First-Time Home Buying and Common Questions
Looking back on when I got my license in the summer of 2018, I should have realized that dealing with first-time buyers would be synonymous with early childhood parenting. First conversation that you have with someone that’s never bought a home is going over the basics- here’s what homes are costing where you want to live; the best way to save for a down payment; how the mortgage process works; inspections, appraisals, and everything in between. When Cal and Bastian started trying to walk or crawl, it’s a constant barrage of positive reinforcement and repeating the same things to instill knowledge in their young brains. Now, this isn’t an insult to you, first-time home buyer. In all honestly, this is going to be an encouragement to know that basically every single person buying their first home has the same questions, concerns, and problems. I want to run through the ones that I see most commonly so that, when you hit me up to buy a house, you’re not constantly prefacing every question with, “this probably is a dumb question”, because I’ve have heard them all.
In my somewhat professional opinion, the main barrier to entry when it comes to first-time home ownership, is a complete lack of knowledge of how to save money. There are obviously a lot of issues with the education system from a macro perspective (love you, teachers- not directed at you). The glaring hole of personal education is the lack of teaching pertaining to basic finance skills. How to avoid debt. How to save. How to spend intelligently while also having a savings goal in mind. So many people don’t even consider the thought of buying a home because of their debts that they’ve accumulated. If more high schoolers were drilled on how to not pigeonhole themselves in their first decade of adulthood, imagine how much more millennials would dominate the economic landscape of America. Millennials, since 2014, have taken up 36% of home buying market share and that’s just going to continue to grow as more of us get out from underneath large debts. All of this dad talk to say- start spending wisely today. You’re wasting your time if you’re not. And then once you determine things you actually need to spend money on, look at your paychecks and evaluate what you’re able to save each month. Times that by the amount of months that you have left on your lease, and then begin to budget what you can spend on a home. This is the easiest, bare-bones way to evaluate your budget and tell you if you need to sign another lease or maybe even cut back some of your spending.
Now that we’ve gotten the preliminary step out of the way that should happen well before you even begin to start talking to your favorite realtor about buying a home, let’s get into the thick of things pertaining to what happens when the buying process starts and gets through a contract. When you first contact me about buying a home, there are some basic things to know and be aware of going into the conversation: first, what I wrote about in the paragraph above. Either have money saved up and ready to use as a down payment or find a lender that can help you with a low down payment option. Second, know where you want to live and have a general idea of what home prices are. Don’t tell me that you want to live in The Nations for $150,000 and you can only afford a $1,000 a month mortgage on a newly remodeled home. Only thing you’re accomplishing there is setting yourself up for disappointment and making me be the bearer of bad news. Once you know what you’re looking for, I’ll take your demographic of where you want to live and price point and set up a search that pulls current listings as well as notifies any time there are new listings. Really cool tool that allows a pulse check for what you’re looking for. If you cast a wide net and are flexible, you’re going to have a lot of options. If you’re really specific for what you’re looking for, you’re going to be in a market flooded with multiple offers and you better be ready to fight for your house or be willing to accept a couple defeats before finding the right fit. Nature of the beast right now, unfortunately.
You find the house, get it under contract, get your first taste of celebratory champagne; then comes the dreaded inspection. The seller is shaking in their boots worried that there’s going to be a shifting foundation or an electrical system failure or the inspector gets on google and finds out that an asteroid the size of New Jersey is POINTED DIRECTLY AT THE HOUSE AND WE NEED TO ABORT MISSION. Buyers see some caulking missing from the bottom of the guest tub and all of the sudden feel like we need to drop the price of the house by a few stacks. This is the most important part of the article, so please make sure you read this. My last couple of deals have had some heavy repair proposals. Like- twenty to twenty five items asked to be fixed by the seller. For first time home buyers, you need to have a reality check that not every single thing listed on an inspection report is going to be fixed. I had a report last week that literally had eighty three items on it. Overwhelming report to look at for a first-time home buyer and can, understandably, make it look like the house is falling apart. Almost every time, it’s not. It’s an inspector’s job to go in and list every single thing that could be considered a defect. Inspectors usually grade out concerns on a scale of 1 (cosmetic/ not a cause for alarm), 2 (needing repair/ moderate concern level), 3 (major problem/ immediate remedy necessary). Most inspections are going to be majority level 1 fixes, then have a bit smaller portion of level 2, and a very small group of level 3; most don’t have any depending on what type of home you’re buying.
Inspection reports and working out repair negotiations is the worst part of my job. It’s stressful for my buyers, it’s stressful when I present the proposal to a listing agent basically telling them, “I need your client to spend a few thousand dollars out of pocket before they get their sale proceeds to get this fixed, or we back out and no one walks away happy.” Big yikes. However, it’s part of almost every single home buying transaction. If you’re not a cash investor working to flip properties, you’re going to be doing an inspection and asking for repairs after. As your agent, it’s my job to take your wants and request and present them to the other party involved. The part where I need to do a better part of being an agent is this- just because an inspector says something could be an issue, doesn’t mean that you need to get hurt feelings when a seller says “it’s fine” or it’s not something they’re willing to fix. The reverse goes for sellers. I had a client that refused to get a decade plus major appliance serviced, and that was the only repair the buyer asked for. If you’re a seller that is making a significant amount of equity on a sale and you can’t pay someone $100 to service equipment because of principles, you need to reevaluate said principles. Don’t be a jerk just for the sake of being a jerk.
My job as an agent, especially for first-time home buyers, is primarily two-fold: be your primary advocate through every phase of the process, and to be your Mr. Miagi. Sometimes learning is fun, sometimes it sucks. One of my big focuses the last couple of quarters has been pulling myself back on trying to help with the mortgage process and questions. While I know I have a solid grasp of that facet of buying a home, it puts an undue amount of pressure on me to juggle too many balls at once. It’s also not something that I have hands-on availability to throughout the process. As an agent, I am (and should be) a bystander to your mortgage process that is there to receive regular updates from your loan officer and to be a gopher for contract documents if they need them. Nothing more, nothing less. For too long I’ve let my ego get in the way of my job where I want to display my well-rounded capabilities. Going forward, I want to do a better job of just being a facilitator between a client and lender and not someone that has to answer all of the questions. Your lender is getting paid to take your phone calls and answer your emails and texts. I need to let them do their job. And educating people that have never had a mortgage before definitely falls in their job description more than it does mine. Thankfully, I work with a few lenders that are great at their job and great at educating borrowers.
Buying your first home is, most often, a very emotional experience. The initial high of seeing the home you want to put an offer in. Visualizing yourself and your family seated at the table for dinner. The sadness of learning that a different offer was accepted. The joy of an accepted offer. The frustration of a not-so-stellar inspection report. The begrudged compromise of a repair proposal. But it always ends with joy, and I think that’s the important thing to remember. All good things in life come with some type of disappointment and relative hardship along the way. While I can get (frequently) frustrated by agents, clients, inspectors, appraisers, and other parties in the transaction, my job is so frequently rewarding as an end result that I couldn’t imagine doing anything else. It’s worth putting up with the issues I come across to get to put clients in homes and financial situations that are going to benefit them for years down the road. My business has flourished this year, and I’m really honing in on my skills that make me a better agent than the next. That’s due in large part to the first-time buyers that continue to trust me; and I’m going to continue to lean in to being the best advocate I can for them.