The day has finally arrived. You’ve been saving your money, your credit is in tip-top shape, and you have all your ducks in a row to buy your first house. It’s exciting, but it can also be overwhelming when you consider all the steps that you have to go through in between finding your dream home and being handed the keys.
That process can be a lot less stressful when you enlist the help of a real estate professional, but even the most experienced agent might not have every answer or know all the best ways to move forward with your purchase. So we spoke to several agents, creating a comprehensive list of their best advice on how to buy a house. These five agents shared 35 tips on homebuying, many of which might not be common knowledge!
Making use of these important and little-known insights can help you from the moment you decide it’s time to start house-hunting, all the way to sitting down to closing, and can give you a better understanding of how to buy a house in today’s market.
Deciding to buy
1. If you’re thinking about buying, it’s probably time to start the process
“I usually tell potential clients to start taking those first steps toward homeownership the minute they think about buying,” she says. “It might not happen for a year or two, but you should put a plan together. People need to find out what they can afford, how much they need to save, or any clean-up or improvements that might be required of their credit report.”
The research stage
2. Start at the end of the journey
When you start researching potential neighborhoods and homes, where do you want to end up? McKenna-Inman asks this of all her buyers, because knowing the end-game is a big part of the buying process.
“Do you want to be near a specific school if you have children or are planning to have them?” she says, “or are you okay with a commute to work if you find a house outside of town? Every buyer should consider the end result, which includes location, schools, and of course, price and affordability.”
Nailing down your budget
3. Don’t start looking until you know what you can afford
California agent Rick Fuller says that prospective buyers really need to understand their budget before they start looking at homes.
“There’s nothing worse than finding a property you love, but is above your means,” he says. “If you find a home and it’s not in your budget, you end up disappointed in every subsequent house you visit.”
When interest rates are low, your dollars stretch further as a buyer. So it’s smart to figure out exactly what you can afford based on current rates before you go crazy browsing those listings online. Talk to your trusted mortgage advisor about how much you can comfortably afford, your down payment, and the current market conditions to ensure you know where your affordability sweet spot is.
4. Don’t wait to get financing
Agent Richard McKinney, who is based out of Florida and has more than 20 years’ experience in real estate, says that no matter how qualified you think you are, making sure you have your preapproval letter is very important.
“I see so many offers come across my desk without pre-qualification letters,” he says. “A seller needs the comfort of knowing the buyer is serious and well-qualified.”
5. Try for a local lender
McKinney also suggests buyers try to find and use a local mortgage lender if they can. They will know and understand the market in your area much more intimately.
6. Save more than you think you’ll need
Ruth Wordelman, a real estate agent based in Colorado, says that buyers should work with their lender in regards to how much they’ll need to save for a down payment, and when doing so, they should consider the market in their location.
“Right now, things are going for well above asking price, and appraisal values haven’t necessarily caught up to market value,” she says.
“You’ll probably want to save extra in case you need to cover an appraisal gap, which is the shortfall between what a house appraises for and the agreed contract price.”
7. Gifts are allowed
McKenna-Inman says that, especially for first-time homebuyers, sometimes saving up for that down payment can be difficult.
In cases like these, she makes sure her buyers know that most mortgage programs, including those backed by the Federal Housing Administration (FHA), allow monetary gifts up to a certain amount that can go toward the down payment or closing costs — so if saving is a challenge, you might be able to get help from family.
Shopping for a mortgage
8. Dare to compare
According to Wordelman, shopping for a mortgage should involve just as much research as any other investment.
“When you look for a mortgage, it’s about competitive rates, low or no origination fees, and accessibility. Gather your information from several different sources before you decide so you can compare, and never be afraid to ask questions. This is your money!”
Wordelman also suggests finding a lender who is very accessible, preferably available seven days a week, and that is experienced with your region and any regulations or requirements associated with it.
Finding an agent
9. Availability is key
Selecting a knowledgeable agent is, of course, an important part of the homebuying process, but you also want to know they will really be there for you.
“Agents need to be available to their buyers,” says Wordelman. “They should be responsive to your calls and texts, and remain connected throughout the process.”
10. Consider a team
With that in mind, Fuller notes that buyers who choose agents who are part of a real estate team often have a more streamlined experience.
“Everyone goes on vacation, gets sick, or may have to take leave,” he says. “When you go with an agent who is part of a team, even if your agent isn’t available, there will always be someone who can help you.”
11. Vet prospective agents
When trying to decide on an agent, take advantage of the resources offered online.
“Take a look at online reviews,” says Fuller. “Read the reviews of that agent in order to better determine if they will be a good fit for you. Also, look for companies that are recommended by third-party endorsements, or agents who have won awards for quality of service.”
12. Pick an agent who really knows the area
Both Fuller and Wordelman stress the importance of choosing an agent who knows your area and the local market.
“An agent should be knowledgeable about things like property taxes, HOAs (homeowners associations) in various neighborhoods, schools, everything pertaining to your area’s market,” he says.
Wordelman adds, “An agent who has been working in a specific market for a long time and has a good reputation can go a long way toward getting your offer accepted.”
13. Trust your gut
“Go out to lunch in the town, visit the library and schools, drive around the area,” she suggests. “It’s not just about the numbers. There’s an instinctual feeling one gets about a town, neighborhood, or house.”
14. Be ready for a marathon
Wordelman reminds buyers that house-hunting can be both fun and exhausting. “Hydrate and bring snacks,” she says.
“And with COVID, there are still restrictions in some areas as to how many people can be in the house, so consider having someone watch the kids.”
15. Target the right price range
When housing inventory is short (which it has been), then homes can sell for well over asking price. Knowing this, Wordelman suggests that buyers probably shouldn’t shop at the very top of their budget.
“If you are approved for up to $450,000, I recommend shopping for homes between $350,000 and $425,000,” says Wordelman. “In many areas, homes go for above asking price, and you’ll want to have that cushion.” And again, as we said above, appraised values are coming in short in many markets, so you should be certain to have a buffer in your down payment to cover any potential appraisal gap.
16. There is more than one pool of properties
In addition to those homes you’ll see on the standard MLS listings, a knowledgeable agent is going to have access to other sources. Fuller says that most agents should not only know what’s available right now, but also what is coming up soon, through their colleagues and coworkers.
Fuller notes that a good agent will have a handle on “properties that aren’t quite on the market yet,” in addition to “properties that were on the market and didn’t sell for whatever reason.”
If one of those piques your interest, “it’s possible for us to have a conversation with the seller if we have an interested buyer.”
17. Don’t be afraid to look outside your immediate area
While an agent should create a fairly exhaustive search for prospective buyers, Wordelman says that one thing they sometimes overlook is opening up searches to MLS systems that might be right on the edge of where you want to buy.
“If your area is on the cusp of a second MLS system, make sure your agent prepares searches using both regions,” she says. “As a buyer, you might want to look at places that are just outside the immediate area, and your agent should do this for you.”
Making the offer
18. Know what the seller needs
McKinney says that a big part of negotiating with the seller is knowing what is important to them. “The seller often has concerns that go beyond the price of the home,” he says.
“Your agent should find out if there are other things they want, such as if they need to sell fast or prefer a long closing, or if they would consider a lower offer for a cash deal that closed fast. Asking what is important to the seller should be the very first thing your agent does prior to making the offer.”
19. Move quickly
McKinney also cautions buyers against waiting too long to make an offer.
When inventory is tight (and it has been in most areas for years), then it “is not the market to think things over,” he says. “If you really love that house, put in an offer right away.”
20. Consider incentives
Wordelman adds that any offers should include your preapproval letter from your lender, and that incentives — such as the buyer offering to pay for some of the fees that are normally paid by the seller — can sweeten the deal.
She also suggests limiting home inspection contingencies to matters of health, safety, or structural issues, as opposed to the seller having to worry about potential cosmetic issues.
21. Price is king
Fuller says that both buyers and their agents should understand that when it comes to making a good offer, price matters.
“It’s not the only factor, but it is very important,” he says. “Most sellers are going to select the highest price offer, and in a multiple-offer environment, you’re going to have to pay more than the list price.”
“In every market, a reputable agent is going to understand how much a house price goes up with each additional offer, and will be able to write an offer that is best for their buyer.”
22. Shorten contingencies
McKinney notes that if you need a mortgage or inspection contingency in order to buy, you might consider shortening the time period.
This can be a great incentive for those sellers who want to close as quickly as possible, and it makes you look like a more serious buyer.
23. Make sure your agent is on top of contract deadlines
The earnest money, which secures the contract on the house, is deposited when it is received, and Wordelman says that part of an agent’s job is to protect it.
“Make sure you know what deadlines there might be in the contract, so you know at what point your earnest money can’t be recovered,” she says.
24. Sweeten the deal
Wordelman also suggests that offering a higher earnest money can help a seller commit, as it shows you are serious about the purchase and have the money needed to buy. McKinney adds that a strong earnest money of between $5,000 and $25,000 is a good incentive for sellers, though average earnest money amounts vary depending on where you live.
25. Negotiate repairs
During the inspection and appraisal period, you might discover the home needs repairs you didn’t anticipate, such as a new roof or water heater — things that really can’t be determined prior to the inspection. Fuller often advises his clients to consider negotiating certain repairs, as opposed to just asking the seller to pay.
“One way is to ask for a price reduction, which could mean a lower loan amount for the buyer and lower property taxes,” he says. “A buyer could also ask for a closing cost credit, which can offset closing costs.”
“There could also be items on the property you might like to acquire as the buyer, such as furniture or appliances, and you could request those be part of the sale in lieu of repairs.”
26. Go beyond the standard home inspection
In addition to a regular home inspection, Wordelman says buyers should also consider inspecting for radon, mold, asbestos (important in older homes!) structural issues, sewer scoping, water quality or a well test.
27. Be upfront about the repairs you want
Wordelman adds that it’s important to write a clear and concise request in regards to any repairs you want done prior to closing.
“Vague or ambiguous requests could be waiving what you really want,” she says. “You don’t get to ask for more once you sign off on the inspection, so be clear on what you expect.”
28. Order the appraisal ASAP
Once you’ve picked your lender, make sure you get them everything they need so that they’ll order your appraisal as soon as possible, which will help speed up the process and can even be a good incentive to include in your offer, says Wordelman.
“If you end up having an appraisal gap, it can be helpful to know sooner than later,” she says. “The seller does not have to lower their price, and you don’t necessarily have to bring in more cash than you offered. Remember, closing isn’t over until the funds are received, so this is the time to negotiate.”
29. Anticipate appraisal shortages
In many parts of the country, the housing market is running with a very low inventory, which means houses are selling for more than their appraised value.
“There isn’t much you can do about the appraisal,” says McKenna-Inman. “In markets like we’re in right now, appraisals often come in below purchase price, and in that case, you’ll either need to try to renegotiate with the seller, or have the financial wherewithal to cover the difference between the purchase price and appraised value.”
Here again, this is why it’s critical to know how much you can comfortably afford before you start looking. In competitive markets, you’ll want to be sure you can both afford the monthly mortgage payment on the home, and also have sufficient down payment and reserves to cover any possible appraisal gap.
Renegotiating during closing
30. Work it out before you come to the table
If there’s a problem after you’ve closed on your house, your options are extremely limited and will usually involve attorneys and lawsuits.
Wordelman states that any potential last-minute issues really need to be worked out prior to sitting down to close, which includes signing off on any amendments or addendums for repairs that need to be completed.
The final walkthrough
31. Never skip the walkthrough
The final walkthrough is your last real chance to verify everything is in order prior to closing on your new home. Wordelman suggests taking the signed off repair list with you, just to make sure all agreed-upon repairs are completed.
32. Ask to see receipts from all completed repairs
Mckenna-Inman says that buyers should review all receipts for any completed repairs, primarily to verify that they were done by a licensed professional. “I always want to see proof of who did the work,” she says, “especially with things like electrical or plumbing. You don’t want some friend of the seller, who might not be licensed or know what they’re doing, to be making repairs on the home.”
The closing table
33. Request docs in advance
If you want to go over documents with a fine-toothed comb before you sign them, it’s a good idea to request to see all signing documents in advance, says Wordelman, otherwise the closing process can be slowed down.
34. Make sure funds are in hand
Wordelman advises double- and triple-checking to make sure funds were wired in advance; otherwise, your closing might be delayed. “Where I live, we fund at the table,’’ she says. “That is the day everything happens.” And if your title company requires a cashier’s check, make sure you get that at least a day before closing so you have it with you the day of the big event.
35. Bring your ID
It might seem like a no-brainer, but in all the excitement of closing, it’s not uncommon for buyers to forget their ID, says Wordelman — and that’s a necessary document to complete the closing. You don’t want anything to delay or slow the process, so making sure to avoid even these small glitches helps facilitate a smoother closing.
Follow our 35 tips, and you’ll be a homeowner in no time. Best of luck!
Header Image Source: (Roger Starnes Sr / Unsplash)