When the day comes to purchase a home, there are bound to be many emotions – excited, nervous, even a bit stressed, but homeownership is an important investment for many different reasons.
Owning your own home is a way to build long-term wealth and financial security. Unlike other investments such as stocks or bonds, owning a home provides the benefits of both a place to live and a tangible asset that can appreciate in value over time. Unlike renting, where your money is not going toward building a future for yourself, homeownership allows you to invest in your future.
As a homeowner, you’ll have a sense of stability and control over how you want to customize and improve your living space. You can decorate your home to your taste without having to worry that the landlord may not approve of the changes (no matter how minor they may be).
When you own, it also provides the opportunity to build equity, which is the difference between the home’s value and the remaining mortgage balance.
As the mortgage loan is paid, not only are you reducing your amount of debt owed, you’ll be building that equity and increasing your ownership stake in the property.
To help you get an overall picture, we’ve broken down the benefits to homeownership below. Along with the more obvious reasons as to why owning a home has its advantages, there may be some that surprise you.
Building Equity:
As homeowners make mortgage payments, they build equity, which is a form of forced savings that can grow over time and provide a source of wealth.
Home equity can be a valuable asset homeowners can tap into if needed.Some of the more common reasons people may choose to use their home equity include home improvements, debt consolidation, education, and even emergency expenses.
Appreciation:
Historically, real estate has appreciated in value over time, providing homeowners with potential financial gains. When your property value is worth more than what you paid for, this can provide potential gains, either through selling for a profit or using the equity built up to obtain a loan or home equity line of credit.
It’s important to keep in mind, appreciation is not a guarantee as the value of real estate can also go down. In addition, appreciation can take time to occur.
Tax Benefits:
Homeowners can benefit from tax deductions for mortgage interest and property taxes, which can lower their taxable income and reduce the overall cost of homeownership. Having these types of deductions, especially during the early years when mortgage payments primarily go towards the interest.
Stability:
Homeownership provides a sense of stability and belonging to a community, as well as control over one’s living environment. Owning your own home allows you to customize it to your taste, both inside and out. Whether it’s repainting, planting a garden, installing a swimming pool, the decisions are up to you..
Owning a home can also give you a sense of security, knowing that you have a long-term place to live, should you choose. It allows you to put down roots in your community, becoming more invested in your neighborhood. From local schools, to small business, your ties to these types of establishments help give you a sense of belonging.
As a homeowner, you have the sense of freedom and independence that comes with having control over your living space and financial stability.
Forced Savings:
Paying a mortgage is a form of forced savings that can help homeowners build wealth over time. Each mortgage payment made goes toward principal and interest, which means that part of each payment goes towards building up equity in the home, which can serve as a form of savings.
In addition, making monthly mortgage payments allows homeowners to budget accordingly, creating good financial habits. This can help build a sense of financial responsibility and accountability.
Inflation Hedge:
Real estate can be considered an inflation hedge as property values tend to increase with inflation. Because real estate is something you can touch and see, when the cost of things go up like food, gas, etc. the value of real estate usually follows. This is because people still need a place to live since there is only so much land and housing available. When more people want to buy a home than there are available, the prices increase thus creating a sellers market.
Potential Rental Income:
One of the benefits to homeownership is the potential to earn income by renting out the property and earning passive income if you decide to move.This can help offset mortgage payments or provide additional income.
Keep in mind, there are several factors to consider when renting, including the rental market in your area, the costs associated with property management and maintenance, and the potential rental income that can be generated.
While renting out a property can provide a source of passive income, it’s important for homeowners to carefully consider the financial and practical aspects of becoming a landlord.
Pride of Ownership:
Owning a home can provide a sense of pride and accomplishment. For many people,owning their own home is a lifelong dream, and achieving that dream brings a feeling of accomplishment.
You’ve invested your time, energy, and resources into acquiring the property, and you can take pride in knowing that you’ve accomplished something significant.
Legacy:
When you own a home, you now have a tangible asset that provides stability and security for your family, both now and for future generations.
One of the most significant advantages to homeownership is the legacy it can provide for children, grandchildren, and beyond. Your home may also become a central location for gatherings with family and friends, and where traditions are passed down through generations..
Becoming a homeowner provides many benefits but there are certain factors to consider before making such a big financial commitment. Like most things, there are pros and cons and it’s important to carefully weigh those to determine if homeownership is right for you.
To flip or not to flip, that is the question. For some people, the idea of flipping a home (or homes) to turn a quick profit is exciting, while for others, the thought of long-term financial gain is a lot more attractive.
Flipping a house involves purchasing a property, renovating it, and then selling it for a profit. This strategy can be a quick way to make a large ROI (return on investment) but it also carries a certain level of risk.
On the other hand, buying a rental property can provide a steady stream of passive income, but requires a long-term commitment as well as the ability to handle the responsibilities of being a landlord.
Two very different real estate investment strategies, each with their own pros and cons. Which strategy is right for you? There is no right or wrong answer, it all depends on what fits your lifestyle and aligns with your financial goals.
The decision of which one to choose also depends on your risk tolerance and level of experience, two very important factors when deciding between flipping a house or renting it. Why? Because depending on which you choose will affect your ability to handle the risks and responsibilities that come along with each strategy.
If you are considering jumping into the world of real estate investing but are unsure which approach best fits, we’re breaking down each one so you can have a better understanding of the unique advantages and disadvantages associated with each.
Flipping Houses
This route can be a high-risk, high-reward strategy. It requires a significant amount of capital and a willingness to take on the financial risks associated with renovating and selling the property.
Something to keep in mind, flipping a house is not investing because while there is the opportunity to make a lot of money, you have to earn it (i.e renovations). Flipping a house takes a great deal of work and often a great deal of patience.
Regardless of whether you’re doing the renovations yourself, or contracting out the jobs, you’re still required to take an active role in making sure all of the work gets approved and completed correctly.You are spending both time and money when you flip a house.
Pros include:
Cons include:
Rental Properties
On the other hand, buying and renting out a property is generally considered a lower-risk investment strategy. It can provide a steady stream of passive income, but it also requires long-term commitment and the ability to handle the responsibilities of being a landlord. This includes finding and vetting tenants, dealing with repairs and maintenance, and handling evictions if necessary. An investor who has a lower risk tolerance, or who is less experienced in dealing with the responsibilities of being a landlord, may find this strategy more challenging.
Pros include:
Cons include:
Before deciding to rent or flip a home, it’s important to carefully evaluate all of the pros and cons, assess your tolerance for risk, your level of experience, which strategy you’re more comfortable with, and decide which strategy aligns best with your lifestyle and goals.
Once you’ve made the initial decision to start buying property to rehab, your homework officially begins.
In our previous blog, we discussed the basics, which included developing a plan and gathering all of the information needed to form the right team to turn your vision into a reality. Now it’s time to begin the property search.
Sounds fairly simple, but it’s actually a bit more detailed than you might think. A lot goes into the process. To help you get started, we’ve broken out below four main points to keep top of mind as you get started.
What Makes the Best Markets?
One of the most important decisions you’re going to be faced with is, where do you want to buy? When thinking about this question, consider the best places with desirable locations. There are great opportunities all over, you just need to know what you should be looking for.
Do you remember the common expression, location, location location? It is everything! Focus your search towards popular areas where there is a demand for the type of property you’re looking to rehab as well as an area with foreseeable growth. This is when a local real estate agent is going to prove to be an invaluable resource.
As you narrow down potential properties, keep an eye on similar listings in the area to see how long they’ve been on the market, current asking price, along with any price reductions. If it doesn’t look like many homes are selling in the location you’re looking in, it might be a good idea to consider a different area to make the deal more profitable for you.
Something else to think about is the material and personnel cost. What is it going to cost you personally to flip a house in your target market? In addition to the cost of just about everything going up, things cost even more in larger cities, like New York City, than they do in other places. The more robust the local economy is, the higher the average cost of things will be. On the flip side, the price of real estate will be higher in the more expensive markets.
You’ll also want to keep an eye out for a catalyst, something that affects the market. In smaller cities, things are different than they are in larger, more populated areas but there are catalysts regardless of size.
Things like crime rates, schools, and even new businesses, are all important factors to take into consideration when assessing what will bring value to a neighborhood. Look for the areas that are up and coming because by the time all the improvements and additions are made to a neighborhood, it’s likely too late to maximize your profit potential.
Local taxes are another factor to consider when looking at different areas since they can have an effect on the pricing and salability of a house. Higher real estate taxes can impact a potential buyer’s ability to afford the home. In addition, until you flip the property, you will be the one paying these taxes as well.
Choosing the Best Type of Investment Property
Are you looking to buy a single family home, or maybe something a bit larger, like a multi-family. Along with deciding on the type of home, you’ll need to be clear on whether you’re going to flip it, or possibly rent it. The best way to make this decision is to look at your financial goals; flipping a home brings a single score while renting will generate income over a long period of time.
How to Find Houses to Flip
After you’ve studied the market, narrowed down the area, and decided upon the type of property to invest in, it’s time to physically start the search. In our first post on flipping homes, we gently touched upon some of the ways in which to go about this.
In case you missed it, let’s review.
Get a real estate agent – Especially if you’re unfamiliar with the area, having a local real estate agent as part of your team is important. They know the best places to look, and can help weed out the properties that aren’t a match. Not to mention they are filled with knowledge and advice regarding the market as a whole.
Look for auctions – If you have the ability to pay cash, private auctions might be something to consider. Foreclosure auctions are often published by the county several weeks before they hit the auction block giving you the opportunity to check out the properties prior to their sale date. Keep in mind that it’s highly unlikely that you’ll be able to go inside the home, or even on the property itself.
While these types of opportunities can be good, they also carry risk. Most auctioneers require a 10% deposit of the purchase price put down at the time of the winning bid with the remainder to be paid within 30 days, otherwise you lose the deposit. This is why these types of deals work best for cash buyers. It’s difficult to finance auction purchases because lenders want appraisals and often a walk through before closing.
Digital Classifieds and Online Sites
Do you remember the days when you would open up the classifieds and look at property listings? These days all you have to do is turn on the computer, do a quick search, and sites like Zillow, Trulia, and Redfin (to name a few) will be able to provide hundreds of listings. Craigslist is another platform to search for property listings.
How to Choose a House to Flip
We’ve covered how to find a property, now let’s focus on how to choose the right one.
First, look at the location and conduct the same type of research your potential buyers will do. If a couple with young children are looking at the property, then the school district becomes important. If the area is predominantly filled with young, single people, the focu of importance changes slightly..
Things such as easy access to public transportation, shopping, restaurants, these are factors that weigh into a buyer’s decision as well. Look at the positive attributes as well as negative ones that could have an impact on your ability to flip the property.
The physical characteristics of a property is another area to focus on. You’re going to want to make the property stand out yet you will also want it to conform to what’s around it.
For instance, if the home is smaller in size compared to other homes in the immediate area, it might sell for less money, but if it’s a home that is much bigger in size compared to others in the area, then it might be viewed as too expensive for the neighborhood.
You also want to pay close attention to the home’s exterior. Buyers often fall in love with a property at the street, so before they even set foot inside to see all of the wonderful things you’ve done, they may have already formed an opinion. And for some, that drive by is all they need to make up their mind.
Purchasing, rehabbing, and selling a property is a lot of work, but with knowledge and the right team, it can be a profitable venture.
We’ve all seen the home renovation shows on networks like HGTV and thought to ourselves, that might be a good idea. The transformation of a house in shambles to a beautiful dream home is enough to make anyone consider the possibility. Granted some of the shows are geared towards personal home renovations, while others are renovating with the intent to flip.
If you’re new to the process, house flipping entails purchasing a real estate property, updating it to add value, and then selling it for a profit. Most home flips involve buying property at a less than average price, (either a fixer-upper or in foreclosure), rehabbing the property, and selling it for more than invested.
Shows like the Property Brothers, Flip or Flop, and Christina on the Coast, to name just a few, give the illusion that the process of flipping a home can be fairly simple – all you have to do is just buy a house, make a few cosmetic changes, and sell the property for a good profit. Unfortunately it’s not as easy breezy as television portrays.
What isn’t visible in that one hour is all of the behind the scenes happenings that get you to the finish line. Anyone who has ever had some type of home renovation done, knows it is not a quick and seamless process, there are always bumps along the way.
Ask anyone who has flipped a home and they will tell you the truth – the process isn’t as fun or as profitable as you see on screen. Television has the power to glamorize and home flips are no exception.
Flipping homes can be a lucrative way to earn good money in real estate but in order to be successful, you’ll need to be armed with a lot of knowledge, planning, patience, time, energy, and good judgement.
It’s important to not only understand the process but also the basics of what flipping a home entails. Most people find themselves juggling both their day job and home renovation which can be extremely time consuming, not to mention super stressful.
Before diving into your first home flip, there’s a lot to know and educating yourself is important. There are countless books and sites filled with information to help guide you in the process. We’ve broken down some of the basics:.
How to Get Started
First step is to develop a plan for your flip. What is your budget, how much do you want to spend on the purchase, and how much will be needed towards the renovations? When thinking about cost, keep in mind they include contractors and specialists along with the materials needed.
You’ll want to have a team in place to help you get started before the home search gets under way. Ensuring the people you want to work with are available and align with your budget before making a purchase is important.
The last thing you want is to find out after closing is that the cost of contractors is higher than expected, or availability is months away. A renovation takes time and the last thing you want to do is delay it even further because you didn’t assemble a team beforehand. Remember, time is of the essence. Every day you own the property it is costing you money.
Finding the Right House
When it comes time to find the home, there are a few different ways to go about your search. Consider working with a real estate agent, especially if you’re unfamiliar with the area. A good agent can provide insight into the market and possibly help you sell the home once the renovations are complete.
You want to find a home in a desirable location or one that is growing and promises a high resale value.
If you have the ability to pay cash, auctions are another place to look for good opportunities for a discounted price. Just keep in mind they can carry some risk so before going this route, read and understand exactly how they work.
Secure Financing
In the world of real estate, cash is king. An all cash deal means that by the time of closing, the buyer will have unconditional liquid assets sufficient to pay all of the costs associated with the purchase, including the sales price and closing costs. If you ask any seller they’ll tell you they prefer this method of getting paid over an offer from a buyer who needs to secure funding in order to purchase.
If you don’t have the funds to purchase outright, you’ll need to secure financing. There are different types of loans to explore which is why speaking to a mortgage broker ahead of time is a smart idea. If you have bad credit, options may be limited. If your credit is low, consider raising your score before starting the home search.
Legal Representation
Whether the deal is all cash or financed, there is always a lot of paperwork involved. It is important to seek out legal advice and have a real estate attorney look over all of the documents. Their job is to provide you with the best possible legal advice and will ensure all of the necessary steps are taken prior to closing.
The Bottom Line
At the end of the day, the most important piece of advice is be prepared. Seek out the help of experienced professionals and ensure you have a great team in place to help you achieve success.
Flipping homes can be a lucrative business and with the knowledge, skills, and motivation necessary it is possible to become successful.
Whether this is your first, second, or maybe even third home purchase, each experience likely feels like the first. Regardless of how many times you’ve actually done it, the home buying process creates an array of feelings and emotions.
From excited to scared and everything in-between, buying can be intimidating. That’s why it’s important you’re working with the right realtor who will be able to guide you through each step of the way.
The home buying process really begins before you even step foot into a home, and continues all the way up until the day of closing. There are numerous steps you’ll take with each stage which in turn creates a whole new set of questions. Keep in mind, nothing you ask is silly, if you are unsure about anything, speak up.
Buying a home is one of the largest purchases you’ll make in your life which is why it is important to feel as comfortable, and informed as possible. Part of your real estate agent’s job is to help make the experience as stress-free as they can.
We know things can get overwhelming with all of the information you need to know beforehand, so to help alleviate some of it, we’ve put together a list of common questions buyers ask to help you navigate the process a bit easier.
What’s the first step of the home-buying process?
Before you even get started in your search, it is important to have your mortgage pre-approval. Some agents will not begin working with potential clients if they don’t have an approval in hand.
Why is this piece of paper so important? Because it tells you, and your agent, just how much you can afford. There is no reason to look at properties that you are unable to afford. It’s not fair to you, your agent, or the seller, to waste time looking at properties out of your price range. Knowing how much money a lender will approve for a loan is an important first step.
How long does it take to buy a home?
Unfortunately, there is no definitive answer as this timeline varies greatly from person to person. On average, it can take anywhere from a few weeks to several months to find a home. It also depends on the timing, as well as the circumstances. Do you need to move ASAP, or is this your first home?
Once you find your home, it usually takes an additional 30-45 days to close after you’re in contract. Keep in mind this timeline can change for a variety of reasons.
How much do I have to pay my real estate agent to help me find a home?
Great news–nothing! The seller pays the realtor fee/commission on their end.
How much money do I need for a down payment?
The more you put down upfront, the less you will have to borrow from a lender. Generally, 20% of the purchase price is an ideal number for a few reasons. First, it lowers the monthly mortgage payments, avoids paying private mortgage insurance commonly referred to as PMI, improves the nature of your offer, and can help you lock in a better interest rate.
That’s not to say you must put down 20%. The minimum amount depends on the type of loan you are obtaining to finance the purchase. Lower down payment loans, like an FHA loan, requiring a minimum down payment of 3.5%, were designed to make homeownership possible for first-time buyers.
When it comes to the different types of loans available, this is where your mortgage broker steps in. It’s a conversation you should have even before the actual house hunting process begins. Knowing how much you can afford and the type of loans available are all part of the initial conversation you should be having when obtaining your pre-approval.
What additional fees are there besides the down payment?
Additional costs include the loan origination fee, which is not a single fee, but a set of lender-specific fees that are part of closing costs, as well as the closing cost itself. These are the fees paid at time of closing to complete the purchase. They may include the survey, underwriting fees, title search fees, documentation fees, legal fees, pre-paid property taxes, HOA, etc. Your mortgage broker will review these with you. While you do have these additional expenses, the down payment is usually the largest cost associated with buying a home.
Do I really need to work with a real estate agent when buying?
It is strongly recommended that you work with an agent for many reasons. First, they have your best interest. Their goal is to help find you a home that fits your needs, and they will advocate on your behalf when needed. Real estate agents are skilled negotiators, and have access to a network of different people you will need throughout the process. Plus, it doesn’t cost anything to work with one.
Can you recommend…..?
Whether you’re in need of a mortgage broker, appraiser, lawyer, moving company, or any other type of professional service associated with the home buying process, your real estate agent should be able to offer some recommendations. Mostly all real estate agents have a network of people they trust to provide the best possible service to their clients.
While every home is different, the steps, especially in the early stages of purchasing, are generally similar. The same holds true for the questions you are more than likely to have. Remember, don’t be afraid to ask, it is part of an agent’s job to provide you with the information needed in order to make the most informed decision.
For both sellers and buyers, working with a real estate agent is beneficial for a multitude of reasons. Depending on what side of the transaction you’re on, the reasons why you should work with an agent will differ. What doesn’t change is the invaluable experience a good agent brings to the table.
When it comes to selling, many people think they can save time and money by going at it alone, without a realtor. What’s interesting is that FSBO (For Sale By Owner) sales often are less than the homes sold by real estate agents. Granted, the homeowner saves on paying the realtor’s commission, but that comes with a cost (literally).
Statistics show that only 11% of sellers actually succeed at selling on their own and for the ones that do, their sales are about 26% less on average than properties represented by an agent.
A lot goes into selling a home that you may not even realize. There are many challenges and if you’re going at it on your own, navigating all of the moving parts can be difficult.
Real estate agents do a lot more than just bring potential buyers. They know the in’s and out’s of both buying and selling and are invaluable for a multitude of reasons. Michele Haas, President of the Brooklyn Multiple Listing Service (MLS), points out the following ways in which real estate agents are instrumental in the overall process.
Agents have:
Extensive knowledge of the market
Professional networks
Negotiating skills
Understand required documents
Fiduciary responsibility
Can readily find and identify comparable sales
Can recognize possible issues with a property
Must live up to the standards required by their license
Based on the above, we dive a bit deeper into just how working with an agent is beneficial.
Time Consuming – Selling your home is a full-time job. Between fielding calls and messages for showings, hosting an open house, advertising, and all of the other minutiae that comes with listing a home, it’s an agent’s job to make sure it is taken care of.
Experience – Real estate agents are trained for the job. They’ve studied and taken exams to become an agent and continuously refresh that knowledge with continuing education classes. They know how to navigate the market better than someone who isn’t in the business and their knowledge and experience can be the difference in getting a home sold quickly.
Pricing Advice – Agents understand the real estate market – they know the value of homes, they know the areas, and how to compare properties, all of which factor into pricing a home correctly. While you may have a certain number in mind, the price may not be reasonable. That’s why having an agent to research the comparable sales can help confirm if you are in the right price range. They know where to look and have access to this type of invaluable information.
What they don’t possess is an attachment. As a homeowner, you’re attached to your home in one way or another. Maybe it is your first home, or where you raised your children. Because of reasons like these, it can be difficult to be objective and for many homeowners, it’s not easy to separate the two. That’s why having a real estate agent is important as they can help you to focus on the bigger picture and not get caught up in the emotional side.
Professional Negotiators – As hard as it can be to price your home correctly when you have an attachment to it, so can negotiating its worth. Real estate agents are removed from all of that. Their main goal is to get your house sold and if negotiations are involved, they aren’t going to hold onto emotional ties that will prevent them from making a good deal. Being removed allows agents to give you better guidance and advice.
When it comes to negotiating, attention to detail is key. Your real estate agent knows what details need to be written into the contract. There are numerous documents involved in the process and having an agent to help navigate all of the paperwork is important, especially when questions or concerns arise, they can advise. This invaluable knowledge is helpful regardless of whether you are the seller or buyer.
Fiduciary Responsibility – Agents have a fiduciary responsibility to their clients, they must put your best interest first. Whether they’re working on your behalf to sell your home, or help you purchase one, their loyalty remains with you.
Network of Professionals – It takes a team of various professionals to get you to closing day. From home inspectors, to mortgage brokers, to attorneys, etc, a real estate agent has a trusted network of other professionals to help you every step of the way.
If you are on the other side of the real estate process and are looking to purchase a home, working with an agent is just as important. Buying a home is one of the largest financial transactions you’ll ever make and you want to have an expert on your side. Real estate agents are tapped into their network and have access to various sites, like the MLS, to get the most up-to-date listings.
Whether buying or selling, either side can benefit significantly from hiring a real estate agent. The reasons may be different but the end goal is relatively the same, to ensure as smooth and stress-free process as possible.
Congratulations, you’ve made the decision to purchase your first home and it’s an exciting time. You’re about to embark on one of the biggest financial decisions you will make in your lifetime so it’s important you understand what it is you’re about to take on.
Information is power and educating yourself on one of the most important purchases beforehand will give you a clear understanding of what you’re getting yourself into before you actually do. The home buying process has a language of its own and taking the time early on to understand will put you ahead of the game when you officially begin your search. Don’t wait until it’s time to sign the contract to educate yourself on the process.
Even if you’ve purchased before, it’s still a good idea to re-educate yourself and discover any new changes that have taken place in the real estate market. It’s a lot to wrap your head around but if you know what to expect then it doesn’t have to be as scary as you may think.
Before you begin the search, it’s a smart idea to start saving early. Having a strong down payment is important. Not only does it lessen the amount of the loan, in some instances, the stronger the down payment, the better your chances of your offer being accepted, especially in such a competitive market.
It’s also a good idea to find out your credit score and clean it up if need be. Credit scores typically range from 300 to 850 and while you don’t need a perfect score to get the best mortgage rates, there are certain credit score requirements you will need to meet in order to obtain a mortgage.
To qualify for the best interest rates, prospective home buyers should aim to have a score of 760 or greater. However, the minimum credit score requirements vary based on the type of loan you’re going for along with who is insuring the loan so speak to your loan officer to find out where you need to be in order to secure funding.
Along with putting money aside early and cleaning up your credit, there are additional things to keep in mind as you prepare to jump into the home buying market.
How much can you afford? – A common mistake potential buyers make is house-hunting before knowing how much they can actually afford.
“First they should get pre-approved so they know what they can afford,” explains Barbara LaBarca, Director at Brooklyn MLS and Broker/Owner at Coldwell Banker LaBarca.
Obtaining a pre-approval ahead of time is essential to the process. Why? Because you need to know the maximum loan amount you qualify for. You don’t want to have your heart set on a house only to find out you’re unable to afford it. Knowing the maximum amount you can spend will allow your agent to search for the homes in your range and save your time from viewing the ones that aren’t.
And second, without a pre-approval in hand, it’s difficult to make an offer. Most real estate agents will not accept an offer to purchase without an accompanying pre-approval, especially in this competitive market. You need to come in strong, and that includes providing the documentation needed to show you can back up the offer you’ve made.
Choosing the right realtor – Chemistry is key. You’re going to spend a lot of time with your agent so you need to mesh. You’re about to embark on one of the biggest purchases of your life and you want to have a trusted real estate agent by your side. Your agent should be able to explain the ins and outs of the home-buying process, be familiar with the area(s) you’re looking to purchase in, as well as understand exactly what it is you’re looking for. Overall, they need to be immersed in the local market.
Referrals are a great way to find an agent. Ask around, talk to people you know who have already gone through the real estate process and ask them to give you an honest opinion on what their experience was like.
And mostly importantly, you need to find an agent you can trust. Are they honest, and do they have your best interest at heart? It’s always a good idea to speak to at least three agents before choosing someone to work with. Once you find the right agent, remember to be honest and transparent about what it is you’re looking for so that from day one they can being finding you the right options.
There is no perfect home – It’s your first home and you’ve more than likely dreamed about the ideal place to put down roots. You don’t want to settle but before you start looking, it’s a good idea to write down the things you want out of your new home.
What are non-negotiables and what are the aspects you can compromise on? No home is perfect and going into your search understanding that will make things easier.
Maybe the home you fall in love with isn’t in the specific neighborhood you had hoped to move to, or the home in your chosen area is a bit smaller than you originally planned. Knowing what your deal breakers are ahead of time will make it easier to accept that the home buying process, and the home you choose, may not be 100% perfect, and that’s ok.
Do your homework – Ask yourself, what type of home fits your needs, what are your homeowner goals, and what type of property will best fit your lifestyle. Once you have the answers, start reading up on the different neighborhoods, taxes, schools, local attractions. Anything that is going to impact your life in a direct way once you settle down in a specific home / area, should be a part of your overall search.
Understand the buying process – There are a lot of moving parts to the home buying process so having an understanding of each is important. Even before you start looking, you’ll want to familiarize yourself with the different financing options available. Being informed could help you save money on interest, fees, and even your down payment.
Knowing the different types of loans available will prove helpful when you sit down with your lender. Along with the conventional mortgage most people know about, other types of loans include the FHA, VA, USDA, Jumbo, and Adjustable Rate Mortgage loans. Each one has its pros and cons, and while they may not be right for everyone, understanding what is available will be helpful to the process.
“Besides their mortgage payment, buyers should consider that they will need to pay bills like
their water bill, electric, and gas,” explains LaBarca. “Taxes and insurance are included in the mortgage.”
Choosing the right loan officer is as important as choosing the right agent. After your offer has been accepted, they will become the person you talk to often as they guide you through the next phase of the home buying process.
Whether you are obtaining funding directly from your bank, or working with a mortgage broker who serves as the middleman between lenders and borrowers, they should be able to help you in understanding the loan best suited for you, along with providing you the guidance needed when the application process begins.
After you find a home, there are multiple steps (i.e home inspection, appraisal) that need to be completed before moving forward. This is when having a knowledgeable real estate agent is important. They will be able to explain these processes and continue to put your best interest first while these next steps take place.
Buying a home can be overwhelming with many first time buyers dropping out of the market because they believe it’s going to be too difficult. The process does have its challenges, but with the right team in place, it doesn’t have to be as stressful as you envision. Working with the right people and educating yourself right from the beginning can make all the difference.
As we prepare to wrap up a record-breaking year for real estate, potential homebuyers are wondering if 2022 will bring more of the same. Despite the fact there were sellers a bit apprehensive to make a move during the pandemic due to economic volatility, the real estate market in 2021 saw a record setting boom.
Sales were at an all-time high while mortgage rates were at an all-time low. The combination of the two created a favorable sellers’ market with tighter competition amongst buyers. With interest rates expected to remain low in the upcoming year, homebuyers looking to make a move in the coming months should start preparing sooner rather than later.
Being one step ahead of the competition is a good idea especially if inventory remains low. While the housing market may pick up with additional inventory right after the new year to satisfy buyer demand, there’s no guarantee.
One way to stay on top of the real estate market is to work closely with an agent. Buying a home is not as simple as we’d like it to be, but the process doesn’t have to be as stressful as you might believe it will be. While buying a home is no simple task, working with a real estate agent offers you overall support each step of the way. Their knowledge of the local market coupled with the skills to get you where you need to be will alleviate some of the stress that often comes along with buying a home.
Before starting the home search and teaming up with a local real estate agent, there are a few questions to ask yourself so that when you do find the right place to call home you’ll be ready to move forward.
Credit Score
Ask yourself, is my credit score in good shape? If it isn’t, take the necessary time needed to boost it up to where it should be before you begin applying for a mortgage. Your credit score is an important factor when it comes to obtaining a loan. Not only does it affect whether you’ll get approved, it also affects the rate at which you’ll qualify.
The higher the score, the more likely you are to get approved at a more favorable interest rate. There are different types of mortgages, each with their own credit score requirements. It’s a good idea to talk with a mortgage lender ahead of time to gather information on all of the various loan requirements. That way, once you obtain your credit score, you’ll know exactly where you stand.
Boost your credit
Once you obtain your credit score, there may be a chance you’ll need to boost it up. Make sure all bills are paid on time and if possible, pay down as much of your existing credit card debt (if not all) before starting the mortgage process.
If you plan to purchase a home in the near future, resist opening any new lines of credit as this will affect your credit score. While the discount many stores offer with the opening of a new credit card may sound enticing, resist the urge to apply. You may save a few dollars today, but long-term this can hurt you when applying for a mortgage.
And lastly, when looking over your credit report, check it carefully for any potential errors. If anything looks incorrect or even suspicious, you’ll want to correct and/or rectify it before starting the mortgage application process.
Save, save, save
With home prices being on the higher end of the spectrum, agents and their buyers are seeing sales for over asking price, whether it be the result of a bidding war or anxious buyers offering higher to secure an acceptance.
To remain in the game in such a competitive market, having a strong down payment shows a strong interest in the property and a commitment to get the deal done. While there isn’t a specific number required to put down, many times buyers hope a larger number will help them get their offer accepted over the competition.
Plenty of lenders will allow you to put down less but on a conventional mortgage you’ll be required to pay private mortgage insurance (PMI). While mortgage insurance isn’t a bad thing, it’s an additional expense homebuyers tend to try and avoid especially with home prices being falling on the higher side. Why add to your monthly payment if you don’t have to?
Research different neighborhoods
Before heading out with an agent, conduct a bit of research on home prices in the different neighborhoods. This will give you a better idea of which areas are more feasible. Together with your real estate agent you can create a game plan and focus on the properties that fit within your budget. There’s nothing worse than falling in love with a home that exceeds your finances.
After a long, cold winter, springtime is back and bringing with it bright sun, breezy filled days, and a breath of fresh air. People feel energized and ready to tackle the tasks of cleaning and decluttering.
Spring is long considered the best time to sell a home, but before contacting your local real estate agent, you’ll want to ensure your home is squeaky clean. This goes beyond the general housecleaning chores—you’re going to want to do a deeper dive which is sure to make a huge difference to potential buyers.
Like the saying goes, “you never get a second chance to make a first impression,” and when it comes to your home, you’re going to want to “wow” potential buyers from the moment they arrive.
The outside of a home is just as important as the inside and oftentimes, buyers will have already formed an opinion before they’ve made it to the front door. Which is why landscaping, even if it’s minimal, of the front and back property should be on your to-do list.
Whether you’re looking to put your home on the market now, or just want to clean away winter’s mess, we’ve put together a list of tips to help you get started.
Outside Cleanup
Stage the Backyard
Steam Clean Carpets
Let in the Light
Deep Clean Kitchen and Bathrooms
Declutter & Organize
Whether you’re buying or selling, it’s always a good idea to ask your potential real estate agent a couple of questions first before deciding who is the best person to help you with your real estate needs.
As 2021 is underway, many people are thinking about their next move. For almost a year, they’ve been working from home, and as of now, they continue to do so. And as we move forward in coming out on the other side of this pandemic, there will likely be changes in where people ultimately decide to reside due to both their interests and needs.
While some people attempt to tackle real estate on their own, it’s best to leave things in the hands of a professional. Not only are licensed agents experienced, they know the market and will work hard for their clients.
In seeking out an agent, you’ll want to join forces with someone who is trustworthy and transparent. A good listener is another important quality in an agent. Whether you’re buying or selling, having someone who will listen to your wants, needs, and concerns, plays a big part in the overall process.
And it is a process that often takes time, which is another reason why it’s key to connect on both a professional as well as personal level. Working with an agent is like entering into a relationship; true partnership works both ways. You want to not only feel comfortable in being able to express your thoughts freely, you also want to feel heard.
Regardless of the side of the table you’re on, the whole real estate process can be overwhelming at times; having a real estate agent who can shoulder some of that stress is priceless.
Each agent has their own working style, their own personality. No two are the same and what it ultimately comes down to is finding the “right fit.” You want to feel confident when you’re signing a contract; choosing the right agent will make a world of difference in your overall experience. To help you get started, we’re compiled a few basic questions to ask potential real estate agent.
As a seller, one of the reasons for hiring a real estate agent is to retain their marketing expertise. The various marketing tools agents employ aides in gaining the most exposure with prospective buyers as well as real estates agents within the area. Inquire as to what successful sales strategies they employ. Will they help prepare your space for the best possible photos and will those be professionally taken? Do they utilize social media marketing and if so, in what way? The market is a competitive one and it’s important to know just how the agent plans to make you’re home stand out amongst the rest.
When selling your home, it’s important to know before signing a contract exactly what percentage fee the real estate broker charges. The commission fee total is dependent upon the final sale which is taken out at closing. Keep in mind that different real estate agencies may charge a different percentage and the lowest fee does not always mean its the right choice.
If you are on the buying side, it’s also a good idea to know how this works. We know agents don’t work for free so understanding where their commission comes from is always helpful.
Regardless of whether you’re selling or buying, you want to know what safety precautions are being taken during this time. For sellers, the thought of people coming in and out of your home can be stressful, so knowing ahead of time how an agent plans to ensure your safety is important.
The same goes for perspective buyers. Entering into another person’s home and potentially coming in contact with multiple individuals can be a bit unsettling for some people; knowing ahead of time the safety measures that have been put in place can ease your mind,
Whether buying or selling, it’s a good idea to find someone who has experience in the particular process you’re currently pursuing. Agents who work with both offer an additional value. Not only can they help in finding you a new home while trying to sell your current residence, they can provide you valuable assistance when transitioning from one place to another.
In popular areas, homes can fly off the market as fast as they’re listed. When you see homes you love, how quickly will the agent be able to accommodate your request? What is their schedule like and does it align with yours? Are they available to work with you full time, or only part-time? Make sure the real restate agent can accommodate your day to day needs and that your overall timeline aligns with their availability to help you get there.
You want to be sure your agent isn’t overwhelmed and he/she has the time to dedicate to providing you the time needed. For example, if you’re selling, will your agent be available on weekends to host an open house? On the buying side, what is their availability when it comes to going out to look at homes?
Whether it’s a phone call, email, or text, make sure the agent is comfortable using the communication tool that works best for you. When it comes to signing documents, do they utilize electronic signing to make the process quicker? Time is always of the essence especially in a hot real estate market. You should also make your expectations on updates clear. Buyers and sellers often become frustrated when their agent doesn’t communicate with them as often as they’d like.
One of the many challenges in buying or selling, is knowing who you can trust for help. From lenders, to inspectors, to lawyers, a good agent has a strong network of professionals that can help you. Keep in mind that while an agent can offer suggestions, they are not requirements. Buyers and sellers have the right to choose whomever they want to work with.
A good agent will ask you questions as well. They should inquire as to what your real estate goals are and be able to repeat them back to you along with an explanation as to how they’re going to help you achieve them. You want to work with an agent who understands your needs and will take all of your requests seriously.
Referrals are always a good starting point when looking to hire a real estate agent but in the end you must feel comfortable with whomever you choose. There is no magic number of questions to ask nor are there any right or wrong ones. What it eventually comes down to is chemistry and connection, trusting your gut will be the deciding factor in choosing a real estate agent.
