To anyone who has bought a home before, you know the drill. To anyone who is a first-time home buyer, hopefully this helps you get started with what you need.
As a real estate agent, one of the first few things I do when working with new clients is to ask them what part of town they are interested in, if they have a pre-approval, and what their "must haves" are with a home. I can tell you right now that if we don't find what is right within the first month, every client I have worked with has changed their mind about all of the above. It's OK to change your mind about things! This is going to be your home, and is going to be one of the biggest (if not THE biggest) financial obligation of your life! So what can you do to prepare?
Get a budget in mind. If you feel comfortable enough, reach out to a mortgage lender to talk about what you might be pre-approved for. Make sure you talk with them about what that means in terms of a monthly payment, since many of us do budget around what we know we take home per month.
Learn about the areas you are interested in! If you have children, look at the school district. Ask to observe or visit a class where your child will be attending. Look at the taxes! Many home buyers adjust what they are willing to spend in a given area due to taxes being higher. Drive by the neighborhood in the evening to see what the neighborhood dynamic is when most people are home.
Get an idea of how many bedrooms and bathrooms you MUST have in order to be happy in your home. If you are just starting out, do you plan on having kids? Consider that in your bedrooms. Do you have company over a lot and want a large entertaining space? Do you need it on the main floor, or would the basement work? Make sure to consider that too! Do you want something ready to move in, or are you OK with something dated as long as it is cared for?
Consider a remodeling budget. We are in the era of HGTV! Everything is remodeled and looks so chic and modern now! I have news for you... Most homes on the market are not remodeled. You will have to do some cosmetic work to get your home into this century if you want to buy an older home. Make a budget estimating what it might cost for new kitchen cabinets, new flooring, new vanities in the bathroom, or even a new tub. If you can put some money aside, and you go in with the mindset that you are prepared to get some work done, then it will be that much easier to find your home.
Decide how much money you are willing to deposit for earnest money. Earnest money is different than the down-payment. It is applied towards the down-payment at closing, but it is money placed into a trust account after an accepted offer showing your good faith in the interest of buying the home. Typically, buyers need to write a check within three days of an accepted offer and deliver it to the listing agent's office to show their good faith. This is called "earnest money". I have seen anywhere between $500 - $25,000 in earnest money. The average is somewhere between $1,000 - $3,000. It is important to understand that earnest money can be a risk as well. If you back out of the deal at any point, the seller does reserve the right to keep a portion or all of the earnest money if they believe there has been damages from losing out on another offer. However, you can always request to receive your earnest money back if you do have to back out.
It's also important to understand what the market is like. If it is a buyer's market, it's looking good for you. There are way more homes on the market than there are buyers looking, which means home prices will be lower. You have more power to negotiate the terms as to what is included or what the seller will pay for. If it is a seller's market, get ready to pay closer to asking price, if not over asking price. Home values will also be higher due to the shortage of homes on the market as well. You will not have as much room to negotiate financially, but I always say ask anyway. You never know what someone is willing to work with unless you ask. Be reasonable though.
Lastly, start looking at which real estate company you might want to work with. As a buyer, you will not pay a commission unless you sign a Buyer Agency Agreement and end up trying to buy with a different agent or find a for sale by owner. Before you sign anything, make sure this is someone you want to work with! You may find your dream home in one showing, or it may take almost a year. Is this a person you would be able to work with for a long period of time if needed? Create a few questions asking about the real estate agent's personality and experience. Keep in mind that even if the agent does not have a lot of experience in the industry, they probably work with people who do and need someone to take a chance on them too. If your personalities match, give them the opportunity to show you what they can do, but ask how they plan to handle questions you'll have that they might not know the answer to.
Hopefully this has provided any first-time home buyers with some good guidance to get you started!
