October 1, 2016

QUICK TIPS FOR BUYING YOUR FIRST HOUSE

About one year ago, I began the process of looking for a home. I was so excited. After years of saving up for this moment, giving up a wedding, and every other extravagance I could think of, I had finally made it.

I had 20% to put down plus closing costs and a start of an emergency fund. I figured I had it all planned out. I knew the area I wanted to live in. I picked an upscale area about 15 to 20 minutes outside of the city. I planned for rising gas prices and figured my home would be worth more. I had spent two years tracking homes and prices on Realtor.com, while I saved all my pennies.

I went through random open houses and picked Realtors’ brains. I knew exactly what I wanted.

So, on January 1st, 2011 I called up a Realtor and stated my desires:

1. A fixer upper.

2. Great neighborhood.

3.  Good resale potential.

We agreed to meet the following weekend and see our first set of houses — 15 to be exact. They were not what I expected. What followed was four months of house shopping every weekend and many week nights. Pure stress — even from a person that loves real estate — and a deep hatred for most (if not all) the homes in my price range.

I learned a lot in the process and I feel I should share this with you:

  1. House shopping is an investment. It is not like shopping for a pair of shoes or the right turkey at Thanksgiving. This house could destroy you financially if you don’t plan it right. It can make you wealthy if done right. It is not about a feeling or an emotion. It is about putting all the pieces of your life and your partner’s life into a complex system that tries to make sense of everything. It is about looking five and ten years into the future. You have to be prepared to stay or sell up depending on market changes.
  2. Do not buy one of the first 20 houses you see. The first 20 houses are awesome because you’re excited and you’re dreaming. They will not be perfect after you move in.
  3. Be prepared to accept. Eventually, you will realize there is no perfect house. Once you realize that you are ready, make a bid on one. Accept what you are getting. In this market, ask for everything and be honest about what you’re getting.
  4. Have twenty percent to put down. Don’t show up with ten or 15 percent. Twenty percent makes you a serious buyer. Sellers will give up more because there aren’t a lot of you. If you don’t have the 20 percent, then wait. Interest rates aren’t going up any time soon.
  5. Be honest about your skills. If the house needs new plumbing and a kitchen and you aren’t a plumber and/or cabinet maker, the house is going to cost a lot more than the ticket price. Don’t sign up for something you can’t do and/or can’t afford to have done.
  6. Your Realtor isn’t God. If you aren’t comfortable, then don’t sign. Our Realtor was convinced she found us the perfect house, but I hated it. I didn’t realize it at the time, but she was tired of shopping with us and was ready to move on. She got her wish a few months later, when we got a different Realtor.
  7. Remember you will get a house. Eventually, you will find the right house. Do not give up.

Enjoy the process and remember there is no rush in a market like this!

 
Anna Domzalski is a staff writer for the Financial Bin. Anna will soon begin her role as Dean of Financial Bin University and will conduct online budgeting classes beginning in February 2012. She can be reached via email at Anna@FinancialBin.com.
 
 
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