Once you have made the decision to buy — whether you're down-sizing, upgrading, relocating, or becoming first-time homeowners — you'll want to take some initial steps to smooth out the process: choose a realtor, get pre-approved, refine your search and start touring homes!
Choose a Realtor
Real estate agents advocate on behalf of their clients while guiding them through all steps of the home buying process. They can also be valuable resources for finding other licensed professionals including loan officers, inspectors, closers, contractors, and more.
How do you find a realtor? You might start by asking trusted friends and family. Like other service professionals, realtors often get connected to clients through referrals. If your friend or family member had a good experience working with someone, you might too. Depending on your process, you may be spending a lot of time with your agent, so choose someone you like and trust.
You might also visit open houses in your target neighborhoods to meet agents and get a feel for who might be a good fit. Online searches for local agents are a good start too of course. Once you’ve narrowed it down, schedule a meet-up with your list of questions to start the process.
Get Pre-approved
If you want to make an offer on a house (and plan on financing it) you will need to get a pre-approval letter. Getting pre-approved differs from being pre-qualified in that it requires more than simply applying for the loan. Pre-approval involves an in-depth analysis of your financial background including credit history, employment verification, assets, etc. The process will provide you with a more realistic picture of what your interest rate and payments might be, and will help determine in advance how much house you can afford.
Sellers will favor pre-approved buyers who demonstrate their ability and intent for successfully getting the loan. Most won’t entertain offers without this bank letter. A strong pre-approval from a reputable lender is an important piece that will put you at an advantage over competing buyers. It's best to get it done ahead of time. Know how much you can afford (or are willing to borrow) before setting your sights on homes out of your range.
If you’re paying cash, be ready to provide a proof-of-funds statement or bank letter for the amount you are offering.
Refine Your Search
An infinite number of factors can help determine your needs and wants when buying a home. Common considerations include things like schools, commute time, space, walkability, neighborhood preferences and of course price. You may also be deciding between a single-family home or condo/townhouse. Make a list of what you're looking for — decide what might be a deal breaker, and what won’t.
Once you've narrowed your focus and established parameters, you can more efficiently make use of online tools to help with your search. Realtors subscribe to the local MLS database (the most up-to-date resource for finding properties) and can easily create automated searches using your criteria which enable you to receive email notifications of new listings as soon as they become active. Searching on your own can be fun, but MLS auto emails are an easy and accurate way to stay up-to-date. Your search criteria can easily be tweaked at any time if your preferences change.
Tour Homes
Finding a home often begins with browsing online and driving through neighborhoods to get a feel for what you want and what's out there. The next important step involves actually getting into a home. You can do that a couple of ways — through open houses and private showings.
Open Houses
If you tour a home at an open house it's important to understand that the agent holding the open will be representing the seller so be careful about revealing too much if you’re seriously interested in the home. That agent will most likely pass along your comments directly to the seller. If you end up making an offer later, the revealed information could become detrimental in negotiations. Your price, terms and motivations should only be shared with an agent representing you as a client. (More on agent representation here.)
Also, you may be asked to sign in at an open house. If you are working with a realtor, feel free to share that with the open house agent as well.
Private Showings
Another great way to see homes is through private showings with your real estate agent. Your agent can set up single showings or multi-home showing tours to fit your schedule. Occasionally lead time may be required to view a home so plan accordingly. If a home is vacant, a showing request will likely be automatically approved, requiring no prior notice. In a competitive seller’s market it’s best to get in as soon as possible to have a shot at submitting an offer.
Sometimes one showing is not enough. Second or third showings are not uncommon. My clients will occasionally return with family, friends or contractors to get second opinions, cost estimates on projects, feedback, etc. If there's time to do so (with no known competing buyers), it's a good idea to take another look, just to be sure.
Heidi Swanson is a Realtor® based in St. Paul, Minnesota. She writes a blog to share information on variety of topics including buying and selling, market conditions, homeownership trends, local events and more. Reach her at heidi@lyndenrealty.com or 651-503-1540.