Jay’s Note: I’ve been trying to get Francy to write a post formonthsyears. Today, after handling email inquires from two first time buyers, she finally caved.
For most of us buying a home is the most expensive purchase in our life. Making the right choices can save time, money and future headaches. We are often asked about the process and I thought it might be helpful for home buyers to have an actual list with some references. Whether you’re a home buying novice or you’ve purchased a home before the process is pretty much the same:
1. Talk to a lender
2. Evaluate your needs
3. Choose your Real Estate Professional
4. Identify a property
5. Write and negotiate an offer
6. Inspect the property
7. Close escrow
Talk with a lender. This important first step is sometimes skipped over by even the experienced buyer. Nothing can be more disappointing than finding a home that you love only to realize that you either cannot obtain a loan or you cannot afford the payment for that property. Lenders have tightened their criteria in the last year. Even if you currently own a home it may be difficult to obtain a new loan with a payment you can afford.
Evaluate your needs vs. your wants. This includes location (where do you need to live vs. how far are you willing to commute). Do you need a den or can you get by without one? Is a pool a must or would you like to have a pool? Some “wants” can be difficult to locate in some price ranges. Knowing what you cannot live without can be very helpful when beginning your home search.
Choose a Real Estate Professional. Choosing the right agent to represent you can make the rest of the process easier. Real estate agents are *not* all the same. Experience and expertise can vary greatly. Is your next door neighbor or your cousin’s friend really the best choice for you? A common mistake is that a potential buyer will locate the property before locating an agent. The agent listed on the ‘for sale’ sign already has an agreement to represent the best interests of the seller. Although they can help you purchase the property with what is called “dual agency” it is extremely difficult for one agent to give their best representation to both parties. Another problem we often see with first time buyers is that they view a lot of properties with a number of different agents. Once you have been shown a home by an agent, that agent is considered to be working with you for that particular property. This can be a difficult situation if you locate the perfect home but you happen to be with an agent you don’t feel comfortable working with.
Coming Monday - We’ll cover the remaining steps in the process!
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Thanks, Francy. Looking forward to part 2. Dmitry, my busband, is the first time home buyer specialist in our house.
Maureen - I’ve been thinking about this post for a while now. Jay has penned some great posts about the buying process and I thought it would be helpful to bring them together in a single post.
I do want to go on the record as saying that this may be the only time I actually post. After all Jay is the personality and I’m the brains
She’ll get sucked into it like the rest of us. It’s a sickness…
Finally! I’m going to have to show Aimee this - she’s just not into writing posts - even though she’ll send over an article to me and recommend I blog about that topic. I’ve told her I can set up an account and she can just write herself, but she won’t do it!
Great post Francy - you hit the nail on the head. If I may, the suggestion about the next door neighbor not being the rigth agent for you also applies for a lender. You just have to make sure you choose a professional who is good at what they do - saves a lot of headache.
Just a point for you “First Time Home Buyers” regarding a lender. I would interview a few before moving forward with one. Mortgage Brokers vary SIGNIFICANTLY!! Quiz a few on the First Time Home Buyer programs that they offer…How Fast Their Turn Around Time Would Be…As a full time real estate investor, I’m glad to have finally located a broker that actually performs. I’ve found that 9 times out of 10, they’ll tell you EVERYTHING THAT YOU WANT TO HEAR and then hold up a closing. There are some super excellent mortgage brokers out there, you just have to find them. So, if you are denied by one, don’t think that it means you can’t buy a house.
Personally I think that the order is a little backwards as most real estate agents know great lenders that they can refer. We find when our clients work with the lenders we refer that they close on time and there are much less surprises along the way. Other then that great list.
I think one of the most important items you mention is “Nothing can be more disappointing than finding a home that you love only to realize that you either cannot obtain a loan or you cannot afford the payment for that property”
As a home buyer myself in the 1990’s (prior to becoming an agent and before the LSR and “getting pre-quailfied” requirement, I looked and fell in love with homes I could not afford and it can be a heartbreaking experience.
So to all home buyers- be realistic, do not buy a home that you become house poor, and interview several lenders and several agents. Make sure you find an agent and lender with YOUR best interest first and foremost.
Welcome to the Blogosphere Francy! Nice first post, looking forward to part #2!!
Hey Ken - I have to agree, and disagree with your comment. Yes, we know several great lenders and are happy to refer to them. But talking to a lender is the first step a prospective home buyer should take. Now which lender is another question, as there are countless lenders out there, ranging from the brilliant, to the not-so-swift.
Of course it’s important to get a good one, and as Rich and Jamie noted, it’s important to talk to more than one.
So I guess technically it wouldn’t be a bad idea to get some lender’s names from an agent, but the bottom line is speaking with a lender to understand what you can afford and what mortgage products are available is a crucial first step.
Congratulations Francy - what amazing advice. I think first time home buyers don’t have enough information on the web and more of us should dedicate more posts to them. (now I have to get Rick to blog as well….how did Jay do it?)
Jay I don’t think we disagree much on this point. It’s kind of like which came first the chicken or the egg? Naturally talking to a lender is the first thing I have clients do, but I want them talking to good lenders that actually know what products are out there in todays market.
Francy… It’s easy to see now where Jay got his training. Looking forward to Monday.
GS
Well, your system ate up my last comment. So, I’m commenting again.
Good post Francy. I enjoyed reading this and will be sure to show it to Aimee. I’ve been wanting her to blog but she won’t do it. She will however send me articles and suggest I blog about it, but she won’t do it herself.
@Ines - how did I do it? It took almost three years… lots of groveling and encouragement. Let’s just see if she sticks around!
@Ken - I agree that we agree
@GS - I am trainable…
@Shailesh - as you know, I found your comment in the spam filter. I have no idea why it flagged you as you are SO not a spammer. Let me know the next time you comment and I’ll fish it out pronto if it winds up there.
Since this is part of the contract now, finding insurance is an important aspect of the homebuying process too. It’s critical to have the right coverage on the biggest financial transaction of a person’s life.
Howeve, I like the post and am looking forward to the next sections.
As over 90% of potential buyers are now choosing to look online for their dream property maybe this is a good place to start. Using London Online estate agents means that the homeowners can themselves show potential buyers around their property for a more personal and detailed approach helping with the chance of a sale. Consider this when you Choose a Real Estate Professional.
Jay’s note: Oliver, I removed the links in your comment as they clearly violate our comment policy of no advertising. There are other ways to advertise here, we don’t want the comments cluttered up….
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