Today’s market can seem intimidating if you’re a first-time homebuyer. Mortgage rates are at or near historic lows, but inventory is limited. However, you can prepare yourself for the competitive market and the road to homeownership ahead. Here are 4 ways you can prepare yourself as a first-time homebuyer.
Carefully select your real estate agent.
It’s important that the person who is guiding you through your first real estate transaction is a brilliant partner and resource. That’s why being selective when you choose yourreal estate agent is so important. Be sure to ask them questions about how they handle business, what their communication style is, and what you can expect from them. Your agent should be a wealth of knowledge and will be the one to help guide you through the process, so make sure your goals and expectations line up.
Know your budget before you look.
You’ve found your dream home. It has everything you need and want. The only problem is: it’s WAY out of your price range. Don’t start viewing homes, even online, until you’re aware of what your budget is. Reach out to a local mortgage consultant and getpre-qualifiedfor your mortgage before you start your home search. You’ll be thankful you did in the long run.
Know your wants vs. needs.
Make a list of features you would like in your home (wants), and a list of must-haves (needs). Understand what items that are an absolute requirement for your future home. For example, if you have a dog, a “need” might be a fenced-in yard, while a dog wash tub inside the house may be a “want.” Interested in some help to make your wants and needs list? Be sure to check out our blog post: Wants Vs. Needs.
Be prepared for a multiple-offer situation.
With many homebuyers in the market and limited inventory, it is common to be in a multiple-offer situation. But don’t fret! Working with a real estate professional gives you a significant advantage. Your agent will assist you in creating the best offer you can give, and guide you through that process. There are plenty of ways to help you win in a multiple offer situation, so don’t worry if this comes up in your home buying journey.
When you’re ready to start your home buying journey, be sure to reach out to one of our knowledgeablesales professionals in your area.
With a limited supply of entry-level housing for sale, getting your foot in the door you want could be a challenge if you’re looking to buy your first home soon.
Nearly a third of Americans who’ve never previously bought a home say they plan to in the next five years, according to a survey commissioned by NerdWallet and conducted online by The Harris Poll among 2,007 U.S. adults in January 2020.
Before you join the house hunt, decide which type of property best fits your goals. Here are the pros and cons of buying a turnkey home, building a new house or renovating a fixer-upper.
Buy if you can roll with the punches
What could be the downside to a move-in-ready house? All you need to do is move. But in today’s market, competition is fierce. According to data from the National Association of Realtors, in December 2019 the inventory of homes for sale in the U.S. reached its lowest level in over 20 years.
“You have to be ready to go yesterday,” says Simone Plush, a real estate agent with Washington, D.C.-area Century 21 New Millennium. Especially for first-time home buyers, the process can be “an emotional roller coaster,” Plush says. She encourages buyers to be strategic and swift when making an offer on a turnkey home. For example, looking at homes priced slightly below your budget lets you afford a competitive bid that’s over the asking price.
When you’re feeling frustrated, Plush says, remember your “why” — the reason you’re house hunting in the first place. Reconnecting to your desire to have a backyard for your kids, for example, can help you maintain momentum.
Build if you want to call the shots
New construction might sound intimidating and time-consuming, but unless you’re starting from scratch with an architect and a piece of land, it can be surprisingly straightforward and speedy.
“In many of our communities, home buyers have the option to purchase a quick move-in home,” one that will be ready within 30 to 90 days, commented Jessica Hansen, vice president of communications for Arlington, Texas-based homebuilders D.R. Horton, via email.
Time frames can vary by builder and demand. Jeff Mezger, president and CEO of Los Angeles-based builder KB Home, says his company averages three to four months from breaking ground to move-in day. The average home search takes about 10 weeks, according to a 2019 NAR survey, followed by several more weeks to close and get the keys.
In the same survey, the most-cited reason home buyers gave for purchasing new construction was to avoid renovations or problems with mechanical systems. Both these builders, like many others, offer home warranties, protection that buyers of existing homes may have to purchase for themselves.
“When you close on a used home, you’re on your own if something goes wrong,” Mezger says. “With a new home, you still have that relationship with us.”
But these conveniences come at a cost: In the NAR survey, those who bought new construction paid a median price $85,000 more than those who purchased a previously owned property. Feasibility may also depend on where you live. In an urban area or well-established suburb, building new may be difficult without paying to tear down an existing structure. In rural areas, there’s plenty of land, but starting from the ground up outside a development may mean extra costs for securing access to water, electricity and more.
Fix if location’s a must
Renovating a fixer-upper is tougher than it looks on TV, but if the house has good bones, you could snag an affordable home in your ideal neighborhood. The NAR survey shows 26% of first-time home buyers said they compromised on condition in order to buy a home. Condition issues are unsurprising as the nation’s housing stock ages. According to Harvard University’s Joint Center for Housing Studies, as of 2019 nearly 80% of American homes were at least 20 years old, and 40% were at least 50.
“First-time home buyers should not be shy about houses that have good mechanical and structural components that are just ugly,” says David Pekel, a former contractor who’s now CEO of the National Association of the Remodeling Industry. “You can fix ugly.”Pekel recommends working with an experienced home inspector to determine what needs to be addressed. A contractor can delineate the scope of work and potential cost. Pekel says most will charge a consultation fee that’s refunded if they’re hired.
Finding your financing
Whether you choose to buy, build or fix, there are various financing options. In addition to conventional mortgages and standard government-backed loans, there are construction loans and renovation loans suited for borrowers financing new construction or remodeling. A lender that offers loan products for the kind of property you want can guide you through your choices.
This article was written by NerdWallet and was originally published by The Associated Press.
Ready to get a jump on the spring market? Look for your new home now during the winter months. Buying a home when the snow is falling can be beneficial to you as a buyer. It can even potentially save you some money. Here are 4 reasons to buy a home in the winter.
There are plenty of homes on the market in winter.
We’ve said it before: with technology, there is no off-season for real estate. In fact, “almost a million homes were sold in the US last winter (973,000 from Dec 2018-February 2019).” So there will be plenty of great homes available to buyers during the winter months.
While the quantity may be lower than the spring/summer market, you will still have great options available to you.
You’ll have fewer offers to compete with.
Winter weather keeps some buyers away from the market until the snow and ice has melted. This means there will be lower demand and fewer buyers to make offers.
We aren’t saying you’ll be the only person to place an offer on a home, but you may find yourself in a smaller pool of offers. This can work to your advantage and keep you from engaging in a costly bidding war.
You’ll see how the home holds up in bad weather.
It is easier to inspect the exterior of a home in the spring or summer. But winter will show how well the home performs in snow, sleet, ice, and cold. You’ll be able to see leaks, discover how the insulation performs, and find any heating problems.
Motivated sellers could help save you money.
Many homes listed in the winter because of a major life change. And while this doesn’t mean you’ll get a home for a severe discount, it may save you a few dollars. According to Trulia, buyers saved, “an average [discount] of 6.1% on home prices, the highest discount through the year.”
While it may be a cold outside, the real estate market is still hot! If you’re ready to start looking for your home now, check out homes for sale page to see all of the great homes available now.
Are you ready to attend an open house? Here are a few questions you should be asking the listing agent while you’re at an open house:
How long has this house been on the market? It’s always good to know if a home is new to the market or has been sitting for a while. It can help inform your agent for negotiations.
Why are the sellers moving? This can offer some insight into the home. Knowing why someone is choosing to sell could be helpful for both you and your agent.
What (if any) updates have been made to the home? This can be important for you as the home buyer to inspect the work. They should be able to provide any permits for those updates (if required).
What is the neighborhood like? The listing agent should be able to give you an overview of the neighborhood and what it’s like.
Are there any offers on the home? If there are offers already in on the home, you’ll have to decide (and quick) if this is a home you’re interested in.
Asking a few questions can give you useful information to determine if a home is right for you.
Interested in checking out some homes in the evening? Don’t miss our Twilight Open House Tours happening Wednesdays this summer. Our next Twilight Open House event is happening Wednesday, June 19 from 5-7PM. Check out all the open houses here: Twilight Open House Tours.