Thinking about testing the Pleasanton housing market and attempting to make your first real estate purchase? Many first-time home buyers find themselves feeling overwhelmed or lost throughout the home-buying process because there are so many unknowns. Buying a home is a long and difficult process, but by reading this article, you’ll know what to do to avoid a few of the most common first-time home buyer mistakes.
1. TALKING TO ONLY ONE LENDER
Most first-time home buyers don’t realize that different lenders will offer different interest rates. As a result, they only speak with one lender and they lock themselves into an interest rate without shopping around to see if anybody can offer them a better deal. Interest rates are high right now and you may feel like it’s a waste of time to speak with multiple lenders. Remember that shaving off a few percentage points off of your interest rate lower might save you thousands over the duration of your loan. Speak with at least two lenders – if not more – before committing to a specific bank or organization.
2. WAITING TOO LONG TO GET A PRE-APPROVAL LETTER
Some real estate agents won’t work with a buyer who isn’t pre-approved for a loan. Sellers will often ask to see pre-approval letters before they agree to a buyer’s offer. Getting a pre-approval letter is one of the most important steps in shopping for a home. Ideally, this is something that you will do early in the process. You’ll need to have some information ready when you reach out to speak with a lender. They will likely ask for information about your current cash flow and your debt-to-income ratio. They will use this information to determine what amount you can be pre-approved for. This information will give you a better idea of what price range you should shop inside.
3. SKIPPING THE HOME INSPECTION
In a competitive market, buyers will sometimes waive the inspection contingency as a way of making their offer more competitive. This is a major risk. You don’t want to buy the home only to learn that there are significant financial concerns or outstanding maintenance that is required. These expenses can cost you thousands of dollars on top of what you’ll spend to purchase the home. Most home contracts will allow you to schedule an inspection during the option period in the first 7-10 days after you initially agree to a deal. The inspection contingency allows you to walk away from the deal if anything concerning shows up on the inspection. You can also work with the seller to determine who will pay for the work that needs to be done. The seller may agree to a lower selling price, or they may split the cost of the repairs with you.
4. NOT UNDERSTANDING THE STATE OF THE MARKET
You don’t have to be an experienced real estate agent to develop a basic understanding of what the local market is doing. Having this information will impact the way you approach homes for sale in Pleasanton, CA. You’ll notice homes going under contract faster and selling for prices close to asking in a more competitive market. If the market is slower, you may have more room to negotiate when making an offer. If a home spends more time on the market, the seller may feel a greater sense of urgency to accept a deal that is below their original asking price. Your realtor will provide guidance and wisdom to help you understand what sort of approach you should take.
5. NOT HAVING ENOUGH CASH ON HAND
Certain loans like FHA loans allow buyers to purchase homes with a discounted down payment as long as certain conditions are met. You’ll still need to have a significant amount of cash on hand in order to facilitate your home purchase. FHA loans require a down payment of 3.5% of the total cost of the home. You’ll also need to set aside another 2-5% of the home’s price to spend on closing costs.
6. NOT TAKING THE TIME TO SCOUT THE NEIGHBORHOOD
Every thorough home search should include a neighborhood search. You can renovate or improve certain aspects of your home after you buy it, but you can’t move it to a different location. Think about what amenities or services are located in close proximity to your home. You don’t want to travel several miles each time you need to run to the grocery store for a gallon of milk or a dozen eggs. As for the neighborhood itself, think about what sort of amenities are offered. Even if you don’t plan to use a community pool or a walking trail, their presence in the neighborhood will increase the value of your home if you ever decide to sell. Try to do a couple of drive throughs and different times of the day to get a feel for the area.
7. NOT WORKING WITH AN EXPERIENCED REALTOR
There are a lot of convoluted things that go into buying a home, especially if you’re testing the market for the first time. Thankfully, when you partner with an experienced and knowledgeable real estate agent, you don’t have to worry about being in the dark. Linda Traurig approaches her real estate practice with integrity, honesty, and a deep care and concern for each of her clients. She works hard to provide each person with the highest levels of customer service. She aims to manage all of the details throughout the entire process so that you can focus on other concerns that need your attention. She would love to partner with you during your upcoming real estate transaction and looks forward to working with you.
