own home.
The Devil is in the Details
If you liked a property and are thinking to buy it, first look at the property details. Many new buyers just see the number of rooms or the overall size of the home. These things are not enough. You must also check the construction of the home, the security features and any repairs if needed.
Moreover, know your surroundings. How close are you to schools, shopping and transportation? How’s the local air quality, weather patterns and crime rate? What’s the overall vibe?
Most importantly, know who your immediate neighbors are. Can you trust them? Are their dogs loud? Are they drug users or dealers? You can remodel your kitchen, not your neighbor.
-Know why you want a property
-Do the market research
-Get pre-qualified with a lender
-Find a loan product that make sense for your budget
-Use the services of real estate professionals and check their references
-Negotiate and put terms of sale in writing
-Don’t reject a property just because of minor issues
-Talk to the owner directly
-Get the home inspected before buying
-Not getting pre-qualified first.
-Focusing only on minor issues and ignoring major issues like roof or foundation.
-Paralyzed by analysis while someone else gets the property under contract.
-Skimping on the services of a real estate professional (lawyers, agents, inspectors, etc)
-Wasting time visiting homes beyond one’s budget.
-Losing the deal due to poor communication or negotiation skills with the seller and/or agents.
-Getting emotionally attached to a property and paying top dollar for it.