Tips to make homebuying process easier
Being a first-time homebuyer is an exciting experience but it also can be a daunting and overwhelming one.
We spoke with Romana King, a real estate expert, on buying basics to help novices so that the buying experience isn’t too overwhelming.
1. Get to know your buying power
King says it’s a combination of your credit-worthiness and how
much you can realistically pay for a home. There are two components that make up your buying power: The amount of money you have saved as a down payment, plus how long your credit history shows what a great
consumer you are (how often you pay your bills on time). She suggests you add up all savings you can use buying a home, deduct closing costs which can be about 10 per cent of a final price, and check your credit score.
2. Get pre-approved mortgage
“There’s a big difference between a buyer being pre-qualified and a buyer who has a pre-approved mortgage. Anybody can get pre-qualified for a loan. But getting pre-approved means a lender or mortgage broker has completed a preliminary examination of your income, assets and debt and narrowed down exactly how much mortgage you will qualify for.
“Getting pre-approved will save you a lot of time and energy. It
saves you from looking at houses you can’t afford and allows you to present a confident, firm offer to a seller of a home you want to buy.”
3. Set up one-hour consultation with realtor
Tell them every detail you know about your lifestyle, buying power, needs, wants and desires for your new-to-you home. The more detail you can provide, the easier it will be for them to help you find your future home. Your agent may also know of exclusive listings not available to the general public.
4. Make quick offer, if you find the right home
“If you see it and love it, then make the offer. Otherwise, that dream home may disappear faster than you think, especially if you’re buying in a hot market.”
5. Craft strong offer
“To craft a strong offer, ask your realtor for a comparative market analysis . This report estimates the current market value of a home by evaluating recent sales of similar properties in the surrounding neighbourhood. Some realtors prefer to select what properties to compare, but don’t rely on just their suggestions. Ask for a list of recent sales and then discuss which properties would be the best to use as comparisons. The idea is not to stack the deck, but to get a realistic impression of what houses, like the one you want, are really selling for at this point in time.”
6. Time on market counts
Be cognizant of how long a home has been for sale. The longer it has been, the more room you have in your offer to be aggressive.
7. Seller motivation can help negotiations
“It’s not always possible, but finding out the seller’s motive can help you craft a strong offer. For instance, if the sellers are moving to a new city for work, they may have a particular closing date — give them this date and you could save tens of thousands off the purchase price.”
8. Find out about other offers
If there are, consider putting in your absolute best offer, first. That way if you do lose out, you can walk away knowing you gave it your best. If there are no competing offers, consider putting in an offer ASAP.