I’m a first time home buyer, what should my questions be?
Sometimes the hardest thing about doing something new is that you just don’t know what you don’t know. You’d love to ask more questions to get better information, but you’re not even sure which questions to ask or whom to ask them of.
With this in mind, I’ve been trying to take myself back to when my husband and I bought our first home. I was working in accounting then and had absolutely no idea about real estate and how it worked, I just knew that I wanted a house. Here’s a list of things that I wish I would’ve had a better understanding of:
1) What’s my first step?
Many people start with browsing online for homes that they like. This is easy to do at anytime and it’s often this casual looking that leads into finding something online that you think might be “the one” (at least from what you see in the pictures) and then you get excited. Now what do you do? Well, to a certain degree you’ve already put the cart before the horse. In my mind the very first thing that you should do is talk to a seasoned lender. Online mortgage calculators cannot tell you what YOUR payment will be. Taxes differ from area to area, your interest rate will vary depending on your credit score and down payment, there are many many factors that go into this. Therefore, if you’re looking at a price range based on an online calculator you may be dreaming about a house that you just flat out won’t qualify to buy. That’s such a heart breaker! Avoid this heart break by talking to a lender first and getting a more educated idea of what your price range is.
2) How do real estate agents get paid? What do they do for me? Do I need an agent myself or should I just go through the listing agent?
When a home is listed they make an agreement to pay their agent, the listing agent. The listing agent then puts the home online on the MLS (multiple listing service) and when they do so they let buyer’s agents know how much commission they are willing to share with them if they will help them in selling the home. This is a great situation for buyers! This means that they can have an agent who is advocating for their needs but that gets paid by the seller. But, would there be less commission dollars being spent (and therefore more negotiating room) if you just went straight through the listing agent? Kind of. Usually the listing agent does not reduce their commission in half because there is a higher work burden put on them. Combine this with the fact that they are working on behalf of the seller to get THEM the most dollars possible, why would the buyer get the benefit of these savings? The seller also wants this benefit. I could do a whole other blog on the mistakes that I have seen be made by buyers that just frankly didn’t know any better and didn’t have an experienced agent educating them and advocating for them. This is like using your ex-spouse’s attorney when getting a divorce. Will you save legal fees? Yes. Will they try to get you the best deal possible? Of course not.
Also, your experience is so much smoother by having an agent who is working for you. Scheduling times to see homes is easier, they are able to consult with you the pros and cons of all the homes you’ve seen and how it fits with your goals, they can help you find good vendors for the other parts of the transaction (lender, inspector, title company, contractors, etc.).
I think have your own agent is immensely important! I could go on and on about this, but for now I am done beating that drum.
3) How do I pick the right agent?
Although I think it is immensely important to have representation, I think it is just as important to have the right person representing you. Someone who has been through the ringer a couple of times. Unfortunately, I have seen situations where the buyer got into a sticky situation or paid too much only because their agent hadn’t asked for help when they were out of their zone of experience. Get someone who is either experienced or has the humility and support system to reach out to those around them who have been through the situation before.
4) Where should I be searching online?
There are a whole host of different websites that are available to search for homes, and there are pros and cons to each. Our local MLS here in Grand Rapids, Michigan is www.GRAR.com. This has the most up to date listings and is the primary resource that I recommend. Some of the third party sites such as trulia and zillow are ok places to do research but have many listings that aren’t actually available for purchase and can be a frustrating and time wasting place to search.
As much as I could continue to talk through the process, to me these are the things that you should know to get started. Once you’ve picked the right agent for you (the JulieGR team would love to help of course!) they can guide you through the specifics of your transaction.
Happy house hunting!