FIRST TIME HOME BUYERS 2 BIGGEST MISUNDERSTANDINGS:
1. Not understanding how to work with a Realtor.
HIRE YOUR OWN REALTOR TO REPRESENT YOU!! First time home buyers spend way too much time flipping through ad books, calling from signs and going to visit new home sales offices with no representation? Many Realtors don't call you back, you get frustrated, etc. Sound familiar????
Did you know that if you work with an agent who is selling a home or the home builder salesperson - they are working for the seller or builder, not you. Anything you tell them (even innocently) they could use against you in negotiations. They are obligated to tell the seller anything you say until you hire them as your Realtor, too. By law a seller's agent can represent both sides, but they cannot give advice or opinions to either side. As a first time home buyer, you would be on your own.
Find your own agent!!! They have access to all homes on the market and knowledge about all builders (some builders are much better than others). A buyer's agent's fee will in almost all cases be paid by the seller's agent of the pre-owned home or the builder. A buyer's agent costs you nothing. So why don't you have your own buyer's agent??? It's Free and you will have advice.
Ask friends for a referral or call several from a real estate book. If you call and leave a message they don't call you back in 24 hours, move on. Why would you want someone that doesn't even bother to call you back. Interview them.
How many first time home buyers have they worked with in past 6 months?
How familiar are they with your price range?
Are they upfront about letting you know the market and what you can expect? Do they ask about your financial situation and mortgage information, so they can be prepared to build in closing costs if necessary to help you buy a home.
Will they email you flyers of houses before going out on your first home hunt, so you can eliminate houses you know don't fit your needs.
Will they provide you market comparisons on homes as you see them, so you will know if a house can appraise if you have to add in closing costs?
How long have they been in the business?
Will they provide you with a day by day timetable on the process once you have a contract highlighting the areas that you, the buyer, need to do?
Don't go to a new home builder on your FIRST VISIT without your realtor. Don't get so excited that you just have to go visit them without your realtor.
Understand how the process with builders works before you go. Home builders receive anywhere from 50% to 90% of their clients from realtors. Realtors fees come out of a marketing fund that is considered an overhead cost and is spread across the price of all homes. The price of the home is the same with or without a realtor. Realtor commissions are built into the price of your home, why not get the service. Also, many times the realtor works with the new home builder and knows they can push them for extra concessions, that you might not get on your own. Builders will not offer usually offer you a discount if you don't use a Realtor.
Sign a buyer's representation agreement with your realtor. It guarantees your rights are protected.
2. Not getting pre-approved for a loan by a lender before looking.
Many first time home buyers, don't understand the mortgage process so they tend to put it off. But that can be detrimental to you. You could spend time looking at houses you can't afford. After looking at homes you can't afford, it's much harder to be happier with the ones you can.
A good realtor will not take you looking for homes until you have been pre-approved. They know they might be wasting your time and theirs. It not only helps bracket the price you can afford, but whether the realtor will need to build in closing costs into the price of the home. It could change the price of the home you need to look for.
Being pre-approved can give you a negotiating advantage. If a seller receives two similar bids at the same time, they are more likely to take the one with the pre-approval letter attached. They know that the home sale more than likely will go through and you are serious.
If you don't know a good mortgage person, then ask your realtor to help you find one.
If you work with a new home builder, most of their incentives are tied to using their mortgage company. They usually own the mortgage company so it's a benefit to them. They can usually match any outside lender. If you've gone through the pre-approval process with another lender, you may have to do it all over again with the new home builder's lender.
