The 5 Simple Steps to Home Ownership

Do you remember those late nights just scrolling Zillow for homes in many of the areas you want to live in? You look and then you may just feel so overwhelmed or excited to soon buy your first home, BUT you don’t really know where to begin. Sure, you may ask friends about their experience if they’ve bought a house, but if you’re the typical first-time home buyer (the average age is 32), most of your own friends may not have even started their house search! Well, don’t fear, I will break it down simple here in this article. There are 5 steps all first-time home buyers must go through.

Step 1: Get Pre-approved

Most people would think “wait, shouldn’t I get a real estate agent first?” and you aren’t wrong to think that way. In fact, most of my clients come to me that way. However, before any reputable agent will show you many (if any) homes, they will want to get you preapproved for a mortgage with a licensed lender. You may think to yourself, “but why can’t an agent just show me a few homes and then I get preapproved?” and yes, that could happen, but there are two errors in that thinking.

First of all, we live in a very competitive market here in Northern New Jersey (I am sure it is pretty competitive in most markets in the United States as well). If us as agents went out and showed you many properties and then you find the one you love, then you will want to submit an offer. However, we won’t be able to (or at least most sellers won’t take the offer seriously without a preapproval) as the preapproval takes a little bit of time to get and by that time, it may be too late and someone else now is under contract about to buy the house. Not to mention, what happens if we find out that you can’t even afford the houses you were looking at in the first place?

The second thing you should be aware of is that an agent works strictly off commission. Why would an agent want to work for free without any guarantee that you even qualify? (And yes there are people that do that to agents). Would you want to work for free? I didn’t think so. Therefore, the first step is to get the preapproval as it helps us both.

Step 2: Find a home

Your agent and you will go through several listings before you find “the one.” The agent will work tirelessly to find you a property that fits your criteria and you will typically be looking late nights as well (as I know most first time home buyers will). Remember: at this stage, when you are looking for your dream house, typically I tell my clients to think of the 80/20 rule. 80% of the home you will love and 20% you won’t. No matter what house you look at, there will always be something you may not like. The bedrooms may be too small, it is only a 1 car garage, the price is too much, the taxes are too high, it isn’t in the best area, etc. etc. ETC!!! If you don’t believe me, ask anyone who owns a home, they don’t like at least 1 thing about it and they still bought it.

Also, I like to mention that finding your perfect home could take several months so you need to be patient. Most homes in the area have multiple offers and get under contract very very quickly. In short, this brings me to my next step. When you find your dream home, do not hesitate to make an offer.

Step 3: Make an offer

At this stage, I like to think of this as an art. Not all offers are the same. Depending on how you are buying the property, there are several things you can do to make your offer more enticing to a buyer. For example, you could put down more of a deposit, you can close more quickly, you can get rid of some contingencies (you can’t always do that depending on how you are financing), and many other options. Also, at this stage, you may want your agent to run a comparative market analysis (CMA) to see what homes in the area that are like that home sold for. This allows you to craft your offer price at a reasonable level. Overall, at this stage, speak with your agent and he will tell you how to craft your offer in a competitive market to win.

Step 4: Offer Accepted

Your offer is accepted. CONGRATULATIONS! However, this is not the time you get to sit and rest. There are several things that need to be done. At this point, I would highly recommend getting an attorney to do your attorney review period and review your contract. Once that is done, you still have to do a home inspection, do an oil tank sweep, do a termite check, fill out more paperwork from your lender for a mortgage commitment, order an appraisal from your bank, ensure a certificate of occupancy is complete, ordered a title search, ensure a smoke and carbon monoxide inspection has been done, and much more! Note: Not everything I mentioned is required, but most of it is HIGHLY recommended. Speak to your attorney and real estate agent for your situation as all situations are different.

Step 5: Close on the home

You are finally closing on the home. You sign all the documents required and now you are officially homeowners. At this point or a little before, you want to start getting utilities into your name, have a moving company (if necessary) ready, and be prepared to live in your own home.

In conclusion, the process is pretty simple. I may have highlighted a lot of different aspects of it to be aware of, but do not stress yourself out over everything. You will have a team of professionals ready to help you get through it. If you are in the Northern New Jersey area and you still have any questions about the process or need any recommendations of lenders, contractors, or any other licensed professional, feel free to reach out to me and I will be willing to help.