You most likely seen the melt down of friends or family during their house hunt recently. I can absolutely promise you that it doesn't need to be that way. Tears and yelling aren't a requirement for getting a mortgage no matter what the girl you don't really know who friended you last year says on Facebook.
I have guided and assisted MANY first time buyer clients over the past 10 years. Having managed more than 400 sales since personally I have seen it all. I have received countless offers written on homes I was listing filled with dramatic statements ranging from "I'll die if I don't get this house" to "my fiancee will kill me if we don't get this house" and even "your house is not that nice, we are only going to pay you X". I can tell you none of these strategies are helping yet the crazy offers still keep coming.
There are a handful of steps that smart buyers take when they are starting the process.
Step 1. It all starts with your Realtor!
The first and most important is to choose a Realtor that you have faith in. Check their reviews, look at their past sales and determine whether or not they seem like someone you can trust. Be sure this person works in the areas that you hope to live in otherwise they won't be your best option. Have them make recommendations on local mortgage companies with the best rates, most comfortable closing costs, best closing attorneys and access to the most loan programs. Your agent selection will decide whether you save money, pay market value or overpay. Choose wisely.
Click here to visit some of my recent sales where I negotiated on behalf of my buyer client to help them save large amounts of money, win bidding wars and get the home sellers to make repairs or even leave furnishings. Click here to read testimonials and reviews of my services from buyers and sellers on Zillow, Trulia and Facebook
If you are searching for a home north shore, northern mass or in the seacoast area I encourage you to let me help you learn about the process , negotiate the best price possible and navigate the paperwork. I promise to do everything possible to help you make the right decisions and choose the perfect house.
Step 2. Pick your mortgage company & get approved!
I know, you don't want to have them pull your credit until you find a house. You don't want to pay anything for a pre approval and you really hate the idea of sharing your tax returns and bank statements with anyone. I get it. The good news is it doesn't cost anything to receive a pre approval and my preferred local mortgage people are awesome. They know you hate the idea of spending a Saturday in an office talking about your credit so they don't do things that way. They will meet with you in person OR they can help you strictly via text/email and phone calls at your convenience. I can help you to coordinate sending your documents securely and if needed my assistant can hand deliver them for you.
Did you know there are down payment assistance programs that you could qualify for in some local towns? Mortgage pros are the first ones to know about them and have the insight you need to get approved to receive funds.
Without being pre approved you won't know how much your monthly mortgage payment will really cost, online calculators aren't typically accurate as much as we all want to believe they are. You could be completely shocked to find out you can afford a $500,000 instead of a $400,000 house due to low interest rates or you could be stunned to hear that instead of the $600,000 dream home you were looking at your student loans mean you can buy a $300,000 house. I have seen both scenarios happen frequently.
Without a pre approval you won't know how much you really need for a down payment based on your personal income, assets and credit. There are some loans that are 100% financed with no money down like the USDA and VA loans and there are others that need 3% , 5% , 10% or 20% +. A professional mortgage person can help you to pick the scenario that makes the most sense.
A good lender can assist your agent in showing your strength as buyers in a bidding war. It's crucial to pick both wisely.
Step 3. Start your search strategically
This market is crazy, some towns are a mix of buyers markets and sellers markets and others are strictly one or the other. Working with a good lender and a strong buyers agent you'll be prepared to win in any market. When house hunting you need to know where you want to live to determine what's a realistic expectation for your house to look like, have and cost.
Pick the towns, neighborhoods and locations that interest you the most. Use the waze app or google traffic maps to determine what your commute will be like and then set boundaries for yourself based on your ideal timing. Now that you have your pre approval you know what price range is most comfortable and your agent should be able to identify areas that make the most sense.
Get out and see different size homes in and below your target price point so that you can determine what's best for you. Identify any streets that are your favorite and have your agent go door knocking to see if anyone is considering a move. Finding an "off market" home is easier than people think and often gives you a chance to get a great house at a fair price.
Have your agent call sellers who had homes on the market in 2012,2013,2014 who may have had a high price then which would be a low price now. These sellers can be a huge asset in your search. I can help people find solid values with expired listings.
Why see homes below your target price point? This is a smart strategy that I use when inventory is low. Finding a house with a good location that needs paint, wall paper removal , carpets replaced or appliances updated is a way to get into a great community, save money and not be overbid. Usually these homes have fewer interested parties making it possible to negotiate repairs, price drops and seller credits.
Step 4. Identifying *THE HOUSE*
If you follow my suggestions finding *THE HOUSE* will be a lot easier than what your friends and family experienced during their searches. So be prepared to act when you find the right house. The right house looks different to everyone and could be big, small or medium sized in a cul de sac neighborhood, on a busier road or even in the middle of nowhere.
You'll know it when you feel it. When you feel nervous energy, excited to go from room to room, want to sit on the floor and check email, these are all signs that the house may be the one.
First ask if it's still available, then ask yourself does it have the space inside and out that you need? Determine what the drive will be like to work or anyplace you need to be frequently whether it's parents houses,daycare or schools. Is it in the budget ?
Remember follow my advice and only looked in the price point you are comfortable in to save yourself some heartache later.
Step 5. It's the one, now what?
So the house is swoon worthy and you have to have it, now what? Don't delay, write your offer as soon as you know it's the one. Sleeping on it could cost you the house in today's market. Submitting an offer on a home doesn't cost you anything. When the sellers accept your offer then you provide your first deposit which is a part of your total downpayment. So you have nothing to lose by attempting to purchase the house.
Your agent should have the comparable sales, the values of those on the street, the plot plan, the sellers statement if there is one and the public record information available to review. Check it all out , work with them to determine the most likely real value and then decide what to offer so that you actually get a response. Set a realistic response time, no less than 24 hours so they don't think you are being pushier than needed. No longer than 48 so they don't shop your offer around to other buyers who have viewed the home.
I can tell you the strategy of going in low hoping the seller will come down rarely works and often alienates them so they ignore you completely. Don't risk it on the dream house. Determine the lowest possible price that you could go with that won't scare them and showcase your strengths as a buyer.
If you know the neighbors and grew up on the street let them know this, it will make them more comfortable. If you are going to be heart broken if you don't get the house and still want to negotiate price don't share this information. The first thing a smart seller will say is that you can pay more. I have heard it time and time again. Don't make this mistake.
If you are certain you are absolutely the only interested buyer negotiate to get as much as possible, if relevant ask for repairs, if possible request they pay for some closing costs.
If you are in a competitive bidding scenario have your lender write your love letter for you, pointing out how rational, well qualified and serious you are so that the seller can see they are comfortable with you financially. Have a great credit score? Share it with the seller to make them feel safe. Have a roofer in the family and the house needs a roof? Let them know that this repair won't scare you away. These are all tips that can help you win their affection and your dream house.
Yes, many buyers waive inspections and contingencies but you may not have to. There are other ways to stand out as the safest option for a home seller today.
Step 6. The waiting is the hardest part
Don't stalk the house, don't ask for another showing, don't go talk to the neighbors, don't search for the sellers on Facebook or linked in. Don't do anything that will make you look needy or nervous. Do think about your offer and make sure it's the strongest that it can be. If it isn't adjust it as soon as you feel ready.
If they accept crack the champagne and call your lender immediately. They will need a copy of the offer so they can start to process your loan. Then call the inspector if you are having a home inspection done. Think about whether there are any other tests you'll want. Ask your agent for their input on their most trusted inspectors and what testing you should consider.
When they respond with a counter offer respect the deadlines they set so that you are all moving toward the goal of reaching an agreement. Review their suggested pricing or terms and decide if you are comfortable. Check with your lender to see what the monthly payment looks like at the price and ask your agent to try and determine if you can negotiate further. If so counter their counter, if not it's up to you whether you accept or decline.
When they reject and won't counter rethink your strategy. Ask what went wrong, are they still interested in selling or are they no longer moving? Are they just not interested in your terms like closing dates, down payments or mortgage types? Find out what's wrong and fix it if at all possible. If it's your price that they won't work with determine what you are willing to change and modify it as quickly as possible. You don't want to help another buyer negotiate the price downwards. If your offer was $400,000 and the list price is $450,000 and the value is $450,000 a second buyer who comes in at $430,000 looks a lot more attractive after your $400,000 offer.
Ultimately what you pay for a house is a decision that you should be prepared for and comfortable with. Your monthly payment will always scare you , it's a mortgage for most likely for 30 years. It's normal to feel nervous but it should be an attainable amount that you can pay without needing to shower at the gym to cut down on water bills.
In 2015 buying a home as opposed to renting makes sense financially and there are many perks of owning a home that go beyond just building equity. Building a life, starting a family, having your own yard space for gardening, kids, dogs , being able to paint your walls purple, beige or black , parking your motorcycle or starting your wine collection are all things that you can enjoy as a home owner that aren't as easy when you are renting.