I’m a real estate agent, as you may know, and I love working with first time buyers.  It doesn’t usually result in a big paycheck for me, but I get to work with some amazing people and be a part of a huge event in their lives.  I consider it an honor to help them.  But many of my first timers are sadly surprised by what they need to have in order to buy a home.  Most think they can hop on Zillow, look at the estimated price, put that amount against their income and they’re good to go.  But there’s WAY more to it than that.  Downsizers, you are also running into sad surprise many times.

First, you MUST sit down with your lender and get pre-APPROVED.  Listen, a pre-QUALIFICATION is not worth the paper it’s written on, assuming there’s paper somewhere in the process.  So be careful about the online estimators.  If I am your agent, I am going to want you to get face to face…yes, FACE TO FACE…with a lender, so they know whom you are, and so that they can be held accountable for making the deadlines to which you will contractually obligate yourself. This is critical.  The lending process is fraught with potholes, and you need to be more than a number among hundreds of numbers.  You need that lender to know your NAME and be able to put your face with it.  And I will need to be able to verify/check on milestones as the process progresses.  BUT…you must have a letter from the lender that goes WITH your offer to the seller.  That’s the norm now.

And listen, the lender is GLAD you are there.  They WANT your business.  So go in asking what they can do for YOU today.

Next: It takes DISCRETIONARY cash up front.  You have to pay for inspections and you have to put up due diligence money AND earnest money (usually), and these days you should count on 15K and up, depending on your price point.  Now please listen to this.  You will get all of that back when you close, but if you WALK AWAY, the seller gets to keep your due diligence money and that can start at 4% of purchase price on average. OMG where am I going to get that kind of money?  Well you can be gifted quite a bit.  But you’ll need to talk to that lender person, the one you’re looking in the EYES, about that.

When you find a house you like, these days, sellers don’t have to pay your CLOSING COSTS, they don’t have to buy you a WARRANTY, they don’t even have to do repairs.  In other words, don’t look for a fixer upper unless you are a fixer and you have the money and skills already on board.  The seller is not going to help you out.  Why?  There are 20 other offers on the table that won’t ask for it.

Be sure your agent knows about any class action lawsuits about construction that happened during the age of the house you seek, and ALWAYS look in the crawl space.  Make sure your agent knows what red flags to look for while you are looking at the space and placing furniture in your mind.

Don’t change jobs.  Don’t incur more debt.  Your job history is SO important, and debt-to-income is critical.  Spiff up your credit score, pay off as much debt as you can, and save, save save.  Ya gotta have some cash if you want your offer to win out against the many others.

Buyers always have a list of must-haves, but also almost always veer WAY off of that list in the end.  So my advice is to have an open mind, because…it’s going to end up that way.

Let me know if I can help you; call me if you want to just chat.  And have a wonderful day!

I am Brenda Briggs

Coldwell Banker Advantage

The market is crazy everywhere, and I expect it will be until interest rates go way up, and/or until the supply of available homes catches up with demand.  Honestly, I don’t see that happening any time soon.  If it was a strictly economic issue, I’d think ‘crash’, and it seems like that should be looming.  But as long as you have 100 homes and 10,000 buyers actively looking, the insanity will continue.  Oh, and we have the national LLC’s stalking around buying up properties, turning our communities into rental communities.  So you’re competing with corporate money too.  Still,  it’s all about supply and demand…in my opinion of course.  You have to say that every time you open your mouth these days, even if the data bear out what you’re saying.

But here’s a good reason you should consult an experienced agent:  If you think inside the box (that’s such an overused cliche), you will never have an offer accepted…unless you pay way too much over list price for the property.  You have to think creatively.  It doesn’t have to be all about the money, although let’s be clear, money IS important and expected in this market.

More and more, sellers are asking for a lease-back period AFTER closing.  Why?  Because they are now also facing a housing shortage within which there’s a stampede toward every house on the market.  Think about it:  They can’t line up something to move TO while they market their existing home, because by the time they get their house sold to you, the one they want to go TO has sold three times (I’m exaggerating).  But you get the picture.  The seller can use your due diligence money to pay THEIR due diligence, but only if you give them some lease-back time to find a home, get their offer accepted, and get it under contract in the midst of the frenzy.  Two months is short time for all of that, really.

Buyers, this is a big risk.  You’ll be closing on your home you’ve sweated blood to buy, and now you’re going to let the ex-sellers stay there for potentially months.  So be sure they get renters insurance.  And make sure the appropriate paperwork is recorded, detailing the terms of the lease-back, including how you will handle any damage they do to the property when they move.  Yes, you can charge them rent, OR you can use some ‘free’ time or cheap time as leverage to encourage the seller to pick YOUR offer above the twenty others.  And, just so the wrench goes right into the gears, what if that ex-seller-now-buyer has to allow THEIR sellers to camp out for two months for THEIR lease back?  Risk.  Better know your limits because it could get complicated.  And you’d better have a good real estate agent who understands the pitfalls.

Times are complicated in real estate.  Market values are going up and up, because each time a home sells above what we call the ‘true value’, that home becomes a comp for other homes coming on the market.  I doubt there’s been a time when home values have gone so high, so fast.  In any case, current real estate transactions should be a team effort, with the principals and agents putting their heads together to figure out how to make the most of today’s market.

It doesn’t always have to mean paying out far too much cash; it could be a matter of communication between the agents  to find out what the other party wishes for or needs.  Trust me, everyone is stressed out in this market, and I think an act of kindness could go far.  Nobody expects that anymore, but it’s not always about the money.  Let the seller breathe a little bit if you can afford to, and sellers, if you NEED that contingency, tell your listing agent to publicize that in agent remarks.   Buyers don’t always like this idea of leasing back their newly purchased home, and that’s okay!  But it’s on the table more and more, so it has to be acknowledged.

The overarching theme here is that you need to have an agent (who is an advisor, right?) who understands the moving parts, how they work, and how one impacts the other.  That comes with experience and creative problem solving skills.  And trust me, not everyone has that talent.  Vet the ones you want to hire to represent you; be sure that person can explain how things work and be sure they are a team player, not a dictator.  It is unethical and actually dangerous, for real estate agents to tell you what to do.  You, buyer or seller, are the boss.  So BE involved, pay attention, and think outside the box.

And let me just add another couple of thoughts.  IF you have a seasoned agent, one who knows the market and understands the moving parts, LISTEN to the agent’s advice.  For example, if you have over leveraged your property, you cannot expect a buyer to pay for that.  It is THE MARKET that will determine your property value, and if you have borrowed too much against your house, no way the market can cover that in most cases.  Buyers are not dumb.  When I worked for a builder just before the crash in 08, I distinctly remember one of the big guys saying, “We’re just going to ignore the economy and keep on selling houses.”  I almost fell out of my chair over that one.  Well waiting for a buyer to pay astronomically more for your property than it is worth to pay off all of your debt, makes about the same amount of sense: none.  Oh, and just so you know, the good agents can see that from a mile away.  Trust me on that one.

And at last, remember that your real estate agent is bound by law to protect your privacy.  So be up front about your goals, what you want and WHY you want it.  Don’t make the agent figure out, for example, if you’re over leveraged.  Be up front about that so she/he can work on that problem with you.  We do love a challenge, after all.

And good luck.  Listen, it’s tough out here in the world of real estate, but you are all grown up and are now buying or selling property!    Please adjust your expectations so that you are not terribly shocked by the market, and believe that your agent has ‘got this’ as we say.  Breathe.

I’m Brenda Briggs, Broker, realtor

Coldwell Banker Advantage