First Time Home Buyer Guide
Being a first-time home buyer can feel like a daunting task!
Purchasing a home is one of the biggest investments of your life. It’s a huge financial decision! Below are some tips that will help you along the process so that you can make a successful decision that will grow with you throughout the years.
Building Your Team
Hire a REALTOR
Use buyer representation, which employs a real estate professional to uphold a fiduciary duty to your best interests. The Home Buyer’s Services Boulder County is important because it outlines the responsibilities of the agent who owes their total loyalty to you. Be sure to confirm if the agent you are talking to is also a REALTOR. There is a difference.
REALTORS are held to a higher level of ethical responsibility when representing your transaction. Discuss your representation options with your agent. If you are purchasing one of your agent’s listings, make sure you understand what your agent can and cannot do for you.
Contact a Lender
Arrange for your mortgage financing upfront before you even start to look for a home.
The lender will focus on your ideal price range, your maximum loan, and whether there are any credit issues you should correct before buying. The Lender will also prepare a qualification letter, which you must provide the Seller when you make an offer. Consider this step like creating a team.
The Lender and the REALTOR are here to advocate for your achievement of buying a home. When these people come together it strengthens your ability to succeed!
Become Familiar with the Process
Review A Blank Contract
This can be done on your own or with your agent. Just be sure that before you submit your contract offer that you understand all the details of the agreement.
This is especially important for a first time home buyer because the agreement is lengthy and complicated. Your earnest money will be at risk if you don’t understand how to move through the contract and when it is OK to cancel the agreement. If you cancel outside of the dates and deadlines within the contract you may not receive the earnest money back. It will likely belong to the Seller!
If you familiarize yourself with the contract details and ask questions of your REALTOR you will understand how the process works and how to receive your earnest money back should you decide the house isn’t right for you after going under contract.
Ask your agent to explain the process of negotiating and counteroffers.
Review The Seller’s Disclosure
Reviewing the Sellers Property Disclosure before you make an offer will give you a picture of what physical conditions of the property are important in your decision.
Your contract offer should reflect the condition of the property. The seller could disclose a repair or condition that would affect what you would be willing to pay. You should know this before you decide on an offering price.
Protect Your Investment
Comparative Market Analysis (CMA)
Ask your agent to prepare a market analysis of the property before you make the offer.
Every first-time home buyer should know what similar properties are selling for so that you don’t overbuy. Also, if the seller remains firm on his price, you will be able to tell if the value is really there. The CMA will also let you know how many days properties are likely to stay on the market before receiving an offer, which is an indication of market demand. This CMA will also let you know what percent of the list to value properties are selling in this market so that you can construct an effective offer. Are properties selling at 98% of ask price or 103% of their listed price? Each of these answers will point to a different strategy for writing your offer.
Property Inspection
Get the property inspected by a licensed professional inspector.
This will help a first-time homebuyer know the true condition of what you are buying. Be sure to give yourself plenty of time to get the inspector into the home well before your deadline. That way you have plenty of time to follow the inspector’s advice if they recommend that you have another expert inspect a troublesome item. Ask your inspector to explain how to work or maintain appliances or systems in the home with which you are unfamiliar.
Home Warranty
Ask for a residential service contract when you write the offer.
This will cover you for some items that malfunction during the first year of ownership. Cash used for the downpayment, closing costs, and other home necessities can deplete your cash reserves. A residential service contract will reduce the risk of a future drain if a warranted item needs repair that first year.
