First Time Home Buyers
The topics covered below are:
Starting Your Search | Finding Your Agent | Touring Homes | Getting Pre-Qualified | Keeping Track of Homes | Before Making an Offer | Evaluate Each Home's Features | Real Estate Commissions | First Time Buyer Tips
Most first-time home buyers start searching for a home before they even realize it. You talk to family, friends and co-workers, and discuss the benefits of home ownership. You get tired of renting and want a home mortgage interest deduction. You want your own space where you can change the color of the walls without asking permission. But sometimes you don't know how to start the process of finding and buying your own home. In this category of buyers, remember that in general if you have not owned a home for the last three years, you are considered a first-time home buyer.
Starting Your Search Online
About 80% of all home searches start on the internet. With just a few clicks you can find hundreds of online listings, see virtual tours, and sort through photos, real estate agent information and much more. By the time you are ready to talk to an Urban Green Real Estate agent or broker, you probably have an idea of the type of home and neighborhood you want to live in.
Finding an Agent
At Urban Green all our agents are trained in working with first time home buyers. We help educate you on what can sometimes be a very complex process of buying your first home. From our first meeting to understand your wants and needs, finding a lender so you can be pre-qualified for a loan, locating suitable homes to tour, showing you data on homes on the market and the price others have sold for, to making an offer and closing on a home sale so you finally become a home owner, we are by your side to smooth out complications, explain the entire process, and find creative solutions when problems pop up.
We would be pleased to work with you to help you on the road to home ownership. Just give us a call to speak with an agent.Contact Urban Green Real EstateNorthern California:
Call Toll-free 888-732-2988 or email firstname.lastname@example.orgSouthern California:
Call Toll-free 800-473-3603 or email email@example.com
How Long Should You Tour Homes?
Good real estate agents will listen to your wants and preferences, and will only show you homes that fit your needs. While some buyers will look for their perfect home for years, buyers who do that aren't very motivated. A motivated buyer will find a home within two to four weeks. Many buyers find a home within one or two days of touring homes with an agent. Typically you will see from four to seven homes with an agent in one day. Seeing any more than that will tend to blur them all together.
Finding an agent who is right for you is very important. The agent will be a valuable ally in your home search efforts. In order for your real estate agent to show you homes you can afford, you need to get pre-qualified by a lender. The lender will show you different types of loans, the monthly loan payments, and how much down payment and closing costs (additional fees besides the loan) are required. This gives you and your real estate agent valuable information on what homes you can realistically afford.
Be sure to read our How to Finance Your Home page and the Financing Roadmap on this website to learn more about getting a loan.
First Time Home Buyer Programs and Grants in California
The state agency in California which offers first time home buyer programs is the California Housing Finance Agency. Programs and the availability of funding change from time to time.
CHDAP offers down payment assistance for first-time home buyers who meet specified moderate income limits. The CHDAP offers a deferred-payment junior loan of up to 3% of the purchase price or appraised value, whichever is less, to qualified borrowers to be used for their down payment or closing costs. This loan may be combined with a CalHFA or non-CalHFA first mortgage loan. It cannot be combined with the Extra Credit Teacher Program (ECTP) or the Home Ownership In Revitalization Areas Program (HIRAP).
For full details on these State of California first time home buyer programs available to California residents, contact:
CalHFA Home Ownership Division
P.O. Box 4034, Sacramento, CA 95812
You can visit the California Housing Finance Agency website at
Many counties and cities also offer special loans and grants to first time home buyers or workers in certain occupations. Be sure to call the city and county where you plan to buy to find out more. Your Urban Green Real Estate agent and your lender can be important sources of information on these programs.
After you purchase your home, be sure to search state, county and local websites for credits you can receive for remodeling your home with energy-efficient features.
How to Keep Track of the Homes You See
Bring a notepad or handheld digital device to take notes. Some buyers use a form and a clipboard. Note what you like and don't like about each home. Rate the home on a 1 to 10 scale before you tour the next home.
Bring a digital camera and make sure the first picture shows the front of the home and the address number.
Pay attention to the location. Is it near public transportation, schools or shops, or is it next to a busy highway?
Your real estate agent will provide you with print outs of each home you tour from the MLS (Multiple Listing Service).
Before Making an Offer, View Your Top Choices Once Again
After you tour homes for a few days, you will most likely know which one or two homes you would like the best. Ask to see them again. On the second visit, you will notice details and features of the homes that you didn't notice on your first tour.
After this second tour, your agent should call the listing agent to see if any offers have come in, to check on the sellers' motivation for selling and to see if the homes are still available to purchase.
You should also carefully go over all comp (comparative pricing) data on similar homes that are on the market, those in escrow (pending sales), and homes that have sold in the last few months to help determine the value of the home as well as your offer strategy.
Evaluate Each Home's Features
Here are some features you might want to evaluate when determining which home to buy:
Number of Bedrooms: The most common request is for three bedrooms and parents with young children prefer bedrooms to be located on the same level. Often first time home buyers, singles or seniors will prefer two bedrooms. A den can usually be converted to a bedroom by adding a door and a closet.
Number of Bathrooms: Most people prefer more than one bathroom, yet one bathroom homes are usually less expensive. It could cost less to add one more bathroom than to purchase a home with two bathrooms.
Square Footage: First look at the layout to see if it will work for you. In general, larger spaces have a lower cost per square foot. Bring a tape measure to check if your dining table or king-size bed will fit in a room. A vacant room can look smaller than one with furniture.
Interior Features: Here's where you note what features you like. Do you want an open floor plan, a separate dining room, a large family room or an eat-in kitchen? Is a fireplace, central heating and air conditioning, or gas appliances high on your wish list? Does the home need to be updated? If so, be sure you know how you will pay for the updates.
Garages: You will need to determine how important a garage is to you and how to address your car parking and extra storage space needs at your new home. Homes with garages might range from attached one to three car garages, detached one or two car garages, underground parking for a condo complex, to off-street parking or no parking. Some newer high-rise buildings charge an additional fee to purchase a reserved parking space in their underground garage.
Exterior: Do you like to garden, have a pet that needs a backyard, or really don't want to maintain landscaping or the exterior of your home at all? Do you care about a busy street nearby or is access to public transportation important? Do you like living close to your neighbors in a condo or townhouse complex or do you want more private space? Do you need access to or want to buy a home with a pool or spa? Do you want to live near shops, close to a hospital, or near a church, temple or mosque? These are just some of the important preferences you should evaluate before making your offer.
Other Factors: Do you need to be in a certain school district? Do you want to buy a like-new home, one that needs some cosmetic work such as paint, flooring and landscaping, or do you want to buy a true fixer that needs more extensive work but has a lower price tag? When you see a home, ask how old it is and try to access its condition. Naturally, if your offer is accepted, you will have an inspection to get more information on repair work needed.
Real Estate Commissions
When you are buying a home, the seller pays the real estate commission to the broker who listed the home, with approximately half going to the broker who represents the buyer. Generally much of the commission from each broker is paid to each real estate agent representing the buyer and the seller. Some buyers think that they will save money by purchasing a home from people selling their own home without the benefit of a real estate agent and without the legal protections that derive from using forms from the California Association of Realtors (CAR). In most cases, potential buyers discover to their disappointment that the sellers do not reflect in their home price their savings from not paying a commission to an agent and usually have no access to recent, accurate information on sales prices of comparable homes.
First Time Buyer Tips
If the number of homes for sale in your target city or neighborhood has been increasing, and the DOM (number of days an average home has been on the market) is also increasing, while home prices are decreasing, you are in a buyer's market with an excellent opportunity to negotiate an offer.
When prices are increasing, homes are selling fast, and there is a smaller inventory of homes on the market, you are in a seller's market with lots of competition for properties.
A balanced market is when pricing remains almost the same, with no major increases or decreases.
- Request Your Agent to Send You E-Mail Listings and Property Updates
One key to beating other buyers to a good deal is to see new MLS listings as soon as they appear on the market. Many buyers don't realize that the data they are viewing online could be way out of date. Some websites update their listings every 24 hours. On other sites, real estate agents sometimes leave expired and sold listings as active for days, hoping prospective buyers will call. To avoid wasting your time on old information, ask your agent to register your e-mail address so you can receive daily MLS changes of reduced prices and the latest listings that meet your criteria. This is the best way to receive the same data agents receive.
- Tour Homes with Reduced Prices
Most buyers want to offer less than the asking price for any home they want to purchase. We all like a deal. But if you try to make a low-ball offer, you have a smaller chance of getting it accepted if the home was just listed for sale. Sellers of homes that have had recent price reductions or have been on the market for at least 30 days are more likely to be receptive to a low-ball offer.
- Obtain Comparable Sales Data
When you see a home you are interested in buying, ask your real estate agent to print a list of similar homes in the same neighborhood that have been on the market in the last six months. These are usually called "comps" or comparable homes. Compare this data with home value websites such as Zillow and you'll see why your agent's data is much more accurate.
- Ask to Reduce Your Closing Costs
Depending on your local area, there are often fees associated with closing that are customarily paid by the buyer such as property taxes, recording fees, title insurance or escrow. In a buyers' market, you can request the seller to pay those closing costs. These costs can add up to one or two percent of the sales price and are often paid by the buyers. Ask your agent if these fees are negotiable, then ask the seller to pay them on your offer.
- To Increase Negotiating Power, Ask for Something You Don't Really Need
Did you like the sellers' refrigerator? The living room curtains? The washer and dryer? Include it in your purchase offer and then use it as a negotiating tool. This often draws the sellers' thoughts away from the price and focuses those thoughts on the personal property. If the listing states the curtains are not included in the sales price, ask for them in your offer. If the sellers refuse, tell your agent to say, "OK, if we leave the curtains, would you be ready to sign the offer?"
- Request a Credit
If you find the home you want, but don't like the color or condition of the paint, for example, ask the seller to give you a paint allowance in your offer. Check with your lender before you write the offer to find out how to word a credit clause that the lender will accept. Most lenders have a cap on how much a buyer can receive from a seller towards closing costs, sometimes stated as a percentage of the sales price.
- Include Contingencies in Your Offer
In a buyers' market, you have more leverage. Write your offer with several contingencies that will protect you. These include contingencies for approving an inspection, for the home appraising at the agreed upon sales price, and for obtaining a loan no higher than a certain loan rate and points included in your offer. Your agent should make sure the offer includes a reasonable period to conduct inspections and to approve title, pest and geological reports. Usually, during contingency periods, buyers can back out of the contract without risking their good faith deposit.
- Request a Home Warranty to Protect Your Investment
Sellers realize that in a buyers' market, they usually have to provide a little something extra to the buyers to make a sale attractive. This is your opportunity to ask for a home warranty protection plan that covers you in the event the plumbing, an appliance breaks down or the heater thermostat malfunctions. Normally these plans protect you for one full year from the date of closing and you often pay a modest fee towards each repair or replacement.
- Include a Short Acceptance Period in Your Offer
Usually there's no reason to give a seller more than 24 hours to accept or counter your offer, unless you are making an offer on property owned by sellers who live out of the area, a bank owned property or a short sale property. If you give the sellers too much time, they might delay accepting your offer while waiting for a better offer to be made. There are almost always a lot of homes on the market, and you deserve a timely answer.
- After a Home Inspection - Renegotiate
All buyers should obtain a home inspection of the home they are planning to purchase. Most contracts give buyers the right to cancel a contract if the home inspection reveals repairs or defects that are unacceptable to a buyer. If the repairs are minor, you might want to renegotiate the sales price or ask for a credit against your closing costs.
Again, be sure to read our How to Finance Your Home page and the Financing Roadmap on this website to learn more about getting a loan. Also, see The Buying Process for more information.
Please give us a call to find out more about Urban Green and how we can assist you with your own first home.
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