Starting the home buying process is very exciting! You probably already have a good idea of what you're looking for in a home and what area you would like to live. Now that you know you are ready to buy, how do you go about finding the perfect home to fit your needs? Consider the following steps that you can realistically expect during your search:
Choosing a Real Estate Agent
This may be the most vital step of the home search and buying process. Choosing the right agent to represent you will impact every aspect of your journey. Therefore, you should not make this decision lightly. An agent should be able to demonstrate the value they will be adding to your home buying experience. Choosing the wrong agent could cost you thousands of dollars, waste precious time and increase stress. When deciding on an agent, make sure they can prove to you they are:
- Knowledgeable about the area/type of house you are trying to buy.
- An expert on the entire home buying process and able to save you money at every step.
- Capable of identifying risk mitigation strategies to improve your offer to purchase.
- Dedicated to finding the right home for you - no matter how difficult.
- Creative when negotiating on your behalf.
- Adept at finding solutions and providing suggestions you may not discover on your own.
- Committed to you and your unique situation.
- Personable and enjoyable to be around!
In order to feel confident about the process, you have to feel confident about your agent. Speak with different agents until you feel that you have the right person working for you! It is important to keep in mind that you generally have no risk in hiring an agent. Although the agent works for you you, they are generally paid for out of the seller's proceeds!
Pre-approval means that a lender has verified your information, documentation and credit to approve you for a specific loan amount. This is important because it will give you an opportunity to discuss loan options and budgeting with your loan officer, along with identifying any potential issues with your credit. Likewise, you will learn the maximum amount that you can borrow (see link for Mr. First Time's worksheet on identifying your spending comfort level,*) which will allow you to work with your real estate agent to identify houses within your budget.
If you have not already gotten pre-approved with a lender prior to selecting a real estate agent, you should do so as soon as possible. A thorough agent will be able to direct you toward a number of knowledgeable loan officers. You should speak to more than one lender and choose the one who offers you the best value, experience and level of comfort. Once you have decided on a lender, work with the loan officer to determine the best loan program for your situation (see link for more information regarding different loan programs, *).
After selecting the right loan program, get the lender all necessary information needed for them to provide you with a pre-approval letter. You typically need to provide the following to receive pre-approval*:
- Proof of Income
- Past two year's W-2 forms
- Past two year's tax returns
- Two most recent pay stubs
- Proof of Assets
- Bank statements
- Investment account statements
- Credit Score
- Pulled by the lender; authorized by you
- Other Documentation
- Social security number
- Copy of driver's license
After the lender has verified all of your information and approved you for a loan, they will provide you with a pre-approval letter. A knowledgeable agent can use this to enhance your offers and negotiate on your behalf.
*Click on the following link to see a detailed explanation of the lending process, ___
Determining Your Housing Needs/Priorities
Unless you have an unlimited budget, chances are you are going to have to make some compromises when it comes to finding the right home that fits your goals. With the help of a knowledgeable real estate agent, you can determine what parts of a home you are willing to compromise on and which ones are must haves. When deciding what characteristics your home must possess, consider the following:
- Number of bedrooms
- Number of bathrooms
- Specific neighborhood location
- Location in proximity to specific items (ex. Light Rail, restaurants, bars, etc)
- Single family home vs. condo
- Amenities within the home or community
- New home vs. older home
- Fixer upper vs. move in ready
- Finishings within the home
- School district
- Garage vs. street parking
These are just a few of the hundreds of features and characteristics of a home than may be essential to you when buying a home. It is important that you and your agent have a discussion about what matters to you so they can find properties that satisfy these needs. You may think you know what you want in a home now, but its okay to change your mind in the middle of the process! Remember, the process is about finding the perfect home for you!
After your agent has gotten a good idea of the types of features you want in a home, they should immediately begin locating specific properties that will satisfy your needs. A good agent will identify several properties and even suggest some that you might not ordinarily have considered. Likewise, your agent should be in constant contact anytime a new property comes on the market that fits your criteria. You will likely eliminate some of the properties just from looking at the listing, but it is important to visit a number of properties to help you narrow your focus. Remember, the average buyer sees 10 homes before finding one they love, and it is common for buyers to change their criteria during the search process.
Tips to help you know you may have found the right home:
- You are drawn to the house from the moment you drive up.
- Maybe it's the area, or maybe it's the physical house itself.
- You feel "right" after you walk inside the door.
- Something speaks to you, makes you feel comfortable and....at home.
- You feel a strong sense of attachment to the space.
- Although you don't own it, you get protective of the home.
- You begin to visualize how you are going to setup the home once it's yours.
- You already know your reading chair would fit just right by the window.
- It satisfies all your must-haves and has no deal-breakers.
- It may not be possible to have it all, but it has everything you need.
- While thinking about it, you can't stop thinking about it.
- It's a big decision, and your gut keeps telling you this is the one.
While touring homes, do not forget to look below the surface to get an idea of the quality of the home. If you are serious about a home, take some time to discover everything you can about the home. Your real estate agent has a duty to help you identify any material facts (anything that may impact your decision to purchase a home), and you should also have a home inspection completed after you have the home under contract.
Making an Offer to Purchase the Property
As with the entire process, once you have found the right property, you need to act fast. Quickly getting an offer to the seller will increase your chances of securing the property before other buyers have a shot. A skilled real estate agent will help you to structure an offer that provides you the best chance of securing the property while getting you the best value. There are many components that go into an offer. Continue reading on the next page to learn more.