Back in November 2014, my husband and I set out on the daunting task of buying our first home. We were completely unfamiliar with the process. As first-time buyers, terms like “escrow” were foreign to us. I tried to learn through online resources but was met with confusing, technical language. What I really wanted was to hear real stories about how others worked with their realtors and handled making offers.
Our initial journey into home ownership was full of mistakes, primarily because we were so naive. However, these errors taught us valuable lessons and prepared us for future home purchases. Here are some key insights from my experience to help you avoid making the same mistakes.
CHOOSING A REALTOR
The first step in buying a house is picking a realtor. While it’s not required, having your own realtor as a first-time homebuyer can be really helpful, rather than using the seller’s realtor. You need someone who is solely looking out for your interests, as a dual agent might try to satisfy both parties.
HOW TO SELECT A REALTOR
Turning to a friend or family member who is a realtor is common, but it can be risky. The saying “friends and money don’t mix” often holds true because the stress of home buying could strain the relationship. A highly recommended realtor is usually a safer bet because someone else has vetted them through a positive experience. Another option is to search online for top-rated realtors in your area if you have no other leads.
We chose our realtor after meeting him at an open house. He made a great first impression, although we didn’t really know what to look for in a realtor at that time. Looking back, there are some qualities that make a good realtor:
– Assertive Representation: The buying process involves a lot of negotiations, and a more aggressive realtor who firmly represents your interests could be beneficial.
– Constant Updates: A good realtor will keep you updated regularly, even if there’s no new development to report.
– Filtered Listings: They should help narrow down potential homes based on your specific needs, saving you time and effort.
FINANCIAL APPROVAL
Most realtors require financial pre-approval before showing homes. This step helps ensure that you are financially ready to buy a certain type of property and sets realistic expectations.
However, remember that you don’t have to spend your entire approved loan amount on your home. The bank might approve you for more than you actually need. For us, we chose to spend less than our pre-approved amount so we could save money for other financial goals like wealth accumulation and retirement, rather than maxing out on mortgage payments.
MAKING AN OFFER
Once you find a home you love, the next step is to make an offer. Your realtor should guide you on a reasonable offer by comparing the recent selling prices of similar houses in the area.
Important factors to consider while making an offer include:
– The Market: Determine if it’s a buyer’s or seller’s market.
– Comps: Look at the selling prices of similar houses.
– Competition: Consider if there are other buyers interested in the same property.
THE ESCROW PROCESS
The escrow process begins once you’ve made an offer. Escrow acts as a neutral party that handles all the paperwork and money transactions to ensure everything goes smoothly.
HOME INSPECTION
A thorough home inspection is a key part of escrow. This step checks for potential issues with the house and gives you the chance to request necessary repairs. Your realtor should advocate for you during this process.
APPRAISAL
An appraiser evaluates the house based on its size, location, and recent local sales. The appraisal value affects your property taxes and mortgage approval.
CONCLUDING PHASE
The last week of escrow generally involves signing loan documents, doing a final walk-through of the house, and transferring utilities and keys. Once these steps are complete, you can move into your new home, and the previous owner usually has 48-72 hours to vacate.