September 14th, 2016 at 11:00 am
Thinking of buying a home for the first time? After reviewing our homebuying checklist, you’ll find there’s much more to it than location, location, location.
You want to make sure nothing slips through the cracks. That’s why it’s important to work with an experienced real estate agent. Some have developed great reputations for guiding first-timers through the process.
We interviewed two of them, both in our Calabasas office, to help us compile this first-time homebuyer guide. Merideth Hasson is a REALTOR®-Sales Associate with more than 33 years of experience, and Sarah Cortell, a REALTOR®-Broker Associate, brings 17 years of knowledge to each transaction.
First-Time Homebuyers: How to Find Your Dream Home
Here’s their best advice for helping first-time homebuyers–especially millennials–find their dream home:
Get your finances in order
Merideth:
- Talk to a mortgage broker: “When I’m talking to someone who’s never owned a home and they’re saving up money, I always suggest they go to a mortgage broker first. They are helpful because they’ll look through their credit, tell them what they need to clean it up, and how to go about it. Many younger people will start paying off credit cards right away, when they really need to talk to a credit expert first–and that would be a mortgage broker. Because how banks see you when you go to buy a house is really different than before the crash, when if you breathed, you got a loan.”
- Get pre-qualified: “Now it’s really important to have a lender pre-qualify you as a first step. A mortgage broker knows how the bank sees a potential buyer based on what they earn, what their debt ratio is, and what their payment would be looking like.”
Sarah:
- Shop for a home loan: “Shop around for your financing up front; you may be buying a home, but you’re paying for the mortgage. A bad loan is the same as paying more for your home. I recommend a local lender who is familiar to those in the real estate community. It adds another layer of stress to the homebuying process if this isn’t done in advance.”
- Get pre-approved: “The first thing a new buyer should do is get pre-approved for a loan. You’d be surprised how many buyers are out looking at homes prior to getting pre-approved. When they go to submit an offer on that perfect home, they often miss out on the opportunity as the seller is only willing to consider pre-approved buyers.”
- Seek financial advice: “Once you have a pre-approval, go to your CPA or financial planner to have them review your finances, help set a realistic budget, and explain the tax benefits you will enjoy as a homeowner. Upon review, you may opt to buy a home at a lower price than the max the lender approves for you. Now you’re ready to start shopping for a home!”
Decide where and how you want to live
Merideth:
- Don’t rush into it: “What I usually tell first-time buyers–and repeat buyers, too–is this is like a ‘12-step program.’ It’s one step at a time, so you can’t start saying ‘what if?’ I have a lot of clients who think too much about ‘what if this happens’ and ‘what if that happens?’ I don’t have all the answers, so when you go into this, you need to know how much you can afford, where you want to live, and we narrow that down because it’s a process of elimination. They think they want to live in a certain place, but by the time we’re done, they wind up living maybe in another place because I make it clear to them this is their first house, not their forever house. In California, if you keep it for five years, you’re a longtime resident.”
“In California, if you keep it for five years, you’re a longtime resident.”
Sarah:
- Learn about the market: “Familiarize yourself with the market and your needs, go to open houses, be aware of the sales process, check schools, look at commute times, floor plans, accessibility to services, and consider what will best suit your needs now, and into the future.”
- It’s a process of elimination: “Once you narrow down your must-haves, deal-breakers, and areas of choice, the process is much easier. Notice I say the right home, not perfect home. Often, if a home meets 80 percent of your checklist, it is the ‘perfect’ home.”
“As you go about searching for the right home, the most effective way to avoid getting nervous about making the wrong choice–or worse yet, making the wrong choice–is to familiarize yourself with the market and your needs.”
Expect disclosures and inspections:
Merideth:
- Use a local agent: “My first-time buyers will be aware of what a home’s condition is like because we do extensive research. There are standard disclosure papers regarding things like radon and fault zones and liquefaction that you have to get when you buy a house. And you have to work with someone who insists that they’re filled out properly. It’s important to use local agents or someone who’s seasoned who knows how to ask the right questions. Even if you’re living near a gas station, they have to let you know they have toxic waste. I let clients know, you live in Southern California and these are all things that are all around you.”
- Check for safety issues: “A lot of first-time buyers might ask to have everything in the house fixed. So when it comes to the punch list, I usually pick the things that are safety issues–electrical, GFCI (ground fault circuit interrupter) outlets, and having the chimney checked is very important because we’re in earthquake country.”
Sarah:
- Don’t skimp: “With the inspection process, my words of wisdom to first-time homebuyer is simply that inspections are essential, and don’t skimp to save a couple of dollars. The basic ones I recommend are the general home inspection, sewer scope, and fireplace inspection. Then, based on the home inspector’s findings, move on to more specific inspections as recommended. Buyers choose their own inspectors, and the cost of inspections is an out-of-pocket expense for you, the buyer, during the escrow process.”
- Don’t expect perfection: “It’s important to keep in mind that the purpose of your inspections is to determine the true condition of the home, not to come up with a list of everything that’s wrong with the home to demand the seller make it like new. However, this is your opportunity to ask for concessions from the seller, in the event significant issues are discovered affecting the value or safety of the home. Remember to pick your battles wisely here. I find that a reasonable request gets the most generous response from the seller, day in and day out.”
“Often, if a home meets 80 percent of your checklist, it is the ‘perfect’ home.”
Comforting thoughts
Merideth:
- Keep calm and think about write-offs: “Learn how to be in the moment of what you’re doing. If there’s something you don’t like or can’t be explained, ask your agent. Millennials are making money and they need to realize how much they’ll be saving by having write-offs, so consult with a financial expert before you buy.”
Sarah:
- Use a buyer’s agent: “I also recommend that first-time buyers pick an agent to represent them. A lot of first-timers don’t realize the buyer’s agent is getting paid by the seller, so they’re essentially getting a free service with somebody who’s looking out for their best interests at no cost. A knowledgeable agent should walk you through the home buying process, help analyze home values, and introduce you to the purchase contract before you go to submit your first offer. It can be a great comfort having someone on your team, whether you’re a first-time buyer or a repeat buyer.”
“A lot of first-timers don’t realize the buyer’s agent is getting paid by the seller.”
Follow this helpful homebuying checklist for buying a house and feel free to share any of your tips in the comments below.
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I like how Sarah mentioned that the first thing a buyer should do is get pre-approved for a loan. My husband and I have been talking about it for a while, and we’ve finally decided that we’re ready to purchase a house. We’ll make sure to get pre-approved as soon as we can so buyers know that we’re serious and we have better chances at getting the home we want.
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