Knowing just how much house you can afford will make your search much easier. This is probably the most important question for first time home buyers. But, don’t rely on online mortgage calculators or even a realtor’s back-of-the-envelope guesstimate. These rough estimates can leave important financial details out of the equation.
When it comes time to make an offer your real estate agent will be invaluable. He or she will help determine the amount of your offer and manage the negotiations which follow. Using comparable homes in the area that have recently sold, your realtor will be able to assess a reasonable value of the home. While not an apples-to apples comparison, this information provides a useful guideline in determining price. Don’t hesitate to offer less than asking price to start. This is typically expected by the seller. In rare instances when a market is unusually hot, will the seller expect full asking price.
Once you and your realtor have settled on an asking price, he or she will begin the negotiating process. Here’s what you can expect:
- Your realtor presents your offer to the realtor of the seller.
- The seller will consider your offer and either accept or reject it.
- Should your offer be rejected, you can submit a counter offer or withdraw all together.
- Expect some back-and-forth before you agree on a price
The best way to know how much you can afford, and put yourself in the best possible position when it’s time to make an offer, is to get a pre-approval from a reliable mortgage lender.
An experienced Loan Officer will:
- Help you obtain pre-approval
- Have access to a wide range of loan program that can meet most any need. Including loans with little or no down payment, VA loans, or FHA loans which can be ideal for first time home buyers
- Keep you up-to-date on the progress of your loan application through closing
- Be able to assist you in identifying areas where you may be able to improve your credit score
Just like your Loan Officer, a qualified professional real estate agent has resources you’ll never be able to find on your own. An experienced real estate agent will:
- Have expertise of the local market and early access to new listing before they hit the internet.
- Have a good working knowledge of the neighborhood and local amenities
- Be a better negotiator providing much needed perspective because they are not emotionally involved in the sale.
Buying a home without an agent can become a big hassle very quickly. Because a home purchase is a legally binding contract you will need access to an attorney. Also, remember that the real estate agent is paid by the seller, not the buyer.
Like any professional you hire, you want to make sure there is a good fit. Interview several realtors, ask them to provide references along with their sales history.