First Time Home Buyer Checklist
First Time Home Buyer Checklist
Are you thinking about making your first real estate investment? Looking in California’s Bay Area? Think you can buy a distressed property and make it your own?
Below is a brief checklist from Bridges8 to get you started.
Participate in a Home Buying Seminar with Jon Arango
Jon developed this Boot Camp based on his own experiences as a buyer and a seller, coupled with his extensive experience as a Real Estate Agent and Associate Broker. To learn more about Jon’s Home Buying Seminar, contact us at 415.637.1646 or sign up here.
Select a Real Estate Agent
Why Work with a Real Estate Agent? Partnering with a well-trained Real Estate Agent can help make the home buying process smoother, easier, and can help you find the home of your dreams. A knowledgeable Real Estate Agent can help guide you through each step of the buying process, offering sound advice along the way. Working with a professional Agent who knows the ins and outs of the real estate industry and the market/s of interest will help you minimize mistakes.
Real Estate Agents have access to MLS listings – all the local homes listed for sale by other Agents. In addition, there are other benefits to working with a real estate professional, whose job includes:
✓ Arranging appointments to view homes
✓ Advising you on the local real estate markets and property values
✓ Helping you make a competitive offer
✓ Negotiating the purchase contract terms with Seller and Seller’ Agent
✓ Recommending inspectors to evaluate the property
✓ Monitoring the escrow process on your behalf
When you meet with your selected Agent, you need to have an idea of what you are looking for in a home. Create a punch list of amenities and assets, ranked in order of priority, to review with your Agent. While you may not be able to check off everything on your list, you can communicate to your Agent those things that are top priority in a new home.
The primary challenge for house hunters in California is the current low inventory levels. Low inventory can drive up the price of the homes available when buyers are having to compete for the same dream home. This environment is considered a “Seller’s Market.” Read this recent Forbes article for some details on property values and the housing market in California.
In a Seller’s Market, buyers will more than likely encounter bidding wars for the same property. The competition can be fierce. This doesn’t mean that you will be unsuccessful. It does mean that you want to put together the most attractive offer package possible. This is where the most skilled and experienced realtors can make the difference between getting your dream home, or not.
One of the most important reasons to team up with your mortgage professional before beginning the process of shopping for a home is to obtain a Pre-Approval. A Pre-Approval is part of the official loan process where a lender provides you with a letter confirming the specific loan amount for which you can expect to be approved.
Presenting a pre-approval letter along with your offer when you find the home of your dreams will allow you to make the strongest possible offer. Sellers will see that you have begun the mortgage process, and that a lender has agreed to give you the amount you are offering, which can give you a competitive advantage over other potential buyers. In fact, many potential buyers lose in bidding competitions against a lower offer because the financing is more secure.
Realtors generally work closely with a couple of Loan Officers and can make recommendations. However, you decide who you wish to work with. Selecting a Loan Officer to team up with early in the home-buying process is extremely important. By providing your Real Estate Agent with some basic information about your income, savings, and debt, he or she can assist you in getting pre-approved by a reputable lender.
An experienced and knowledgeable mortgage loan advisor will help you review your overall financial picture, discuss your financial goals, and determine what home-ownership looks like for you. They will then go over your financing options, what monthly payment amount you can afford, and what you can expect for down payment requirements and closing costs. The mortgage loan advisor you select will work with your realtor to guide you through the home buying process. Your advisor will then help you map out a plan to get you to the finish-line and into your new home.
Shop for your Dream Property
At this point, you should have your vision of what you want in your new home. You should have identified your Real Estate Agent. You should have your Pre-Approval Loan Offer letter. You are ready to go shopping!
As referenced above, house hunting should be focused on what you need in a home, how much you can afford, and what locations you desire to live within. Research neighborhoods that you think you would like to live in. Visit them on different days and different times of the day. Listen for sounds and observe traffic patterns. Check out the area parks, shopping opportunities, local cafés, proximity to freeways, theaters, pride of ownership, and any other amenities that are on your list of needs. Your wish list is your Real Estate Agent’s guideline to identify homes in the MLS database. You should be your own advocate as well by keeping an eye out on new properties for sale.
Once you and your Agent tour a property, take notes and photos. It can become difficult to recall which one had that great walk-in closet, or the open floor plan, the newly updated kitchen, and so forth, after you’ve seen several homes. Your notes will help you decide which homes you want to see again, as well as those that might be out of range but on your radar for future. Take time at the end of the day to review your notes and pictures and to talk about the pros and cons. If the property is priced right and in a desirable area, you may have to act fast. Your Agent will help you by vetting the homes you are seeing. Ask questions to understand why they picked that home.
Remember, time is of the essence. Staying organized and focused will help you get through this part of the home-buying process and find your new home.
Make offers until you have an accepted offer and are under contract
For most buyers, choosing a home is an emotional process. An Agent can assist you in this process by offering objective information about each property you look at. In fact, this Money magazine article highlights just a few of the benefits an Agent can deliver during the “offer and negotiation” phase of home-buying.
Once you’ve found the home of your dreams, your Agent will research recent comparable sales – known as “Comps” – of similar homes in the area to help determine a fair selling price. Based on those comparable sales, as well as other factors like inspections and repairs, an Agent will then help you structure an offer and negotiate to get the very best deal possible.
The average number of California properties that receive multiple offers is approximately 8 out of 10 homes. With the fastest market in history, homes are selling at record speed. When a home hits the market that you might be interested in, make time to go see it promptly. If you plan on waiting for the open house, you might miss out. Due to historically low inventory levels, buyers must be more aggressive to be successful in their homeownership goals.
Even with the great skills of a Real Estate Agent, buying a home in a sellers’ market can take a lot of your time. Be prepared, be flexible, be ready to move quickly, and be decisive. The right home will show up eventually. Buying a home – whether it’s your first home, your forever home, or your retirement home – is a big decision. The last thing you should want is buyer’s remorse.
Make a strong offer! In a sellers’ market environment, you and your Agent will benefit from having a war chest of strategies to improve the odds in getting your offer accepted.
Complete the Transaction
When your offer has been accepted, it’s time to move forward with the mortgage loan process.
Now you have the information that a lender needs to move your loan forward, such as the property address of the home you want to purchase. Your loan advisor will help you update and complete your loan application so that it can be submitted for final underwriting review and approval and walk you through the rest of the loan process.
Before your loan gets final approval, you may receive a list of closing conditions that need to be met. These conditions can include verification of employment, proof that you have obtained homeowner’s insurance, and any other items as requested by the underwriter. Once closing conditions have been satisfied, the underwriter issues a clearance. At this point, your loan is fully approved. Congrats!
Feeling overwhelmed? See Step 1 and contact us for Boot Camp. We know the market and we’re here to help!