Timothy Garrity is a realtor and consultant at US Spaces, Inc. He's also a blogger. We asked him to prepare a first timer's guide from his point of view, given the experiences he's had with newbie buyers. Here's what he had to say.
In today’s Internet-driven real estate market, an unprecedented 90 percent of all buyers research homes online before talking to anyone. That makes it very easy to make mistakes. Google is an unbelievable tool for house hunting, but it points you in a hundred different directions. Realtor.com, Trulia.com and Zillow.com are some of the most heavily used sites. You also have Craigslist.org, Homes.com and tons of customized, individual agent sites. “Where do I go first?” “Who am I supposed to talk to?” Which agent is right for me?” Fret not: It’s totally common to feel this way. When I bought my first home, I felt the same way—and I was in the real estate industry!
“Where do I start?”
Your first step should be to choose a licensed Buyer Agent who will guide you through the complicated home-buying maze of modern-day real estate. A good Buyer Agent will explain the process in full, show you any/all properties that you’re interested in seeing, schedule all of your in-person showings, provide all of your real estate education/advice, draw up all necessary paperwork, and handle all negotiations ? whew. That’s a lot of service for one customer, but in all honesty that’s what it takes to do it right. In my opinion, the best place to access information about Buyer Agents is through a search on Trulia.com. Trulia allows you to search for different agents, learn about their experience/education, read through blogs, review answers to open forum questions, and see customer reviews. This is a great way to informally find someone who may be a good fit for you. Take your time, interview a few different agents (either online, over the phone, or in person), and make your choice.
“How does the real estate process work?”
Once you've chosen a Buyer Agent, you can then start following my personal “5 Step Buying Process”:
1. Get pre-qualified/pre-approved for a mortgage, or have your proof of funds ready to go.
2. Start your home search online and in-person.
3. Come to an agreement on terms with the seller.
4. Follow through on inspections, contingencies and dates.
5. Go to closing and pick up your keys.
Please bear in mind that these are general steps, with many more specific ones in between. The goal here is to understand the actual order of how things typically happen and then just take it one step at a time.
“How much does it cost to buy a home, and who pays who?”
This may be the most common question out there. When buying a first home, most people get so excited that they just make a few calls and start hunting before they understand the process and costs. I typically tell my buyer clients that closing costs average around 5% of the purchase price. For example, if you were buying a $200,000 home, your estimated closing costs would be $10,000. This number includes mortgage costs, title costs, taxes, etc. On top of closing costs, you will also need a down payment to qualify for a mortgage; the bank needs you to have skin in the game if they’re going to lend you almost $200,000. On a standard mortgage, the minimum down payment allowed is 5% of the purchase price. So if we use our $200,000 home again, you will need 5% for your down payment ($10,000) and 5% for your closing costs ($10,000); which means that $20,000 will allow you to purchase a $200,000 home. Now this is just an example; there are ways you can lower your upfront costs.
Okay so, who pays who? When you buy a home and seek out the services of a Buyer Agent, the seller typically pays all agents involved (assuming the home closes). So what does that mean exactly? It means that the Buyer Agent is your advocate (and typically at no extra cost to you!). Consider it free legal advice and one of the biggest privileges of being a buyer.
I hope this information has been helpful. My goal as an agent, whether you are buying, selling, investing, or renting, is to educate all of my clients upfront so they understand how the process works. If my clients do not feel comfortable making the important decisions required to buy a home, then I am not doing my job. Technology is most certainly a blessing and it has helped real estate buyers and sellers all over the world gain access to important information, but technology doesn’t always tell you what to do with that information once you have it.