Where do I start? What is going on with the market today? Should I even try to buy a home? Can I even afford to jump into this market? Good questions, all.
First, let’s address commissions. I’ve said this thousands of times now, since I’ve had my real estate license for so long: Commissions are 1) negotiable; 2) normally paid by sellers, unless otherwise negotiated; 3) sometimes paid by sellers who sell as ‘for sale by owner’. Buyers, under ordinary circumstances, don’t pay commissions. There will be other fees, but USUALLY (for now) sellers pay commissions for both sides of the transactions.
With the advent of the real estate sites on internet, there are always “he said, she said” postings, and the real estate commissions have to respond. So here’s a good idea: Don’t ask your friend at work what the rules are; ask your real estate agent. We will tell you what you want to know. We don’t want you to have any unnecessary stress. Buying your first home is an adventure, thrilling, but stressful in and of itself. So for me, I want to keep my buyers informed so they can relax a bit about the money. It helps to know what you are facing. By the way, I and other agents always give you paperwork to show you.
Next: Interest rates. They’re going up. Sorry to say it, but it is true. Now, I’m not a pushy sales person, but you do need to get an idea what a quarter point of interest rate added to you payment will look like. Send some time learning how that process works. So what is the first thing to do? TALK TO YOUR LENDER. I’ve said that a thousand times, too. Until you have done that, you do NOT need to be looking at houses, because….you don’t even know what you can afford. And, understand that it can take months to find a home, or to have YOUR offer accepted when you find one. Multiple offers are the norm these days so…your rate can go up while you shop. So it makes sense, does it not, to get your lender to estimate your payment at several interest rates? Yes, it does.
I know there are real estate agents who read my blog, and they will agree with me that it’s a bad idea to show homes to anyone who has not gotten pre-approved for a loan first. Why? 1) Because that buyer doesn’t have an idea what they can afford. The internet is NOT the whole story. The lender is; so you have to talk to one. 2) Credit pull by lenders digs up things you have NO idea are on your report. That big credit pull is the real one, and that speaks volumes about what you can and cannot do. 3) You have to include a pre-approval letter and/or proof of funds with any offer you make ANYWAY, and if you wait to speak to a lender after you find a house, someone else can swoop in and buy that dream home while you’re getting your ducks in a row. Do that up front.
Can you afford to jump into the race? Well, that depends. It takes a fair amount of discretionary funds, in this market, to get under contract. First, with the ‘due diligence’ Offer to Purchase and Contract, you have to write a big check directly to the seller(s), which they cash right away. Due diligence checks can be several thousand to fifty thousand and more. In a ‘bidding war’, those checks can be huge. So you have to know what to expect, first; and then be able to do what you need to do. Note that you can use gift funds from parents, for example, to help with that (lender approval on that). Then, once you get under contract, you have lender fees and attorney fees, and you also have to pay for home inspections you choose to do. Inspections can cost several thousand dollars, depending on what you choose to do: survey, well test, septic inspection, HVAC inspection, roof inspection, wood destroying inspection, structural inspection…you get the idea. Keep in mind that here in NC, the seller is not required to do any repairs, although, again, most sellers will do some. Not always, though. If you ask for repairs, that’s completely negotiable.
What’s going on in the market? Well here, there’s still a shortage of homes. So there are often multiple offers and prices are high to start with. So very often, a stick built home for a first time buyer has a 3 in the first number. There are some existing homes and even some new ones in the 200’s, but they are not the average. And you can find manufactured homes (double wides) at or just under 200 thousand. Young professional first time buyers in my client base are normally buying in the high 200s to 300 thousand range, on AVERAGE. And I will say that there are a lot of people wanting to buy in North Raleigh in the 400’s. Folks, that one needs a 5 in the first number now, in most cases.
I’m still finding that my first time buyers and even first time move-up buyers are staying conservative, not maxing out what they CAN afford, but rather going with a payment amount that doesn’t make them ‘house poor’. I think that’s so smart.
Now, let me say this: Once you decide to jump in and try to find a home, put in your running shoes. You MUST be able to make quick decisions. Not rushed, but quick. Know what you want, where your line in the sand is, and get informed about what you need to look at when you shop for a home. I mean, look in the crawl space, check out the foundation for cracker. Mobile home? Look for tie-downs and other things that are required by lenders in order to finance them. And listen, cash changes everything. If you are not getting a mortgage, your options are greater, and a conventional loan gets you out from under government loan requirements. Talk to your lender, if you are shopping for a manufactured home. FIND OUT what the lender requires in order to finance one. Short lesson is this: Be prepared, be informed.
You’ll get tired of hearing information from any good agent. It is our job to inform you, advise you, and protect your interests. So we’re not ever going to leave you alone in the dark.
As for me, I’d love to chat with you to answer questions. I’m Brenda, with Coldwell Banker Advantage, hoping I get to meet you.
Coldwell Banker Advantage 919-210-6113