Hire HomesbyMarco and Avoid Making These Mistakes
Most real estate agents will tell you that they love working with first-time homebuyers. First-time buyers, they say, are enthusiastic about finding their starter homes, they are thrilled to be moving out of their apartments and they are extremely grateful at the closing table when they officially take title of their family's first home.
But savvy Realtors also know that first-time buyers are apt to make some common mistakes. For one thing, first-timers may go house-hunting before meeting with a mortgage lender, which means they may waste time looking at homes they cannot afford. First-timers might also not realize how important it is to work with just one Realtor, and one who represents their best interests and not the seller's. And, just as damaging, first-time buyers may decide to skip a home inspection after settling on a house.
These three mistakes, in fact, are the ones that first-time buyers most often make. And unfortunately, the excitement of buying a first house can be tempered drastically when new buyers make any of these miscalculations. The good news, though, is that the Chicago area features plenty of skilled real estate pros who can help new homebuyers avoid these costly errors. Here, then, is some advice for real estate pros on the most common first-time buyer mistakes and how to avoid them.
1. Looking at homes first, mortgage lenders second
Most people would agree that the best part of looking for a home is touring all those houses on the market. For first-time buyers this experience is even more exciting. Many of them will be touring homes in neighborhoods in which they've never before set foot. Others will be poking through styles of homes about which they've always dreamt. Problem is, touring homes should not be the first step buyers take. Before looking at even one residence, buyers should meet with a mortgage lender.
A lender can pre-qualify buyers for a mortgage loan, meaning they'll study potential buyers' incomes, expenses, credit ratings and assets to determine exactly how large of a mortgage loan they can obtain. Armed with this information, buyers can search for homes that fit within their price range. Buyers who search for homes without first getting pre-qualified from a mortgage lender run the risk of initially looking at homes they cannot afford. When they begin looking at homes that do fit within their budgets, they then find that they are disappointed. This makes sense: A $100,000 home never looks as good to buyers after they've spent a week looking at $250,000 properties.
Today's mortgage lenders offer more loan programs than ever, many of which are geared specifically to first-time buyers. These loans often offer small down payments of 3 percent. Other first-time buyer programs require no down payment at all. Homebuyers won't know about these programs, though, until they actually meet with a mortgage lender.
2. Changing their Realtors by the day
When first-time buyers are ready to start the house-hunting process, the first thing they often do is call the names of Realtors listed on the "For Sale" ads they see in their local newspapers. This, though, is far from the best way to find a home.
Smart buyers realize that those Realtors in the classified sections will be looking out for the best interests of the sellers they represent. That means they will seek the highest possible asking price for a home. It's their job, after all.
First-time buyers, then, should work with just one Realtor, one who will serve as their sole representative through the housing search. Many Realtors today are licensed as Accredited Buyers Representatives, something that allows them to list the designation "ABR" after their names. A buyer's representative, as the name suggests, works with buyers, not sellers, to help them buy a house for the fairest price possible. Finding a Realtor is a lot like finding the right job. You have to interview. It's best to talk to three or more real estate agents before you begin looking at homes. Ask these agents about their experience, how many homes they help buyers purchase every year and what communities they know most about. Then, pick the Realtor with whom you feel most comfortable. First-time buyers needn't worry about paying their agents, either. First-timers often don't realize that their Realtor is not paid until the buyer finds and purchases a home. This means that buyers can search for homes for a year or more and not have to pay their real estate agent a cent if he hasn't yet found them their perfect home. First-time buyers also may not realize that their Realtor is actually paid by the seller of the property, not by the buyer.
3. Believing that nothing can possibly go wrong
Every homebuyer should order a home inspection before signing a final contract to purchase a home, whether that buyer is purchasing his first home or his fourth. Unfortunately, first-time buyers often tend to want to avoid paying for a home inspection performed by a licensed home inspector.
This is a big mistake. A home inspector can find hidden problems with a house, problems that can be quite expensive. An inspector might determine that a home needs a new roof. A buyer can then negotiate with the seller. She can either require the seller to pay for and install a new roof before the transaction closes or ask for a certain dollar amount off the home's purchase price to cover the costly expense of adding a roof.
Buyers who skip the home inspection may not discover that substandard roof until that first big rain storm in April.
A home inspection usually costs $200 to $300, depending on the size and age of a home. While this is yet another expense in the home-buying process, $300 for an inspection costs a lot less than the price of a new water heater or furnace.