Hone In on Your First Home
Unless you have a large budget or are incredibly flexible in what you’re looking for, finding a home that meets your needs – at the right price, and in the right location – can be a bit like finding a needle in a haystack. Many first-time buyers look forward to the house-hunting process, and then become discouraged when they actually start touring houses. Keep in mind that almost all first-time buyers end up having to compromise on something, so don’t be disappointed if you can’t seem to find your idealistic “dream home.” Try to think logically – rather than emotionally – about the house-hunting process, and factor into your decision the guidelines below:
Remember the Real Estate Mantra: Location, Location, Location!
Almost anything about a house can be changed – except where it’s located. That’s why it’s so important to take a home’s location into consideration during your house hunt. You’ll likely want a home that’s within a reasonable distance of where you work, if possible. And do some research about the area’s crime rates and schools, too. These are additional factors that can play a huge role in how happy you are with your purchase.
Think About Your Future Needs
Homeowners should generally plan to stay in their homes for at least four or five years to break even on closing costs and other fees. So if you have immediate plans to start a family, purchasing a one-bedroom downtown loft (no matter how swanky) probably isn’t your best option. Instead, consider how your family or lifestyle may change in the next few years, and strive to purchase a home that can accommodate your future needs.
Focus on Function
When touring a home, it can be easy to get sucked in by the house’s curb appeal or “cuteness” factor. But try to focus on how the home will function when living there. Is there an entryway closet to stash shoes, coats and other gear? Is there enough garage space to house your vehicles? Does the home have laundry facilities that are easily accessible? These are issues that you might not think about when doing a quick walk-through of a home, but the absence of such features can become a huge source of annoyance once you move in. (And don’t make the mistake of thinking your love for a home’s aesthetics will make up for its lack of function!)
Know Your Lifestyle — and Buy Accordingly
You may think you want a five-bedroom home with an acre yard – but if you value a low-maintenance lifestyle, a condo or townhome is probably a better fit. And think about what’s on the outside of the home, too. Do you enjoy being able to walk to restaurants and shops? Or are you hoping to escape the hustle and bustle of city life? Your home can greatly influence your lifestyle, so make sure it will positively – rather than negatively – affect your everyday life.
Consider Long-Term Costs
Most buyers gauge a home’s affordability based solely on its list price. But some houses come with more expenses than others, and those extra costs can add up over time. If you purchase a condo or townhome – or a house in a neighborhood with a homeowner association – be prepared for monthly fees. If you purchase a home that needs a significant amount of work, think about those costs, too. It’s even a good idea to consider a home’s size, as heating and cooling larger homes requires higher costs than smaller or more modestly-sized houses. Do the math and ensure you can afford the extra expenses that may come with the home before making an offer.
Factor Resale Value into the Equation
Few people make their first home their forever home, so it’s a good idea to consider a home’s resale value when making your decision. Since location can play a significant role in a home’s resale value, buying a house located in a sought-after neighborhood is probably worth your while (if the home fits your budget and other requirements, of course). Also, think twice before buying a unique, out-of-the-box home. Highly-customized properties usually don’t appeal to the masses, so you might have a difficult time finding a buyer when it comes time to sell.
Distinguish Between Your Wants and Needs
Sure, you may want a kitchen with granite countertops and stainless steel appliances, but don’t let that take precedence over your needs. Prioritize and try to figure out what you absolutely must have in a home, and what you can live without. Make a list and rank your needs so when you find a home you like, you can make a confident and informed decision about its ability to truly make you happy for the long haul.
The Basics About Real Estate Agents
You probably already know what real estate agents do: They find houses that meet your needs and interests, tour the properties with you and help you negotiate a purchase price. But many first-time homebuyers have questions about other aspects of real estate agents, such as: Who pays them? How do you find a real estate agent? Find answers to these and other FAQs below:
What is the difference between a real estate broker, a real estate agent and a realtor?
Real estate brokers manage, own or operate a real estate company. They generally have a high level of experience and must have education beyond the agent level. Real estate agents work for a broker and have taken classes and passed exams to meet the requirements to sell property. Realtors, on the other hand, are real estate agents who belong to the National Association of Realtors (NAR) and have agreed to abide by the association’s strict code of ethics.
How do real estate agents get paid?
As a first-time homebuyer, you likely won’t have to pay for a real estate agent’s services, as these costs are typically covered by the seller. Here’s how it works: Sellers must pay their agent a commission (calculated as a percentage of the home’s purchase price), and the listing agent then splits that commission with the buyer’s agent. Be aware, though, that if you buy a “For Sale By Owner” property, you may be responsible for paying your agent’s commission if the seller does not agree to do so.
If I’m at an open house and want to make an offer, can I ask the listing agent to help me?
If you’re not already working with an agent – and if a dual agency situation is legal in your state – then the short answer is yes. However, it probably wouldn’t be wise of you to do so. In a dual agency situation, one agent represents both the buyer and seller of the property. Obviously, the seller wants to sell the home for the highest price possible. And you, as the buyer, want to purchase the home for the lowest price possible. It is the agent’s duty to work in the best interests of his or her client, but you can likely see why that is difficult to do in a dual agency situation. If possible, work with an agent of your own who you know truly has your best interests at heart.
How do I go about finding a reputable real estate agent?
The best way to find a real estate agent is to ask friends and family members in your area for recommendations. (If you’re new to the area and don’t know many people yet, an online search is a good place to start.) Consider meeting with a few different agents to get a feel for how well they listen to you. Also, do some research to make sure any agents you are interested in working with have dealt with homes directly in the areas you want to buy in. Finally, ensure your agent is experienced, but not so busy that he or she won’t be able to devote to you the time you need in your home-buying journey.