What it takes now to buy your first house

April 13, 2015

 

home sold signBy MICHAEL BLOWER
Central Valley Assoc. of Realtors

The Central Valley real estate market is hot right now, providing more available lower-priced properties for first-time home buyers. However, no matter what market you are in, purchasing a home for the first time can be daunting for anyone.

Sure, it’s easy to dream about that perfect home and ride around looking at neighborhoods, attending open houses and making wish lists about the features you want. But the actual commitment and work involved to take the dream to reality can stop prospective buyers in their tracks. Where do you start? What’s really involved? How can you protect yourself? And in today’s competitive market, how do you end up with the winning bid?

 

Making that list

It starts with an assessment of your needs and your lifestyle, today and over the next several years. How long do you hope to stay in this first home? If you’re single, do you anticipate getting married or having someone else move in down the road? If you’re married, do you intend to have children in this home? This will determine whether you can get by with a minimum of two bedrooms and perhaps one bath, versus a three-bedroom, two-bath home.

You’ll also want to think about what additional features are important to you: an office, a guest room, a swimming pool, a two-car garage? Do you prefer a one-story home or two stories? Consider the neighborhood you will be living in. How important is the walkability of it? There are tools available such as www.walkscore.com that can actually rate a neighborhood by these criteria, based on a home’s proximity to restaurants, shops, parks, etc.

Prequalifying is paramount

Once you know what you want, it’s important to know what you can afford. Pre-qualification with a mortgage lender paves the way for quickly and easily making an offer on a home you love. It also saves time and effort by keeping you focused on homes that you can realistically purchase.

You’ll want to get a number of financial documents together to take to a lender, including multiple years of tax returns, several months of recent bank statements, proof of income and other evidence of financial worthiness. What you want to come away with is a pre-approved letter from a credible lender that lets your Realtor and seller know you’re serious about purchasing a home.

Finding a trusted partner

The next step is finding a real estate agent, or Realtor, who will be your partner through this process. The transaction process is a complex one, with regulatory guidelines and laws that the average homebuyer will not be familiar with.

Moreover, an experienced real estate professional will have deep familiarity with all the properties that are available, market trends, the neighborhoods you are interested in, and the paperwork involved in closing, as well as resources for required steps like appraisals and inspections.

To find the right match, you can seek referrals from trusted family or friends, but it’s also important to do your own homework. Start with the Internet. Most agents have robust websites, Facebook pages, Instagram accounts and more. You can see videos of these agents, get insights on their knowledge of the marketplace and the neighborhoods you care about and see what properties they represent.

When interviewing agents, ask about their track records buying and selling in the neighborhoods you are considering. Inquire about the resources they use to find homes and what their process is for working with clients. Getting a sense of their knowledge and professionalism, as well as a chemistry check, will help you make a smart decision about this critical partnership.

Once you’ve found the home you want, you’ll need to submit an offer. In today’s competitive market, it’s not unusual to have multiple prospective buyers vying for the same home. This presents a bidding situation in which the seller selects the “winning bid.” So how do you ensure you come out on top?

Staying sane in this market

Remember to keep in mind what you can afford and what you are approved for in a purchase price.  If there are only two or three other prospective buyers, you may submit a bid you feel is fair and yet would be appealing to the seller in relation to the asking price.

If there are multiple bidders, you’ll possibly need to bid higher to ensure you have a strong chance of getting the house. Be sure to set monetary limits before you start bidding and put in place rules for when you’ll walk away. You should lean on your real estate agent for success in this.

Buying your first home is a special experience, and it should be a positive one. It just takes planning, educating yourself and taking the thoughtful steps necessary to make your dream of homeownership a reality.

 

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