An Insiders Guide to Buying a Home
What Sellers, Agents, and Books Don't Tell You about House Shopping
Research is king if you're a first-time homebuyer. Here are a few tips and tricks to get you on your way.
Buying a new home can be one of the most daunting purchases a person will ever make. Not only is it most people’s largest investment, but most people only do it once or twice in their lifetime.
The first thing you should do when considering purchasing a new home is read, read, read, and then read some more. Buying a house is a unique experience. This is not something a new buyer can pick up from watching their parents or through trial and error, it's something they have to get right the first time. There are a lot of great books out there that will explain the process of buying a home (The Everything book on Home buying, Home buying for dummies, etc.). The purpose of reading these books is to become more familiar with the process, not to learn everything about buying a home. Going through the process is going to be the best teacher.
Interview your agent
Potential home buyers should find a good buyer's real estate agent. Here is the first piece of advice not widely known: interview at least five agents before you choose one. Many buyers get wowed by the first agent they talk to and sign an exclusive agreement right away. Do not fall into this trap. Home buyers need a buyer’s agent who will work for them. The purpose of the interview is to better understand an agent's experience, negotiation strategy, and network. Don’t be surprised if some agents are offended by this. If an agent seems disinterested in being interviewed, avoid them at all cost - they may have something to hide. Find an agent who has been working in the business for at least five years, who primarily works for BUYERS, and who has great connections. The connections become very important when it comes to inspections, the first offer, and the property search.
Mortgage Brokers
Seek out a mortgage broker. The real estate agent can help here, but it is very important to know how much home you can afford. Additionally, a mortgage broker can typically get mortgage rates that are anywhere from 0.5% to 2% lower than most local banks. While this might not seem like much, it can be a difference of $20,000 or more in interest payments. Many agents will get referral fees if they can convince a buyer to work with a specific bank, so really be cautious if they try to get pushy with bank recommendations. It is also ok to shop mortgage brokers. Many will give a ballpark figure on the best rate they can obtain for a buyer with a certain credit score. Shop this around to get the lowest rate. Be prepared to pay an additional $500-$1000 for this lower rate, but understand that there will be significant savings in the long run. Read more about how to find the right mortgage here.
This is the first step in buying a home. Getting the right people at this step can put a buyer in a great position for finding the right home at a good price.
