2020 Buying A Home Handbook – Part 2
The Power of Having a Real Estate Professional on Your Side
If you’re searching for a home online, you’re not alone; lots of people are doing it. The question is, are you using all of your available resources, and are you using them wisely? Here’s why the Internet is a great place to start the homebuying process, and the truth on why it should never be your only go-to source of information and support when it comes to making such an important decision.
According to the National Association of Realtors (NAR), the three most popular information sources homebuyers use in the home search are:
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- Online Website (93%)
- Real Estate Agent (86%)
- Mobile/Tablet Website or App (73%)
Clearly, you’re not alone if you’re starting your search online; 93% of homebuyers are right there with you. The even better news: 86% of buyers are also getting information from a real estate agent at the same time.
Here are three reasons why working with a real estate pro in addition to a digital search is key:
1. There’s More to Real Estate Than Finding a Home Online. It’s a lonely and complicated trek around the web if you don’t have a real estate professional to also help you through the 230 possible steps you’ll face as you navigate through a real estate transaction. That’s a pretty staggering number! Determining your price, submitting an offer, and successful negotiation are just a few of these key steps in the sequence. You’ll definitely want someone who has been there before to help you through it.
2. You Need a Skilled Negotiator. In today’s market, hiring a talented negotiator could save you thousands, maybe even tens of thousands of dollars. From the original offer to the appraisal and the inspection, many of the intricate steps can get complicated and confusing. You need someone who can keep the deal together until it closes.
3. It’s Crucial to Make a Competitive and Compelling Offer. There’s so much information out there in the news and on the Internet about home sales, prices, and mortgage rates. How do you know what’s specifically going on in your area? How do you know what to offer on your dream home without paying too much or offending the seller with a lowball offer?
Dave Ramsey, the financial guru, advises:
“When getting help with money, whether it’s insurance, real estate or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman.”
Hiring a real estate professional who has his or her finger on the pulse of the market will make your buying experience an informed and educated one. You need someone who is going to tell you the truth, not just what they think you want to hear.
If you’re ready to start your search online, don’t skip over the support of an educated and informed real estate professional. You need someone at your side who can answer your questions and guide you through a process that can be complex and confusing if you go at it with the Internet alone.
Regardless of the Price, You’re Going to Need Advice
In real estate today, there are essentially three different price points in the market: the starter-home market, the middle-home market, and the premium or luxury market. Each one is unique, and depending on the city, the price point in these categories will vary. For example, a starter or lower-end home in San Francisco, California is much more expensive than almost any other part of the country. Here’s what you need to know about each of these tiers:
Starter-Home Market: This market varies by price, and these homes are typically purchased by first-time homebuyers or investors looking to flip them for a profit. Across the country, homes in this space currently have less than 6 months of inventory for sale. That means there aren’t enough homes on the lower end of the market for the number of people who want to buy them. A low supply like this generally increases competition, drives bidding wars, and sets up an environment where homes sell above the listing price.
According to data from the National Association of Realtors (NAR) on realtor.com,
“The desire for affordability continues to push down the inventory for homes listed for less than $200,000.00.”
Middle-Home Market: This segment is often thought of as the move-up market. Typically, the buyer in this market is moving up to a larger, more custom home with more features, all coming at a higher price. Across the country, this market is looking more balanced than the lower end of the market, meaning it has closer to a 6-month supply of inventory for sale. This market is more neutral, but leaning towards a seller’s market.
Premium & Luxury Home Market: This is the top end of the market with larger homes that have even more custom features and upgrades. Nationwide, this market is growing in the number of homes for sale. In the same realtor.com article, we can see that year-over-year inventory of homes in this tier has grown by 4.7%. Today, there are more homes available in the premium and luxury space, leading to more of a buyer’s market at this end.
Regardless of the segment of the market and the price point you’re looking at, you’re going to need the advice of a true local market expert to guide you through the process.
Tips for Searching for Your Dream Home
In today’s market, low inventory dominates the conversation in many areas of the country. It can often be frustrating to be a first-time homebuyer if you aren’t prepared. Here are five tips from a realtor.com article titled, “How to Find Your Dream Home—Without Losing Your Mind.”
1. Get Pre-Approved for a Mortgage Before You Start Your Search
This will help you show you’re serious about buying a home. Even if you’re in a market that’s not as competitive, understanding your budget will give you the confidence of knowing whether or not your dream home is within your reach, and help you avoid the disappointment of falling in love with one well outside your price range.
2. Know the Difference Between Your ‘Must-Haves’ and ‘Would-Like-To-Haves’
Do you really need that farmhouse sink in the kitchen to be happy with your home choice? Is a two-car garage a convenience or a necessity? Before you start your search, list all the features in a home you’d like. Qualify them as ‘must-haves’, ‘should-haves’, or ‘absolute-wish list’ items to help you stay focused on what’s most important.
3. Research and Choose a Neighborhood Where You Want to Live
Every neighborhood has its own charm. Before you commit to a home based solely on the house itself, take a test-drive of the area. Make sure it meets your needs for “amenities, commute, school district, etc. and then spend a weekend exploring before you commit.”
4. Pick a House Style You Love and Stick to It
Evaluate your family’s needs and settle on a style of home that will best serve those needs. Just because you’ve narrowed your search to a zip code doesn’t mean you need to tour every listing in that vicinity. An example from the article says, “if you have several younger kids and don’t want your bedroom on a different level, steer clear of Cape Cod–style homes, which typically feature two or more bedrooms on the upper level and the master on the main.”
5. Document Your Home Visits
Once you start touring homes, the features of each one may begin to blur together. Keep your camera handy and make notes on the listing sheets to document what you love and don’t love about each property you visit.
62% of Buyers Are Wrong About Down Payments
According to the ‘2019 Home Buyer Report’ conducted by NerdWallet, many first-time buyers still believe they need a 20% down payment to buy a home in today’s market,
“More than 6 in 10 (62%) Americans believe you must put at least 20% down in order
to purchase a home.”
When potential homebuyers think they need a 20% down payment to enter the market, they also tend to think they’ll have to wait several years (in some markets) to come up with the necessary funds to buy their dream homes. The report continues to say,
“The truth: 32% of current U.S. homeowners put 5% or less down on their home, according to census data.” (as shown below):
The lack of knowledge about the homebuying process is unfortunately keeping many motivated buyers on the sidelines. Don’t let simple misunderstandings keep you and your family out of the housing market. Let’s get together to discuss your options today.