Your first step should be to locate and hire a REALTOR, not just a real estate agent on an exclusive basis. Be sure your REALTOR has a minimum of five years’ experience and 100+ transactions. This person will represent your interests. Don’t work with the first REALTOR you meet, the National Association of Realtors 2012 home buyer survey indicate two-thirds of buyers worked with the first agent they met. Shop around, find a REALTOR who you feel a personal connection with, knows the market, understands the issues and concerns of first time buyers, listens to you, and is willing to take the time to find you a great home. Too often I see first time buyers walk into a builder’s model and buy on the spot. Believing that builder’s representative or property listing agent has your best interest at heart is like believing in the Tooth Fairy. Buyers need a passionate advocate, negotiator, protector, and champion.
Second step, get pre-approved for credit, not just prequalified. Essentially you are on equal footing with an all cash buyer. With a pre-approval, your offer can be contingent on inspection and appraisal making it a stronger offer than others. Don’t just shop for the best rate. You want to select a service orientated lender. Money is a commodity the small difference in price should be reflected in service. Trust me you want a lender that provides service, not an Internet site and 800 phone tree. Ask if the loan officer will attend your closing so if there are last minute issues with your loan you can get them resolved. Don’t schedule your closing at 5:00 PM on the last Friday of the month. If there are issues, and there may be, you want people in their offices to get it worked out. Consider FHA which offers easier qualification and lower down payments than conventional loans. If you qualify for conventional loan have your lender do a comparison to FHA, the cost may be lower going conventional.
Explore special programs for first time buyers. HUD, local governments, development authorities often have interest rate discounts, closing cost discounts, down payment assistance, soft or silent second loans for a down payment. Your employer may have programs to assist your purchase. A REALTOR with experience in the First Time Buyer Market should have information about these programs. There are discounts for types of employment: educators, not just teachers but support staff even school bus drivers, firefighters, police officers, EMTs, first responders, veterans, credit union members, some unions have discounts established with certain lenders. Explore all the discounts that may be available to you. Stack them. In a recent transaction I helped a first time buyer take advantage of both down payment assistance and an interest rate discount. He purchased a $116,000 home with only $1,413 in down payment and closing costs. Add to that he got a discounted 3.0 percent interest rate, on a 30 year fixed rate FHA loan. More people believe in UFO’s than believe you can get that kind of real estate transaction, but it’s true.
Get an inspection/due diligence period. Do your own due diligence; do not rely on what the seller or agents say. Get a seller property disclosure. Get a licensed home inspection to perform a home inspection and be sure to provide the inspector with the disclosure. ASHI certified inspectors are preferred. Get an inspection for new homes, including multiple inspections during the construction process. Attend the inspection so that any issues can be pointed out and explained to you. Call your insurance agent and get a CLUE report. This is the report the insurance company looks at to see if there was a history of past insurance claims. You want to know about the claims history. Goggle the address; if an event that would stigmatize the home, such as murder, rape, or suicide this may come up in the search.
Meet the five nearest neighbors. Ask about the schools, community, what they like and dislike, inquire about problems and issues. Visit the area and home at different times of the day and week. Sell yourself as a buyer to the neighbors. These people may be long-time friends and still in contact with the seller even if the seller has moved. Let them know you plan to live in the home verses leasing to a tenant. If you plan to paint, landscape, improve, be active in the community, have children their ages, went to the same college, or share similar interests, don’t keep that a secret. Develop an advocate.
Visit the schools; see how they compare to the surrounding schools. Even if you don’t have children, or don’t plan to have children, your resale buyer probably does. Just because the home is cheaper don’t buy in an inferior school district. Visit the grocery stores and shopping centers that serve the community. Determine if you feel comfortable; feel like you belong, and that you will enjoy shopping and socializing in this community. It is subtle but important. Is it a conformist location or a nonconformist location? Conservative or liberal? Family or singles? REALTORS are not permitted to provide certain advice regarding crime, religion, race, sexual orientation. You need to determine if this is where you will feel comfortable.
Check the crime statistics, review the national sexual offender registry how close are you to problem people or areas.
Check the commute to your work, if it is a significant commute, drive it for a week at the times you will be ordinarily be going to and from the home you plan on purchasing.
Buy owners title insurance. It is a onetime charge and inexpensive. If you are spending almost all your savings, buy a Home Buyers Warranty that covers system failures, plumbing, electric, heating and air.
If the price is too good to be true, it probably is. Don’t buy the property unless and until you understand why the property is being offered at such a discount. Stay away from the big mistakes, power lines, and busy streets, backing to obnoxious uses, flood plain, retention ponds, airports, landfill, sex offenders, and nasty neighbors. Ask to see the seller’s utility bills, tax bills, HOA bills, for the prior 12-24 months. If this home is expensive to operate you probably want to know that in advance of your purchase.
Keep in mind loose lips sink ships. Don’t tell the seller how much you love the property, how perfect it is, how you’ve been looking for months for a home and neighborhood just like this. Don’t post on Facebook you found the perfect house. The seller is doing due diligence on you too.
Lastly, recognize it is expensive to buy and sell, expensive to move. You should plan on staying a minimum of 5 years. If not rent. Buy as much as you can afford. It is a costly mistake to buy a home that will not accommodate your future needs. Don’t buy a 3 bedroom home if you will need a 4 bedroom in 4 years. Stretch and buy the larger home today. It will be a far better financial choice than selling the 3 bedroom home in 4 years paying the costs to buy a new one and move.
Expect buyer’s remorse. This is at the same time an exciting and frightening time. Everyone will have an opinion about your decision; question your judgment, timing, neighborhood, particular house. Trust your judgment. Like all major life decisions, good or bad you will get through it.
Not a first time buyer send this post to a friend, relative, or associate who is. Need assistance in Metro Atlanta or need a referral to a top REALTOR anywhere in the US call me.
RE/MAX Greater Atlanta
An Atlanta Real Estate Expert Serving Clients Since 1979
CRS, CRB, ABR, MSRE, CDPE, CIAS, e-PRO, ESQ
2050 Roswell Road
Marietta GA 30062
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