First Time home buyers are just that…first timers. They are new to the idea of home buying and home ownership. Yet I meet so many who believe they understand the market and real estate industry. It’s not their fault, with so many websites pumping information their way and parents and friends telling them stories of their experiences; its no wonder they feel they have some understanding of how things will go. Among the many misconceptions I hear in the field, here are the top 5 I hear most often:
1. That it’s a buyers market
The majority of the market today is made of first time home buyers. They are all seeking a similar price range and it is competitive out there! Especially since the recent decline in the number of homes for sale. With inventory so low and so many buyers in the same price range, there are often times multiple offer situations. In those situations the sellers have the negotiating power.
2. That they can close quickly
With a regular sale or a bank owned property you can expect to at least wait 45 days to close from the time of acceptance of your offer (with a good lender 30 days). What most buyers don’t consider is how long it will take to get under contract. In this market, the first home you place am offer on may not be the one you buy for a variety of reasons; but mainly because there is a lack of inventory and competitive bidding on the homes that are in the best condition and priced the best.
3. How much money they will need to buy or that the seller will pay all of their closing costs
The sellers consider all of the terms of an offer. If you offer less than list price and ask for closing costs, you are essentially offering them that net amount. Keep all of these things in mind when making an offer. If another buyer doesn’t need closing costs to be paid they will have the competitive advantage. Do not expect that the seller will contribute anything to your closing costs.
4. That they will get a huge discount off the listing price
The discount comes from buying a home in this market at these interest rates! You can of course offer less than asking price if the home seems overpriced. Try to avoid the common mistake of making an offer using the average sales price or average price per square foot when the house is above average! I can’t tell you how often I see a buyer lose out in a multiple offer situation because they are looking at average sales prices. If a home is the best you’ve seen that means it is above average and someone will be willing to pay a premium.
5. That it will be easy
We are dealing with distressed property sales, tough mortgage financing guidelines, declining number of homes for sale, 3rd parties that have to approve sales such as banks/mortgage insurance companies, and so much more. We do everything we can to minimize the stress and make it a smooth transaction but a lot of things are out of our control. You have to keep a level head and don’t take anything personally. You have to make compromises for your first home – and second and third. You will not find the “perfect” house unless you are building one yourself and have an unlimited budget. You just want to find a place where you’ll be happy and can make it your own.
My advice to first time home buyers is always to be open minded and realistic. This market isn’t easy but as a first-time home buyer you will reap the benefits of buying in a market where home affordability is at historic rates!
For more information on first time home buying visit us at: ThinkLiveBe Properties Home Buying
What was your first home buying experience like? Or if you are ready to jump into the world of home ownership – visit the link above!