23 Things Every First-Time Homebuyer Should Know

Lesson #1: Decide location versus space before searching for a home-Before shopping for a home, it’s important to set your priorities and decide which is more important to you: space or location. If you settle on this in advance, you can make thought-out decisions during the home-buying process and avoid the unsettling feeling of buyer’s remorse. 

Lesson #2: Don’t commit before you’re ready-Owning a home is a huge commitment -and a more expensive one than some home buyers realize. Before buying a home, make sure you know exactly what you’re getting into so you can decide if you’re financially and personally ready for such a large commitment. In addition to your monthly mortgage payment, figure out how much you’ll be paying for property taxes, homeowner’s insurance, HOA fees and other monthly costs of owning a home.  

Lesson #3: Sweat equity can save thousands-If you have the skills, the time and the patience to live with dust and debris for a while, do-it-yourself home improvement projects can save you a big chunk of cash.

Lesson #4: A down payment is never a bad investment-Sometimes, home buyers opt for 100 percent financing and invest their down payment money in the stock market. Investing your money in the stock market does not guarantee that you will make money and, in some cases, you can lose money. Putting some money down is a good idea for any home buyer because it minimizes your risk and lets you start off with some equity. 

Lesson #5: The school district will affect home value-Even if you don’t have kids, it pays to check out a neighborhood’s school district before buying a home, as living in an area with a sought-after school system raises your property value.

Lesson #6: A land survey will answer boundary questions-Before making changes to your property, it’s a good idea to find out your exact property lines., You can’t always rely on the seller’s knowledge of the property, so getting a land survey will clear up any uncertainties you have.

Lesson #7: Check building plans for the neighborhood-Before buying a home, find out if there are any building plans near your home such as a playground, dog park or other structures to avoid surprises after you’ve moved in. Sometimes, these things can affect your ability to sell the property or can decrease your enjoyment of your home.

Lesson #8: Reserve some cash for home improvements-Ensuring that you have the cash to cover improvements, maintenance or emergency repairs is important. You don’t want to put off necessary repairs or maintenance due to a lack of money. This can allow the problem to get out of control and cost a lot more in the long run!

Lesson #9: Dig deeper during inspection-If a problem pops up during your inspection, it’s always a good idea to take a closer look. If Brooke had checked out the roof herself, she would have seen the two layers of shingles and known that something was amiss. 

Lesson #10: Continue negotiating after the inspection-If a flaw is discovered during your home inspection, use it to your advantage. If Brooke had known more about the roof issue before she closed on the home, she might have been able to use it during negotiations to get a price reduction. Even after inspections, you still have another chance to get a great deal. Staying under budget when buying a home gives you extra cash to add the upgrades and decor you’ve always wanted.

Lesson #11: Real estate is not a recession-proof investment 

Lesson #12: Examine both financial and personal costs of buying-Buying a home can require you to make tough personal sacrifices. Before buying a home, think about what kind of personal and financial sacrifices you’ll have to make. If affording a home is a stretch right now, it might be better to wait awhile and save up more money.

Lesson #13: Read HOA documents before closing-Before buying a home in a community with an HOA, read through the covenants, conditions and restrictions (CC&Rs), bylaws and budget and look for anything that could affect you in the future. Also, talk to residents in the neighborhood and get opinions on how well the HOA does its job. 

Lesson #14: Secure financing before falling in love with a house 

Lesson #15: Don’t spend every dollar you qualify for-If you are willing to come down on your price range, it may result in opening up options to a larger chunk of the market. With financing already secured, you may find a great house with ease and have the ability to spend more on decorating and upgrades. By not spending every bit you qualify for, you can open yourself up to more options and better possibilities.

Lesson #16: Find smart money-Some people find their “smart money” by getting a loan through a non-profit organization that have agreements with several lenders to give first-time homebuyers affordable loans. These kinds of opportunities are out there; you just have to look for them. Remember, you still have to be underwritten by the lenders, so be prepared to show your credit history and attend classes and workshops the non-profit group organizes. 

Lesson #17: Make sure renovations were professionally done-Paying close attention to the aesthetic details of a home is just as important as the structural details when going through an inspection. Oftentimes, do-it-yourself remodelers looking for a quick fix use low-quality materials that turn into a problem for future homeowners. They key is to make sure any renovations were done by a professional contractor using quality materials that are meant to last. Inspecting details up front is very important so you don’t find yourself shelling out even more cash later on. 

Lesson #18: A creative bid strategy helps ensure a good deal-You may use a unique approach to get a great deal on a home. For example-by first making an offer of $300,000 on the home, then adding a contingency that they would pay $1,000 over any other competing offers up to a maximum price point of $329,000, you could guarantee you get the house with minimal dollars spent over the highest competing offer. Although unconventional, a creative strategy like this can be very effective in today’s market, especially when there are competing bids for the property.

Lesson #19: Don’t overlook the landscaping-Updates to the exterior of a home can add up just as quickly as the interior. If you aren’t looking to spend much more on the details once you have found a home, look for a property that already has the amenities and the landscaping that you desire.

Lesson #20: A higher price point might save money over time-After making interior and exterior renovations, many homeowners find that their budget has been stretched way beyond what they initially wanted to pay for a home. For this reason, it can be smart to adjust your price point a little to help you save money over time. By paying a little more upfront for a home that has all of the upgrades and extras you want, you won’t have to worry about paying for them down the road. 

Lesson #21: Low-balling doesn’t always pay off-Unfortunately, by looking for homes at the top of your price range but making lowball offers -- plus asking sellers to contribute to your down payment or closing costs -- the offers look weak and can be rejected, outbid or ignored every time. If you find yourself incurring multiple losing bids, a change in strategy is in order. By giving a little bit, you can get a lot in return. This can keep you from enduring the discouraging feeling of being outbid or rejected multiple times.

Lesson #22: Change a bid strategy that’s failing-Tweaking your bidding strategy can make the possibility of getting the house you want much more realistic. The offer should be strong enough to at least hit the seller’s base price. The key to remember is if you would like the sellers to do something for you, such as contributing to closing costs or the down payment, then you need to get as close to their asking price as possible. 

Lesson #23: Save money for a down payment-Take some time to save money for a down payment before buying a home. Your offer will look stronger to the seller, and you’ll have more leverage during negotiations.

As a first-time home buyer, there are a large number of things to consider when purchasing your home. I would love the opportunity to help you through this process and answer any questions you may have. Call or text me at 210-717-6690 or email me at morganbertram@realtyexecutives.com.

Oh by the way…I am never too busy for any of your referrals!