You’re looking for a house for the first time, and everyone has some advice for you, especially when it comes to real estate agents. You’re hearing who you should and should not use, and why.
Here’s a secret: choosing the correct real estate agent is the last step before buying a home, not the first. Unless, of course, you want to buy their image of your dream home.
The top two important decisions you will make are the location where you want to live that is convenient to your life, and finances. Both of these factors are important in choosing a real estate agent.
Location determines so many other factors in your life that it is critical to choose wisely. Do you want a short daily commute? Does your job send you to different locations daily, like construction or outside sales? If so, location might be less important. Are you orthodox and walk to religious services? Location may absolutely be the highest priority.
No matter your particular circumstances, location will be defined by convenience to your life. For example, does every important event on your monthly schedule occur in the northwest quadrant of your city? Do you want to live in a suburban, rural or an urban setting? Is a specific school district important? Your priorities will imply a geographic area to consider for home purchase.
Step 1: Determine the geographic area that is convenient for your lifestyle.
The financial aspect of the home purchasing process seems to be the most scary for first time buyers. Don’t let anyone else do your thinking here. Determine a budget in your comfort zone, and be conservative.
How much money do you have for a down payment and closing costs? Will anyone else be involved with the financing: a gift of a down payment, cosigning the loan, simply buying the house for you?
How much do you want to pay monthly for a mortgage? All lending institutions have their own ideas and restrictions. You need to determine the maximum you are willing to pay, which should consider what you might have to sacrifice in other areas of your budget.
These two numbers, down payment and budget for mortgage payment, will determine the amount you can pay for a house. Be very happy with these two numbers.
One tip for new homebuyers: if your proposed mortgage payment is greater than your rent payment, start a savings account and put that difference in the account each time you pay rent while you look for a home. Continue whatever savings plan you currently have; this is in addition to, not in lieu of. Do not cash in that account while searching. This process will unveil the hidden sacrifices in your budget which you will make to buy your home, and give you more cash at closing.
Step 2. Determine your budget, then practice it.
You know your general location needs and your budget. For a first time buyer who will require financing, please use a seasoned veteran real estate agent. You do not need your efforts stifled by a rookie learning on the job at your expense. Drive through some of the neighborhoods that meet your location requirements and read for sale signs. Read the ads for houses for sale in those areas. Talk to people you know in these areas about who is a buyers’ agent. Build a list of agents who deal specifically in these areas; they will have great local knowledge.
Interview at least three agents to see who is the best fit for your personality. Real estate is emotional, yes, even for you. Ask the agents to explain any terms you do not understand. If they can’t explain them to you so you understand, do not use that agent.
In real estate, most agents actually work for the seller, although they are honor bound to be fair in dealings and disclosures. Some “buyers’ agents” are specifically assigned to work on behalf of buyers; again they are honor bound to be fair in dealings and disclosures. Find the one right for you and your comfort zone.
Step 3. Trust. Let the professionals do their work.
First time real estate purchasers need a certain amount of education since these are complex transactions. Do your homework first:
- Geographic location
- Finances
- Select a real estate agent
Then: Trust them to do their job. Be patient. Monitor progress, but don’t nudge. You will be in your new home soon.