The thought has crossed your mind on more than one occasion: “Am I ready to purchase my first home?” Maybe you’ve been planning for it and saving for years. Perhaps you’ve started to add up all the rent you’re paying each month and are ready to invest in something of your own. Or it could be that you’re scrolling through social media and a certain co-worker or friend from high school is holding a new set of keys to their first home and you’re thinking “if they can do it, surely I can too!”
Whatever has brought you to the realization that now is the time to buy, congrats! Interest rates are at historic lows and it’s a great time to start your search. But as I’m sure you’re realizing, there are a lot of things about buying home that were never covered in school and you may be struggling with where to start. Every real estate transaction and journey is different, but follow these steps and you’ll be setting yourself up for success:
1. Select A Real Estate Agent Who Is Right for You
Let’s face it, we wouldn’t go to a doctor or hire a lawyer without doing our homework and making sure we picked the right one, so why should picking a realtor be any different? Start by talking to friends, co-workers and acquaintances that you know have purchased a home. If someone has had a good experience with their realtor, they will for sure let you know. Then, have an initial call, check out their website and meet with them to decide if they’re the right fit for you. This is not only a professional that can set you up for success in your search, but also a person you’re about to be spending a lot of time with. A realtor should be your advocate at all times, so make sure you feel comfortable being honest with them and sharing personal details. In most cases you won’t be responsible for paying your real estate agent, the seller will, so it really is important to feel like they have your best interest and investment in mind and you’re not just their latest transaction.
2. Get Pre-Approved, But Do It with Your Budget in Mind
Now’s the time to use the realtor from step one and ask them to introduce you to a good local lender. Every market is different and being aligned with a local lender can help give the seller assurances that you can meet all deadlines and get your loan approved in time. Just like with your realtor, make sure you like the lender. You’ll be talking to your lender throughout the process to help pull sample numbers for places you are interested in. Most importantly, when getting pre-approved, tell the lender what you’d like your monthly mortgage payment to be. You may get approved for a healthy budget, but if it makes your payment double what you’d like to spend, you’ll end up disappointed when you realize the home you’ve fallen in love with online is more than you want to spend.
3. Let’s Go See Some Houses
Now is the time to use your agent to pull properties, share anything they know may be a fit for you and get in the car to see places in person. I recommend seeing 4-6 places the first two times out (trust me, you’ll be exhausted after that many), and by then, you and your realtor should know exactly what you’re looking for. Remember, this is the time for your HGTV moment. Be honest and open about what you’re seeing and feeling when you enter a home. This is one of the biggest financial decisions you’ll make, so ensure your voice is being heard and you love what you’re about to buy.
4. You’ve Found the One, Now Craft a Perfect Offer
Depending on where you are in the country, the process of submitting an offer can vary. Again, this is where having a knowledgeable agent will come in handy. A seasoned pro will start by looking at recent sales in the area to help you come up with an offer price that is competitive, but won’t leaving you feeling like you’ve overpaid. Then, work closely with them to decide which contingencies you want to include. The most common are home inspection, appraisal and financing. Ask your realtor to explain them all in detail and in ways that make sense to you, and then have them explain why you may want to include them, and what the risk would be if you don’t. At the end of the day, make an offer that you feel comfortable with but will also be compelling and competitive to the seller.
5. Your Offer is Accepted, Make Sure You Get to Settlement
Having an offer accepted doesn’t mean you’re done, but it does start the countdown clock to settlement. Within the first few weeks after going under contract you’ll start satisfying and removing those contingencies you included. Lean on your realtor to schedule home inspections and attend them yourself. Trust your lender to order an appraisal and explain the outcome to you. And be prepared to give even more documents and records to help get your loan through full approval. Keep in mind that it’s an exciting time and you may want to start buying new furniture and décor for the home, but adding any extra debt during this period could jeopardize your purchase. Keep communication open with your realtor and lender throughout this time and you’ll be in good shape.
6. Final Details and Closing Time
A few days before your settlement you’ll hear from your lender the amount of money you need to close your purchase. It may seem dated in 2020, but getting a certified check is a great way to go. Wire fraud has seen an uptick in recent years, especially in real estate, so take extra precaution and protect your investment. When the day comes, you’ll make a final walkthrough to ensure the home is just as you remembered it and then it’s off to settlement. Sign your name an ungodly number of times, and then pose for that picture with your keys that will make an old high school acquaintance start to think if owning a home is doable for them. And last but not least, if you enjoyed working with your realtor, pay it forward and pass their name along.
About Matt Windsor
Matt is a licensed real estate agent in Washington, D.C., Maryland and Virginia with McEnearney Associates who left a successful decade-long career in public relations to pursue his passion. What Matt truly loves about being a realtor is helping his clients break through the clutter of the process so they thoroughly enjoy their real estate experience. When not working with clients or touring homes on the market, you can find him at local playgrounds in the neighborhood with his wife, son and former Puppy Bowl all-star dog. You can follow Matt on LinkedIn and Instagram.