Back in November 2014, my husband and I experienced the overwhelming task of buying our first home, being completely unacquainted with the process. As a newbie homebuyer, concepts such as the escrow process were alien to me. I attempted to educate myself using online resources, only to be confronted by overly technical jargon. In reality, I longed to hear real experiences – how others engaged with their realtors, navigated the offer process and more.
Our initial journey into home ownership was fraught with errors, primarily due to our innocence. However, these mistakes imparted valuable knowledge, making me better prepared for future house purchasing endeavors. Here are some insights from my experience to help you dodge the errors we made.
CHOOSING A REALTOR
The initial step toward buying a house is deciding on a realtor. While not mandatory, having your own realtor as a first-time homebuyer can be beneficial, rather than using the seller’s. This is due to the fact that you need a party championing your interests — a realtor representing both buyer and seller may attempt to satisfy both parties.
HOW TO SELECT A REALTOR
Friend or Family Member: A common choice is turning to a friend or family member acting as a realtor. This can be problematic, however, as the adage “friends and money don’t mix” reminds us. Home buying can be stressful and potentially damage close relationships.
Recommendation: In my opinion, this is the superior option. A recommended realtor already has a track record, vetted by someone else’s positive experience.
Internet: If you have no alternatives, conducting online research for the highest-rated realtors in your vicinity could work.
For us, we chose our realtor after first encountering him at an open house. He made a positive impression, and we were oblivious to what we wanted in a realtor at that point. Through hindsight, though, I have pinpointed some essential qualities to look for in a realtor. You should look for:
– A Bulldog, Not a Golden: The home buying process can be full of negotiations between the buyer and seller. More aggressive realtors who emphatically represent our interests could have served us better.
– Constant Communication: A good realtor will consistently communicate updates, even when the day’s news is “no update.”
– Someone Who Does the Work for You: The ideal realtor should filter potential homes according to your specific requirements, thereby saving your time and energy.
FINANCIAL APPROVAL
In most cases, realtors necessitate financial pre-approval before showcasing homes. The process ensures you are financially capable of buying a certain type of property and have realistic expectations.
However, it’s crucial to remember – you aren’t obliged to empty your entire approved loan amount on a house purchase. The bank’s estimate of our purchasing power significantly exceeded the amount we actually spent. Despite having funds to spare, we preferred to save towards achieving our other financial goals – wealth accumulation and a comfortable retirement – instead of tying up all disposable income in mortgage payments.
MAKING AN OFFER
When you’ve found a home that charms you, placing an offer is the next step. Your realtor should advise on a reasonable offer by comparing recent selling prices of similar houses nearby.
Crucial elements to consider while offering include:
– The Market: Whether it’s a buyer’s or seller’s market.
– Comps: What the selling prices of similar houses were.
– Competition: The possibility of concurrent offers from other buyers.
THE ESCROW PROCESS
From the moment you place an offer, the escrow process begins. As a neutral party, escrow manages all paperwork and fund transfers to ensure the necessary transactions are completed as agreed.
HOME INSPECTION
Involving thorough scrutiny of the house for potential issues, the home inspection stage forms an essential part of the escrow process. It’s an opportunity to insist on necessary repairs, with your realtor actively advocating for your interests.
APPRAISAL
A critical step is having an appraiser assess the house based on size, location and comparison with recent local transactions. The appraisal value affects the property tax you’ll pay and mortgage approval from the loan company.
CONCLUDING PHASE
The last week of escrow typically involves signing of loan documents, a final walk-through of the house and transfer of utilities and keys. Once these steps are complete, you can finally move into your new home, with the previous owner given 48-72 hours to vacate.
We’d love to hear about your home buying experiences in the comments!
