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Maria Gilda Racelis

What You Should Know About Home Buying? The First-Time Home Buyers Guide

Commitment is what transforms a promise into reality…Commitment is the stuff character is made of; the power to change the face of things. It is the daily triumph of integrity over skepticism.
~ Abraham Lincoln

“I take personal gratification from the smile on the faces of my first-time home buyers when they get the key to their new home.”

When I started in real estate, my niche was lakefront properties. The returns for the times and efforts expended for every buyer were huge as lakefront homes were not inexpensive.

But the meltdown in 2008 propelled me to revisit my business niche. From Lakefront Specialist, I became First-Time Home Buyers advocate.

Every change is not easy. However, I learned through the course of time that the switch was a blessing. The delight and joy of seeing first-time home buyers obtain the first huge investment in their lifetime are priceless. This is an emotional reward I reap in each consummation of the transaction. The vicarious thrill and excitement are inherent and inevitable.

BUYERS’ LOYALTY

Loyalty begets loyalty. An old cliche that will surpass the test of time. Buyers’ loyalty does not happen over time. Just like respect, it is earned and gained. It is not a giveaway.

In keeping buyers’ loyalty from initial contact till the closing and beyond that requires the ultimate key word “Connection.” Buyers can easily detach from their REALTOR® due to lack of connection.

How do we get this connection is a skill that most agents have mastered? We all have our own different style. However, mastery of the skill does not guarantee loyalty. Buyers can smell easily the pretension and see through the smoke screen if your intention is not intended to serve their interests.

Managing Buyers’ Expectations and Loyalty

“Buyers are liars” maxim has no bearing. Although, there is, arbitrarily, some truth to it in some special circumstances.

Buyers say something that can be construed as lies but in essence, they are mere statements made based on what they initially desire and not to distort the truth.

For instance, they will say that I can afford up to x amount of money to get the house I want. After serious consideration even though they are qualified to get a loan for that x amount, the monthly payment inclusive of everything may not be the amount they are willing to pay.

Therefore, one should ask what their comfortable monthly payment is. “Champagne taste on a beer budget” is a plague among buyers that requires treatment immediately.

Being straightforward with the buyers may be a daunting task. But in order to yield successful results, instilling a culture of candor between the buyers and their agent at the start of the process till the end is critical.

When I meet with buyers for the first time, I don’t have scripts to spill to impress them. I let the interaction flow naturally. An informal introduction is a great start. It would be ideal to meet with them at my office to do counseling first.

However, there are instances when counseling takes place during the process. There is nothing wrong with it. But it is important that an open communication exists.

Keep the Communication Open

House hunting is the most exciting part of the process. Others find this exhausting because of unrealistic expectations. That is why it is crucial that the buyers’ agent asks open-ended questions as there is no such thing as “Perfect Home.”

The Right Home will come along and most of the time, buyers have to compromise but not to the point of having buyer’s remorse afterwards.

Buyers should pass the DNA test first before the agent shows them houses. Once they passed the test (motivation, qualification and intention), both the buyers and agent’s time, energy and efforts will be better utilized.

Listening to their wants and needs is paramount. However, these two should not be construed as one and the same.

WANTS VERSUS NEEDS

WANTS are images percolating in the buyers minds which make them enthralled and ecstatic about. Some gets titillating joy from images of gourmet kitchen with expensive Cherry and Walnut kitchen cabinets with rich and dark stains, high-end appliances graced with decorative carved posts or fluted columns and luxurious granite, stainless steel, marble, tile, concrete, or quartz counter tops.

Others would heave sighs at the sight of 20×20-square foot walk-in closet. Some would be scintillated by a finished basement with surround sound theater room accompanied by leather chairs for ensemble. Ladies of the house will luxuriate in artesian bathroom hot tub and steam shower laced by floor-to-ceiling subway tiles.

NEEDS, on the other hand, are the must-haves to serve two important aspects: functionality and utility. These are the features of the house that make living comfortably and satisfactory.

A home may have all the fanciful, splendid and aesthetically pleasing kitchen and bathrooms but if it only has two full bathrooms for a household of seven, this home is suffering from functional obsolescence.

Adding additional bathroom can be accommodated but it depends on the configuration and layout of the house. Moreover, buyers may prefer a home with 2-car garage over a home with fabulous kitchen without a garage.

See. House buying is a learning process. There are just too many factors and variables to consider. And compromise, most of the time, becomes necessary. Oftentimes, buyers end up buying the style of home outside of their original preferences. Or a house older than the age bracket they insisted.

Just because a house is built in 1950s does not mean they look old. Unlike humans, homes can have an incredible facelift without looking stiff and unnatural. There are older homes which look younger than houses built in the 90s. It is this sort of feeling and visual you get once you are inside the house.

This visual and feeling is what you call EFFECTIVE AGE. I encourage my buyers not to dismiss listings older than 20 years. Most older homes have solid bones. And if they are well maintained, updated and upgraded by the owners throughout the years, they can exude this WOW factor.

BUYERS’ HOMEWORKS: The Dos and Don’ts

Dos

  • Build your Credit. Here is how you can boost your credit score. 1) Check for and correct errors in your credit report. 2) Pay down credit card bills. 3) Don’t charge your credit cards to the maximum limit.
  • Stay current on existing accounts. Make sure that you pay your credit cards, auto loan and other financial obligations on time
  • Use your credit cards in the same manner you use them in the past. Check the pattern.
  • Check with your loan officer before you make any financial decision or changes… no matter how small or immaterial it may seem.

Don’ts

  • Don’t switch job unless it is necessary
  • Don’t open any new credit card, or line of credit
  • Don’t close credit card accounts. This will cause you more harm than good.
  • Don’t consolidate your debt

5 Factors That Decide Your Credit Score

Credit scores range between 200 and 800. Scores above 640 are considered desirable for obtaining a mortgage. These factors will affect your score.

  • Your payment history. Whether you paid credit card obligations on time.
  • How much you owe. Owing a great deal of money on numerous accounts can indicate that you are overextended.
  • The length of your credit history. In general, the longer the better.
  • How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay promptly.
  • The types of credit you use. Generally, it’s desirable to have more than one type of credit—installment loans, credit cards, and a mortgage, for example.

For more on evaluating and understanding your credit score, go to http://www.myfico.com.

Basic Documents Buyers Need to Provide to Get Prequalified

  • Tax returns for the last two years
  • Two most current pay stubs
  • Two most current bank statements
  • W2s

On top of the above mentioned list, loan officers may ask for additional documents. This is just for the purpose of getting prequalified.

10 Steps to Prepare for Homeownership

  • Decide how much home you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.
  • Develop a wish list of what you’d like your home to have. Then prioritize the features on your list.
  • Select three or four neighborhoods you’d like to live in. Consider items such as schools, recreational facilities, area expansion plans, and safety.
  • Determine if you have enough saved to cover your down payment and closing costs. Closing costs, including taxes, attorney’s fee, and transfer fees average between 5 percent and 7 percent of the home price.
  • Get your credit in order. Obtain a copy of your credit report.
  • Determine how large a mortgage you can qualify for. Also explore different loans options and decide what’s best for you.
  • Organize all the documentation a lender will need to preapprove you for a loan.
  • Do research to determine if you qualify for any special mortgage or down payment-assistance programs.
  • Calculate the costs of homeownership, including property taxes, insurance, maintenance, and association fees, if applicable.
  • Find an experienced Realtor® who can help you through the process

Don’t Make a Huge Mistake as First-Time Home Buyers

Yes. There is such thing as Buyer’s Remorse. Buyer’s Remorse is avoidable if you hire a Realtor®. Not just a Realtor® but a Realtor®
that works for your best interest.

The Department of Consumer Protection in Connecticut has recommended the following guidelines in Choosing a Buyer’s Agent.

  • Ask for Recommendation from people who have just bought or sold a home in your area.
  • Ask Recommendation from other professionals you know.
  • Use search engines and look for someone who specializes in First-Time Home Buyers. Internet gives you a wide array of information available online. Read clients’ reviews and testimonials.
  • Interview prospects. Choose the professional who offers you the services you need and with whom you feel comfortable.

USA Today reported Five Common Mistakes First-Time Home Buyers Make. I strongly disagree with the author because First-Time Home Buyers are educated. They will heed the professionals advice… and this is the first and foremost advice I can give them to avoid First-Time Home Buyer’s Mistakes.

What Realtor Does for the Buyers?

So before you even start looking at houses, to avoid pitfalls and dire consequences, hiring the right Realtor is the key. Do your homework.

To give you an idea on what your Realtor does for you as the buyer/client, here is an outline of the basic steps:

The Home Buying Process

  • Assist Buyers in getting prequalified
  • Assist buyers in home selection.
  • Create comparative market analysis to guide buyers in making the bid.
  • Submit offer with first good faith deposit to listing agent
  • Remind buyers to meet with the loan officer for full mortgage application
  • Submit second good faith deposit with clean contract to listing agent when offer is accepted, if needed.
  • Notate contingency dates to remind buyers of the due dates
  • Remind Buyers to hire a Lawyer for the Title Search and to review other legal documents
  • Help schedule and attend home inspection
  • Draft and submit inspection repair requests to listing agent with copy of the report pertaining to the request only
  • Re-negotiate home inspection repairs
  • Remind Buyers to procure Home Owner’s Insurance. Realtor will provide property information relevant to procuring Home Owner’s Insurance
  • Follow up on mortgage commitment letter
  • Get extension for mortgage contingency date if necessary
  • Remind Buyers to Transfer Utilities at least 2 to 3 days before closing.
  • Do final walk through of the property days before and on the day of the closing
  • Attend Closing. Congratulations!!

Note: The sequence or order of events of the process can be changed or any of the steps can be eliminated on case by case basis.

Remember, as a first-time home buyer, a successful transaction entails commitment. This commitment should originate from you as the buyer and the professional you hire.

The lack of commitment from either party will not yield a positive outcome and result. Keep committed from the beginning of the process till the end. Before you know it, you will be painting your own walls with the colors you want without asking permission from your landlord.

It’s your HOME.. You can do whatever you want. But check with the local authorities like building and zoning before you make alterations or additions to the structure.

This article is brought to you by Maria Gilda Racelis of Home Buyers Realty. For all your real estate needs, contact HBR and HBR only.

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Maria Gilda Racelis
I am a full-time realtor and a no-nonsense individual when it comes to rendering services to my clients. I take my job and the responsibility it entails seriously. My clients come first. I ensure that they know and feel I am working for their best interest. However, I do not carry out tasks to compromise my principle. I conduct my business with pride, honesty and integrity.
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