You’re in the market for a home for the very first time. You’ve read all the online real estate sites and are ready for some action. Great! Now, forget all you’ve read and follow these 10 tips to truly prepare yourself with the edge you need to succeed:
1. Choose the right real estate agent.
The agent can make or break your transaction so it’s crucial that you use a knowledgable Realtor®. Since you’ll be spending plenty of time with your agent in person, via phone and email, it’s a good idea to use one with whom you get along. The right agent will also connect you with the best and most reliable lenders around.
2. Get a reputable lender and the right loan.
Lenders, just like agents, have reputations and you want yours to be well received by Sellers. Do a thorough pre-approval with your chosen lender BEFORE you start looking for property. Your agent is constantly working with various lenders so use him as a resource to find the right one.
3. Be knowledgeable and prepared.
This is a very competitive market and, to have a chance of getting your offer accepted, you have to be ready to pull the trigger as soon as you’ve decided on a home. This means having a custom lender pre-approval letter (your agent should help coordinate this), a prior understanding of the offer template you will be signing (to avoid delays), a copy of your most recent bank statement(s) showing enough money for your downpayment and a thorough understanding of the buying process. Your agent should be going over this with you when you first begin to work together.
4. Be realistic about your goals.
As an agent, we want to get you the best home for the least amount of money and most favorable offer terms. In the Los Angeles market, it’s rare for a property to sell at or below asking. Buyers who submit low offers don’t get property in a Seller’s market. High competition means that there are lots of other Buyers who will be “putting their money where their mouths are” and will go all out for a home they want. You’ll want to set your goals at the right height to achieve your goals. For example, if you have a max budget of $800,000, it’s a good idea to focus on homes in the low to mid $700k range, since the $800,000 properties will most likely sell above asking and thus, be out of your budget. Since properties do sometimes decrease their asking price, make sure your agent is keeping an eye on the market to bring you any properties that were previously out of your reach. An $800k property today may be a $750k property tomorrow.
5. Do your research.
Know which areas you’re interested in. Schools, demographics, crime rates and neighborhood info can all be found online. I recommend that my clients drive around town to see which areas resonate with them. Your agent can discuss physical characteristics of a city or area, including boundaries and general city information, but is not permitted to discuss the religious or demographic makeup of an area.
6. Stay positive.
Write the strongest offer you can, without overextending yourself, and be confident in the fact that you did your best. In poker, if you have a straight flush and lose to a royal flush, at least you know you came in strong. As long as your goals are aligned with your budget, you will eventually be the winning hand, IF you and your agent employs the right strategies.
7. Think with your heart first and your head second.
Home buying is very much an emotional experience and why not? You’re buying a dream. When Buyers first walk into “the right” home, they can usually feel it. This is the emotional part, an important aspect in choosing a home. Acting purely on emotion can (and usually does) get people into trouble. Before seeing a home, you would have already done your research so you know it’s within your budget and area in which you’re interested. Don’t let emotion blind you to potential issues. For example, significant cracking may indicate problems with the foundation. Does the layout work for your needs? Will the space fit your furniture or will you need to buy more? Will any renovations you need to do fit into your budget? These are all factors to think about when buying a home.
8. Work with your agent as a team.
As a Realtor®, I am constantly checking inventory. This being said, two minds are better than one. While you can’t access the same MLS (Multiple Listing Service) as your agent, you can check any of the popular online sites to see any properties that pop up. If you see something you like, send it to your agent and have him schedule a showing.
9. Stay on top of your contract.
The RPA (Residential Purchase Agreement) outlines the time periods, obligations and penalties regarding your transaction. Once you’re in escrow, the timeline begins along with your Buyer obligations. Submit your EMD (Earnest Money Deposit) and schedule your inspections ASAP to give you the most amount of time to review the resulting reports. The RPA favors the Buyer as long as you follow it. Staying on top of things also puts the Seller at ease, which reduces possible friction and can make the escrow much smoother and more flexible.
10. Escrow is a living, breathing animal.
Anything can and will happen during an escrow. There are so many variables and parties involved that surprises and delays are to be expected. Although rare, some escrows coast along quite smoothly without any hiccups, but it’s best to expect the norm. It can be common for the escrow period to be extended a bit, so it isn’t recommended to make definitive move-in plans on the date of the proposed closing.
Purchasing property for the first time is an exciting process but can be daunting. Follow these tips and you’ll be way ahead of the game.
Want more? Contact me for brass tax info and tips on the real estate market. No fluff, no sales tactics, just good information to make your life easier.
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John Aaroe Group