The Issue:
I am finding of late that most people assume that they are ready to buy a home without really getting the full picture of what it takes to get to the closing table. The consumer doesn't know that the first step is NOT finding a house they can call home. I know this to be true because I get "show me this house" cold calls way too often. My business is not structured in a way that I can jump up for every one of those calls. Nor is it safe. I have to slow the caller down, put them in reverse, and ask some qualifying questions. There are scripts for this so I won't delve into how the conversation goes.
The Background info:
In our market, MD/DC/VA, there are multiple offers on any listing that isn't a short sale. The average sales price in the DC metro area is $460,372 according to RBI and $192,613 in my own county. I am seeing my own clients get 3% 30 year fixed mortgages. This is affordable, relatively speaking, which means the market is open to more consumers. RBI also states that the average list to sale price ratio for the DC Metro area is 94.51%. Gone are the days that you can underbid on listings that aren't short sales. You WILL lose.
The Solution:
Here are the steps to being a successful home purchaser.
1. Have a consultation with a license Realtor (R), preferrably me, that will guide you through the process, explain the up front costs to purchasing, and set expectations.
2. Sign their agency agreement and contractually hire that agent to work for you. I advocate commitment from both sides.
3. Get qualified by a loan officer that your agent has a close relationship with. Considering your agent will be assisting with coordinating the entire transaction he/she must have open lines of communication with all parties to the tranasaction.
4. Identify that you have available or know where your down payment and closing costs are coming from; savings, gifts, grant programs, seller help. We know in our market you will get no more than 3% help from the seller on average and it takes approximately 9.5% (including 3.5% down payment) of the purchase price to close the deal.
5. Search online for homes, check their statistics, and drive through the neighborhoods on your own, then develop a list of acceptable homes for your Real Estate Agent.
6. Allow your Agent to srub your list based on the wish list you provided during your conslutation. A good agent knows their market and has seen a lot of the homes available. Also, homes must match your financing, FHA 203B, FHA 203K, Conventional, Forgivable Grant Loans, etc. Your Agent can assist with this.
7. Play to win. When writing an offer present your best offer. There is a lot of competition in the non-luxury market. Writing your best offer will, not only, make you feel awesome if you win, but also, provide comfort in knowing you did the best you were qualified to do if you don't win.
8. Make sure you are only getting real estate advice from a licensed Real Estate Agent. Everyone thinks they know whats going on in the market but who better knows then an Agent who works in the market with multiple clients everyday? You're experience won't be exactly the same as anyone else's.
The Conclusion:
It is up to the agents to help educate people on the live real estate market and to stay educated ourselves. Housing statistics and financing options change almost daily. Even when it's tempting do not fall prey to doing whatever is necessary to get a deal. It puts the consumer, agent, and deal in jeopardy.
Until next time, Stay honest my friends!
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