First Time HomeBuyer's Guide

Posted by Matthew Lahti on Sunday, March 3rd, 2013 at 11:57pm

A Helpful Guide to Buying Your First Home.  Having the Knowledge Ahead of Time Will Make You More Educated in What to Expect.

Buying a house for the first time can be a scary experience.  New buyers must be especially frightened after seeing the recent meltdown in the housing market.  The good news is that buying a home is far safer than it was when everyone was bidding the prices up.  In many areas, it is now more expensive to rent than it is to own, and it’s impossible to build a home for what many existing homes are selling for.  Here are some ways to make that leap a little less traumatic:

1) Decide where you want to live and set a price range.

Before you hire a REALTOR or start looking at houses, you’ll want to select the community where you want to live.  Try to narrow your search to one or at most two communities.  It is very difficult to compare prices across different regions, so you’ll have a better chance of getting a good buy if you limit your search.

2)  Visit some open houses.

This is a chance to see whether the prices in your choice area are within your budget, and to get some ideas about values.  You’ll meet lots of REALTORS at these events, and most will want your business.  This is the time to ask questions and find out who has which listings.

3)  Make a list of must-haves.

These are the things that are essential to living comfortably.  If you have children, a good school district and more than one bathroom would be high on the list.  Don’t make the list over-restrictive, though, or you might miss your favorite place.

4)  Decide how much work you’re willing to put into the property.

 If you want a turnkey place, prices will be higher and options more limited.  If you’re willing to do some work, figure out what your budget is.  Count on many improvements costing more than you planned, and don’t cut it too close.

5)  Get pre-approved for a mortgage.

Once you know you want to go ahead, find a bank and get a preapproval letter.  This will let you know how much house you can qualify for.  If there are any problems with your credit, this will expose them and give you time to correct errors.

6) Select a REALTOR 

A REALTOR is a member of the National Association of REALTORS and is your best choice when you get serious about buying.  Although you can find real estate salespeople who aren’t REALTORS, the REALTOR’S code of ethics gives you some protection against fraudulent practices.  In some areas, buyer’s agents may be available.  This is an excellent choice which ensures that your agent represents only you. If such an agent is not available, keep in mind that the agent typically represents the seller.  Do your own homework on values and condition.

The REALTOR you select should be someone you feel comfortable with and someone whose first concern is your needs and not a fat commission.  If you feel you’re being pressured to buy the REALTOR’S own listings or to buy homes that aren’t suitable, look elsewhere.

7)  Make a list of at least five suitable homes.

Ten choices would be even better.  If you don’t have enough choices, you may need to wait for more to come on the market. Try wiggling your price range up a little, if you can afford it, or expanding your search area.

8)  Begin the process of elimination

Eliminate any house that has serious structural flaws and any house that has incurable drawbacks.  If you have small children, a busy street might be such a drawback.  If you hate noise, a location near a big airport would be out of the question.  Eliminate any house that appears to be extremely overpriced.  Also discard any listing that would take more work to fix than you are willing or able to do.  If you still have too many choices, discard those that are less suited to your needs.

 9)  From those that remain, make an offer on the house you love

This may seem like surprising advice, after all the caution you’ve just put into avoiding a bad buy.  But once you’ve eliminated the clunkers, remember that this is your home, not a mutual fund.  Don’t talk yourself out of the house you love best over a few thousand dollars.  If you can’t find a home you love, wait for more choices to become available.

Conclusion:

The best way for first time buyers to pick a suitable home is to eliminate those with serious flaws and those that are grossly overpriced and pick a home they love from those that remain.  A wise choice will pay dividends for years to come.

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