First-Time-Home-Buyer Strategy Guide
If you’re new to the real estate market, there are many things to consider when buying a new home. This strategy guide will help you with some of the many intricacies of the buying process and some other things to examine. But ultimately, the goal of buying real estate is to get the best price with the best terms and conditions and close in the shortest amount of time possible with the least amount of headaches.
In the strong sellers’ market that we are experiencing now, it’s unusual for a buyer to offer much less than the asking price and expect the offer to get accepted. In fact, if you come in and offer a price that is substantially lower while asking the seller to pay for buyer fees, etc. you could possibly offend the seller and he or she might decide not to sell to you after all. And if you are in a multiple offer situation, forget about it- you don’t stand a chance. Anyways, I hope this helps. If you have further questions, please contact Christopher Schultz at 850-699-8891 or email me at chris@nullchriscloses.com
First-Time-Home-Buyer Strategy Guide
Home buying in this crazy market can be very stressful, and there’s a lot to know- things move pretty fast, and certain things can get overlooked. The first thing I would highly recommend to any new buyer would be to hire a good agent that has a track record for success. He or she should have the know-how to navigate through the muddy waters of the fast-changing market.
Did you know that insurance companies in the state of Florida require a new roof put on and a new water heater installed every fifteen years regardless of useful life or what the shingle warranty is?
Here’s another interesting fact: In the state of Florida, realtor fees typically come from the seller’s equity; so unless negotiated otherwise, buyers usually don’t pay for the agent that they hire. So there is every reason in the world to hire a good agent to find a home on your behalf.
There is Never a Perfect Time to Buy
Trying to time the market perfectly is incredibly difficult and Warren Buffett advised against trying. I tell all of my buyer clients that buying a home comes down to the time value of money. If you’re buying a home and plan to sell it in a year or less, then now is probably not a good time to buy- you might be better off renting. However, if you are planning on staying in this home for several years then the chances of the house appreciating are pretty good barring any recessions or major interrupters.
Just because Stan from down the street bought a similar home for $50,000 less four years ago doesn’t mean you should wait until prices hit rock bottom once more before you decide to finally move forward, because you might be waiting for a very long time. Prices will undoubtedly decline at some point in the future, but nobody knows when that will happen or how severe the price reduction will be.
Make a Plan and Build a Team
When deciding on buying a home, you should have a timeline laid out with a list of home features that you’re looking for. If you know what town you want to live in, it would be a good idea to start researching flood zones, city taxes, HOA fees (if applicable), and any special assessments that might factor into your total mortgage.
It would also be wise to start working with a good lender if you plan on financing. I like to tell my clients that buying a home requires assembling an all-star team. Hiring a really good agent and an experienced lender and then working with a good title company can alleviate a lot of the stress that comes with the home-buying process. So make sure you interview a few different individuals for the job to see who the best fit is. Don’t just shop based on interest rate- also take a look at the service and how many transactions they’ve closed. Try finding their track record on Google to see what some of their other customers have said in the past.
Once you find the right lender, work with that person to figure out how much house you want to afford. And just because you might qualify for a $400,000 house doesn’t necessarily mean you should buy one at that price point. Talk with your lender and agent to see what price point is comfortable with your budget, and he or she can estimate what your monthly mortgage payment will be and how much money would be required upfront to move forward with the purchase. Once you’re pre-approved, you are ready to go shopping.
Get an Inspection
When buying a home, you typically have a due-diligence period that allows the buyer the right to inspect. Take advantage of this window by getting a full home inspection. In the Florida Panhandle, an inspection usually runs about $450, and wind mitigation, 4-point inspection, and/or pest inspection may be necessary. If you have an extensive background in home construction, then you might be able to get away with getting an inspection, but I highly recommend them to anyone buying a home.
I don’t know how many times people have saved themselves by backing out of the contract once they found a major red flag on the inspection. Think of them as an insurance policy; you want to know every little (and big) thing wrong with that house before taking possession of it, so you still have a chance to back out if necessary. Otherwise, you run the risk of losing your EMD. (Earnest Money Deposit)
Find a Home with Updates
I tell my new home buyers to try finding a home with updated big-ticket items. Those items are a new roof, a new air conditioner, and a new water heater. If the home has all three of these items in new condition, then it’s a great find. This, of course, is assuming that the home is already up to code and has copper wiring with no polybutylene plumbing.
Roofs and water heaters are required to be fifteen years or less in the state of Florida for an insurance company to cover the home, so looking for homes with these updates gives the new owner some time before having to replace any big-ticket items. The last thing you want to do is buy a home as-is and then immediately have to pay $15,000 more to have a new roof put on in order to get insurance. This is why it’s important to hire a good agent looking out for your best interest.
Create an Exit Strategy
Before you even put an offer on a house, you should already be thinking about your exit strategy. What will the future use of this property be? Are you going to live in it temporarily and then rent it out long-term after a few years? If so, you need to look at schools in the area, proximity, and other important long-term rental features. Is there a possibility of short-term rental? How close is it to the beach? Would it be appealing to tourists? Are you looking to sell in a few years? If so, it might be wise to take a look at some developing areas for faster appreciation and start thinking about ways to force some value by upgrades and improvements. These are the questions to be considered when buying a home.
Similar Article: 10 Wise Tips for Selling Your Home
About the Author: This information has been brought to you by Christopher Schultz. Chris is a real estate professional in the Florida Panhandle and is passionate about his work, his church, his family, and his community. He can be reached at 850.699.8891 or emailed at chris@nullchriscloses.com
I hope that someday, I have the opportunity to work with you. Thanks for reading.
