10 things you should know before you buying your first home By Norman Sinai

Buying your first home brings up a lot of questions and emotions, much of the conventional information can be found through online searches, talking to Realtors, and other people who have bought and owned homes…but do you really want to rely on combining all that information that you may or may not get through exhaustive searching and note taking? Or worse, not get the most important information at all?

Norman Sinai Real Estate Broker

If your entering the home buying phase of your life, let me give you some insights you should be aware of as a first time home buyer: These are in no specific order of importance, and not a complete list of everything you should know, but are stand out important things to know from 24 years of experience with selling to 1st time home buyers: While most are pitfalls to aoid, some of these are suggestive, not mandatory, like knocking the neighbors…read on:

1.   That feeling of obligation and commitment to a mortgage, its ok.

Its exciting, a little scary, and ultimately extremely rewarding, but yes, a bit nerve racking. Just relax a bit. As long as you are working with an experienced guide (your Realtor), are educating yourself on the area, and the home, you’ll be ok.

I have sold homes for over 2 decades, I very rarely have met a person who regretted it.

2.       Embrace the benefits on the other side of that feeling;  your going to have your own space, with no landlord that has any authority over you, you’ll likely gain appreciation, be paying yourself monthly via the pay down of the mortgage, get the tax write off, and ultimately its yours, and a very rewarding feeling and sense of security, comfort and achievement for you and your family.

3.       In this current hot sellers market of “ take it or leave it” home condition, make sure you get a home, pest and roof inspection at the very least, regardless of the market.                                   Yes you have to show your easy to work with and be aggressive in your efforts to secure a sale in this market, BUT to not do inspections on this large of a purchase, well that’s like dropping your young kids off with a person you met at the Walmart parking lot because they were nice…You still need to do the investigation, i.e. inspections on your largest investment to know the condition, potential issues and costs…If any Realtor or person tells you other wise, they are wrong.

4.       Go visit the property at sunset or better, an hour after it gets dark.  From the most affluent areas, to lower cost ones, I have found it a good idea to visit the neighborhood, more specifically, the home your buying, after it gets dark. Ideally on a couple of different days at varying times. Drive by observe, see who’s outside, what the parking situation is. This is very telling, as it gives you an indication of what you can expect or what the dynamic of the neighbors and area are like in the evening. I have been suggesting this for many years, and have had many buyers thank me for this suggestion. Most of the time, there is nothing to see, but sometimes, you may uncover an undisclosed or unknown concern. 

5.       Knock on the doors of the immediate neighbors to know who your living next to– ok, if you’re an introvert or a little uneasy with this, I understand.  As a Realtor, I have done this many times for my clients, and I want to see; who answers, their demeanor, attitude, I want to know who I am living next to…but let me just say this, I don’t go in with a pre conceived idea about anyone, I just want to identify the people and attitude. I truly believe most people are decent human beings, but he truth is, there are plenty of people that I may not want right next to me, and this is especially important if your buying an attached home that shares common walls, such as a duplex. Why would you want to know whos next you? Its no fun having a weirdo unhinged neighbor you have to see daily or be attached to at all times (that’s right, I said it).This isnt to scare you, just bring an awareness for you to be thorough.

**I understand, we are currently in a market where  you don’t really get to be that discerning with all this investigation stuff, seeing who neighbors are and deciding on if it’s an acceptable neighborhood at night….and to that I say, Its not hard, takes very little time, and is imperative to know the neighborhood  dynamic and condition of the home before committing.

6.       Don’t shop at your max price point, and leave room for negotiating…upward. If you can afford a mortgage payment at the maximum price of $900,000, it’s a good idea to shop in a price point lower than that to leave room to go up in price; whether that is a result of having to compete with other offers, or a combination of competition and non transparent pricing by the agent, in other words, that list price is just a starting point and not the actual price the home seller is excepting to get or willing to accept. Im adverse to this strategy but its common in the business and most of us agents use it. Talk to your realtor, learn the difference between asking and current selling prices to know what homes are actually selling for, and gauge where you should be looking at “for sale prices” versus what the homes in your price point and criteria are actually getting sold for.  

7.       Make sure you have a primary point person at your bank or mortgage company.                    Within the mortgage industry, there are certain companies that shuffle the borrower around from team member  to team member, in other words, the consumer and their needs are delegated to varying people and departments throughout the life of the loan, this can lead to team members not knowing or being aware of details the prior person had that may be timely and important in your transaction, which can create confusion, delays, and cause problems. I hear these complaints frequently, and the place it gets clear is while in contract on a home purchase.  My suggestion is work with a mortgage loan officer who will be your point of contact from beginning to end, which brings a sense of accountability, and that person will always know the status of your loan and quickly be able to address any issue or question. There are timelines that are stringent, moving trucks, deposits in play, and you and the home seller can’t afford delays or problems due to unorganized and often uninformed loan staff members. 

8.       Appraisals- what if the property appraises for less than what you agreed to pay?

Lets say you agree to pay $900,000 for a home, and the property ends up appraising for $850,000,that’s a shortage of $50,000, so what happens then?

Well, there are a few options, the first most parties lean to is, you the buyer come up with the difference in cash needed to close the deal at the agreed purchase price of $900k.

In this example lets say the lender agreed to lend 80% of the purchase price, which is $720k, and you the borrower come up with 20% down, meaning $180k as a down payment.

In this example, that shortage of $50k has to come from somewhere.

If the bank is saying, hey we will lend $80% of that lower appraised price of $850k, which is $680k, not that $720k originally based on the $900k purchase price, it now leaves the borrower having to come up with  $220,000k down, not the original $180k, which is essentially $40k more out of the borrowers pocket (not the full $50k).

Alternatives can be-

a.       The seller agrees to lower the purchase price to the appraised value or meet partway between the appraisal value and the original offer price (for example $875k).       This is less likely in a hot sellers market where others are willing to pay that same offer of $900k or more.

b.      Cancel the purchase agreement. This can lead to a loss of deposit if that contingency isn’t carefully crafted with your Realtor, or removed up front in the purchase agreement, which were seeing more of today.

c.       Get a loan with a higher loan to value- I.e. get the bank to lend 85-90% if possible, requiring less down payment money from you the borrower. This may be a good solution if: the additional money needed to accommodate more of a down payment isn’t available or you don’t want to part with it, you can afford a bit of a higher payment as your borrowing more, and your debt to income ratios support it (lenders have a max amount they allow borrowers to spend on all credit related debt).

9.   Prioritize your home buying criteria, and be vocal about it with your Realtor!

Realtors want to know what’s important to you in the home your searching for. While it may start with city and affordability, home size, bedroom and bathroom count, upgrades, condition, schools, amenities, home orientation, yard/lot size, proximity to amenities, commute access can all be very important. Instead of just mentioning it, put it in priority for the Realtor, let them know if there are any non negotiable, or where you have flexibility…for example, occasionally I have people tell me it is an absolute must they have at the very minimum 1,400 sq feet in a home, only to have them want to see an 1,100 sq foot home that checks all the other boxes for them. While some of this may come out in the discover process while shopping, be vocal with your realtor, let them know- often times we have a tendency to exclude things if we think it wont meet your criteria, or include things that aren’t even on your radar. Give feedback and watch the process streamline. Your quickly on your way to the perfect home.

10.   Speaking of perfect homes, 8 out of 10 on the wants and needs checklist is often perfect!

Lets face it, we all want exactly what we want, but we often find homes that meet all needs except one or two…it has all of the attributes, but missing 1,2 or 3 of those things we really wanted. Maybe it’s one block father from the park than desired, or It has the perfect yard and kitchen but not dual the pane windows...I’ll tell you, after decades of shopping with home buyers, there is frequently little concessions we make to get the perfect house, which ends up…being perfect! 

Ultimately, today’s home buyers need to work carefully with their Realtor and lender or loan officer to understand the process of buying a home and securing a home loan.

As both a licensed Real estate Broker , full time Realtor, and loan officer, I can guide you on your path to ownership. Please contact me if you need assistance buying or selling a home or securing a loan.

Happy house hunting.

Norman Sinai ~ Broker, loan officer

Realty World, Bay Area Group

925-829-7500

Quickcloze@aol.com