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My cousin Nyla and her husband are currently living in my aunt’s basement. Even though Nyla and her husband have been talking about house hunting for a while now, she hasn’t yet started. While visiting recently, I asked what was holding up the show, and she admitted that she didn’t know what to do first.
She hasn’t secured a real estate agent and keeps hearing horror stories about how hard it is to land a decent house in this fast-paced seller’s market. They’ve been living with my aunt for less than a year, but Nyla admitted they’ve grown comfortable with their cozy living situation.
So for my cousin and anyone else trying to gear up to begin house hunting, here are five tips to help you prepare. I recently had the pleasure of chatting with Detroit-area real estate broker Ali Berry, a veteran agent when it comes to working with first-time house hunters in the market for a home.
Berry, owner of Quest Realty, recommends all house hunters get a preapproval through a mortgage lender to get a clear idea of how much house you can afford. Preapproval also helps you figure out which loan programs your credit allows you to qualify for.
“For sure, a 100% get preapproved right up front,” he said. “We ask for a preapproval early on because we need to know whether you can buy the houses we’re showing you.”
Berry said he meets a decent number of people who get preapproved for only an FHA loan, which typically requires less than a 5% down payment. But he suggests saving as much money as possible in order to pay 5% down or more on a prospective home.
“I know a lot of buyers hope to put down as little as possible, but having the ability to pay at least 5% down for a conventional loan can greatly improve your chance to win if you end up in a bidding war,” said Berry.
Secure a Good Agent
Finding an experienced agent can save you time, grief and money when house hunting. Not only can a good agent share insight on how to evaluate home prices and houses, but they can also leverage their relationships in the real estate industry on your behalf.
“My agents have built a good repoire with local companies and try to use this to help our clients,” said Berry. “In this competitive market it’s important to have an agent serve as your advocate. A good agent should guide their client to an accepted offer.”
Try to find an agent by leveraging your network of co-workers, friends and family. Ask for referrals and feedback on their level of customer service. You can also find a qualified agent via our sister company, Rocket Homes. Rocket Homes has a network of more than 25,000 top-rated agents across the country. You can also find a listing agent through the National Association of Exclusive Buyer Agents.
“You definitely should interview your prospective real estate agent and use that as an opportunity to run down your entire list,” Berry said. “It’s also wise to check for reviews of your agent online. Smart agents should have positive reviews from former clients.”
Be a Realistic Buyer
Since you’re securing an experienced agent, one of the first things they will tell you is be realistic about your expectations in this process. Many people know what they want even before house hunting, but it’s important to be flexible and open-minded, particularly in a seller’s market.
“One mistake I see buyers do is ask for concessions to sweeten a deal when they don’t really need them,” Berry said. “If you know that a house shows well and is pretty clean, then don’t tack on extra stipulations. This always causes the seller to pause and reconsider your offer against the others on the table.”
In these instances, sometimes we submit offers that reassure the buyer we won’t ask for additional repairs or concessions prior to the home inspection, he said.
“It’s important not to nitpick. Unfortunately, even if you offer $10,000 above asking price, the seller may not go for it if you’re asking for too much,” Berry explained.
Do Your Homework
Berry suggests house hunters get educated on the current housing market to cut down on surprises.
“This seller’s market is not the place where you can come in and make an offer below the asking price,” he explained. “If you do, you have to be OK knowing you could be outbid. Sellers can be more selective because they know another offer may come through.”
Browse online listings and assess the cost of homes in your prospective area ahead of time. Spend some time driving around the community to observe everyday life. Does your prospective area have sidewalks, street lights, a lot of foot traffic or train tracks nearby? You’d be surprised what you’ll discover just with a little bit of research on and offline.
“I always tell my clients to use listing sites like Realtor.com since they do updates every hour or so,” Berry said. “On the other hand, websites like Zillow.com and Truilia.com take a long time update housing listings. Sometimes I’ve found that they lag two weeks behind with updates.”
Time is Precious
Don’t wait too long to get out and see specific properties that pique your interest or you may lose the chance to bid on them.
“The other week we walked through a property three hours after it came on the market and submitted an offer within 30 minutes that was $10,000 over the asking price,” he explained. “By morning, the seller had already received five different offers. So it’s important to act if and when you see a quality listing.”
Berry suggests being as proactive as possible and setting the right expectations in the early stages of house hunting. Doing so enables you to be ready to promptly submit a bid, particularly if you’re searching in a hot real estate area.
“It’s also wise to think through the mortgage amount that you would feel comfortable paying per month,” he advised. “This gives you a better shot to be ready and willing to move if you get an offer accepted.”
House hunting is supposed to be an exciting time in your life. Don’t delay your house hunt another day now that you know where to start. I hope these tips empower you and help to equip you with confidence to get out there and tackle the hunt for your dream home with ease.
If you have tips or want to share experiences you wish you knew before buying your home, please share them below.
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