Chances are you’ve considered buying a home — maybe you even attended a couple of open houses and ran the numbers. But once you get serious, there are a few points you need to consider before signing a contract and heading to your closing.
Buying a home takes more time and research than, say, buying a tablet or smartphone. Before diving in, it’s important to understand the process. Every home buyer’s journey happens on a slightly different timeline, but here are some steps every prospective buyer should take.
The home-buying process often occurs organically, and may begin a year or more before the actual purchase. You’ll get started by viewing home listings online to discover what types of homes you can get in different price ranges.
Look at homes in your favorite neighborhoods, and review statistics and reports on home values. Use this time to dream about some of your favorite home features, and start to put together your list of priorities.
Most buyers will find a property during this phase that prompts them to move to the next stage.
Most would-be home buyers need a mortgage to purchase a home. While the process has gotten easier as we’ve moved farther away from the financial and lending crisis, it can still be challenging if you’re not prepared.
You need to know what you can afford, the types of loans available and how what you can afford will affect your home search. Pull your credit report, and understand your financial situation. Then you can get pre-approved.
Many buyers need to repair their credit score, save more money or allow cash to season for some time before buying. Use the next few months to address any financial issues.
At some point along the way, you should connect with a local real estate agent. These relationships form early, and having that person beside you during your search should be invaluable.
Go to open houses, make appointments and see as many homes as possible. Before making an offer, you’ll need to know the market inside and out. The more homes you see, the more you will know about your local real estate market, and the more confidence you will have when that dream house comes along.
And if you miss out on a deal or two, it’s okay. It’s all part of the process. Don’t feel rushed, and realize that the home search often becomes a part-time job. Have fun with it.
If you find yourself in the real estate market prior to doing significant research, you may be jumping the gun. Unlike a tablet, smartphone or even a car, a home is a long-term investment — and a special one at that. It’s where your life will happen. Move too quickly and buyer’s remorse can creep in.
Timing the cycle is anyone’s guess. But a robust pipeline and emerging trends tell us what the real estate industry will be watching closely in 2018.
The real estate world lost its collective mind in September, when Amazon released a request for proposals for a second headquarters worth $5 billion. Between the release date and the Oct. 19 deadline, the Dallas Regional Chamber worked with developers all over North Texas to compile more than 30 possible sites for the tech behemoth. The 8 million-square-foot headquarters promises up to 50,000 jobs. By press time, it was still unclear which cities made the short list (or that there would even be a short list). But DFW—and every other major MSA—will be fighting tooth and nail until HQ2 breaks ground. Amazon requests proximity to an international airport, access to mass transit, a metro population over one million, a business-friendly environment, and “communities that think big and creatively.”
Besides the pipeline of projects, several proposed developments in DFW sit in limbo, searching for funding, anchor tenants, or absorption in similar product types. Most notably, Ross Perot Jr.’s Hillwood partnered with famed architect Sir Norman Foster to propose a 70-story skyscraper on the other side of Woodall Rodgers from the Perot Museum. Hillwood would need an anchor tenant to get the development off paper and in the ground. Hoque Global and KDC have proposed a 78-story tower. Hoque and KDC said they’d begin building a 20-acre mixed-use campus downtown, dubbed the Dallas Smart District, by the end of 2018.
Downtown Fort Worth sustained some disappointing losses in 2017 with DR Horton moving back to Arington and XTO Energy’s announcement that it would relocate 1,600 employees to the Exxon Mobil campus. Despite those blows, institutional money has entered Fort Worth for the first time in its history. Jetta Operating and Anthracite Realty Partners will complete the $115 million Frost Tower in 2018. Downtown has seven hotels planned or under construction. The 27-mile TEXRail, which connects downtown to DFW Airport, will take its inaugural ride this year. By many accounts, Cowtown is headed for greener pastures.
West Dallas became the face of Dallas’ affordability issues in 2017 when residents’ homes became subject to gentrification. But West Dallas is really just a microcosm. DFW is the fourth worst metro in the U.S. for affordable housing, according to The National Low Income Housing Coalition, offering only 19 low-income units of affordable housing for every 100 demanded. Longtime low-income residents have few affordable options. Compared to every other major metro in the country, Dallas has the highest poverty rate—and it’s climbed by more
than 40 percent in the
last 15 years.
Scott Beck introduced Valley View Center to a bulldozer, Sam Ware bought Collin Creek Mall with plans to redevelop it, and Peter Brodsky partnered with Corinth Properties to restore Red Bird to its former glory as a community mall. Blame it on e-commerce or blame it on millennials, but innovation in the enclosed mall space is no longer optional. Good thing several North Texas minds are up to the challenge.
Buying new construction seems simple, right? Just pick out the floor plan you want, choose the perfect lot, and watch it go up. No sellers to deal with, no unexpected repairs that come up during inspection, no drawn-out negotiations. Right?
Not so fast. In any real estate transaction, it’s important to have a professional on your side, even if the process seems straightforward.
“Having your own agent provides a sense of security,” says Seattle-area homeowner Kristy Weaver, who has bought two new construction homes from two different builders. “It gives you some peace of mind, knowing that someone is looking out for your best interest.”
Peace of mind is just one benefit of having an experienced agent along for the ride. Read on for five more reasons you’ll want a local real estate agent by your side when buying a new construction home.
“Your agent can rely on their own experience and that of their colleagues to help you find a builder you can trust,” says Portland, OR-based real estate agent Kim Ainge Payne of the Realty Trust Group. “What’s the quality of the workmanship? What kind of warranty do they offer? What’s their track record of resolving issues? Getting a clear understanding in the beginning can alleviate serious headaches down the road.”
The timeline for purchasing new construction is typically quite a bit longer than buying an existing home. From the first time you visit the sales center, to choosing your layout, construction, inspections, and finally closing, there are ample opportunities for things to go sideways — think construction delays, permit issues, and financing concerns. An experienced buyer’s agent can help you navigate all of these sticky situations.
Even if you’ve purchased a home before, the contract for new construction is a whole different animal, and an experienced agent can help you make sure you understand everything, from floor plans to earnest money requirements, deadlines for requesting changes, and timelines for completion.
“It’s crucial to have a third party who represents your interests in the transaction,” says Dmitry Yusim, a Seattle-area agent who has represented new construction buyers. “A good agent can add the proper addendums to protect you if something falls through.”
Buyers’ agents know the areas where you’ll find the most wiggle room when it comes to negotiations.
“Builders are trying to keep their sales price up so that the next buyers through the door see the higher closing price,” explains agent Britt Wibmer of Windermere Real Estate in Seattle. “They’d much rather throw in closing costs or additional upgrade credits.”
Builders will offer you endless options for finishes and upgrades, and it’s easy to get overwhelmed. A seasoned real estate agent can recommend the upgrades that will get you the most bang for your buck in resale value, suggest finishes that might be cheaper to do on your own, and help you avoid over-improving, which can jeopardize your appraisal before closing.
Even though a friendly sales representative will greet you with a smile the moment you walk through the door of the sales center, don’t forget that they work for the builder. Bring your own agent with you starting with your first visit — in fact, many builders require your agent to register with them from the very beginning in order for them to be involved in the process and receive their commission.
With a professional you trust by your side, you’ll rest easy knowing someone is there to protect your money, your time, and your new home.
Any buyer shopping for a home today, in any market and at any price point, is likely to come across new construction homes for sale. The sellers are both large national builders and smaller local developers. Some homes are for sale as a part of a subdivision, while others are one-off homes.
But is a new-construction home the right path for you? Here are five factors you should keep in mind.
Unlike a regular seller who lists their home with a local real estate agent, homebuilders often have their own sales employees working for them on site. They do this to have more control and to cut costs.
What does this mean for buyers? Mostly, it may mean the homebuilder isn’t a member of the local MLS. As a result, the homes may not show up in your agent’s MLS search.
The builder may be more apt to advertise online, in the paper or with billboards. So if you’re interested in newly built homes, work with your agent to make sure you’ve identified all the possibilities.
A builder will generally get financing lined up, and map out both a construction and a sales process. This means they’ll try to sell as many homes as possible, before they’re even built.
To accomplish this, they’ll build out model homes and allow buyers to go in and review floor plans, fixtures and finishes while the homes are under construction. Depending on the state, builders need to get through some of the approvals process before they can actually start signing contracts.
For the most part, you can get a sense of what your new home would look and feel like, and where it will be located in the community. Ready to move forward? You’ll likely have to put down a deposit, from a few thousand dollars to 10 percent of the purchase price.
Be aware that even if there are 100 homes in the community, they won’t all be available at once. Home builders tend to release the homes in phases. If the first five homes sell quickly at the asking price, and the market continues to do well, the builder can raise the prices on the second or third phase.
Also, the sales cycle for a new community can take years. The last phase could end up being priced 10 percent or more than the first, simply because the real estate market has appreciated.
A home builder, especially early in the sales process, wants to get a few homes under contract quickly. If the builder can announce they have 10 homes under contract in a few months, the project can seem more desirable to future buyers.
Also, builders like to go back to their lenders with positive news about the project and their investment. To do this, they need early buyers to sign contracts.
For buyers, this means that early in the sales process there could be room to negotiate the price down. But with the reward, there is potential risk. By being an early buyer, you’re committed to the project. If for some reason sales don’t manifest, or you don’t want to move ahead before the home is built, you risk losing your down payment. For example, right after the previous housing downturn, some buyers were stuck under contract on new homes where sales had stalled.
A typical seller has lived in their home for many years, and raised their family or built memories there. So when it’s time to sell, the seller may experience all kinds of issues, questions and uncertainties, which can come out in the negotiation and purchase process.
The seller may unconsciously price the home too high because they’re not ready to emotionally detach from it. They may want to know more about you, or what your plans are for the property. If given a choice between two buyers, the seller may pick one over the other for non-financial reasons.
With a home builder, it’s just a numbers game. They’re focused more on spreadsheets than sentiment. They want to make sure you’re qualified and can get a loan. They set the prices based on their inventory, though there may be a little room for negotiations.
Is the project you’re interested in nearing the end of its sales cycle, with many homes already sold? If so, the builder may be a little more willing to negotiate with you — not so much on price, but on upgrades. If they reduce the price on your home and the sale closes, then that sale price becomes public record. But if they offered you an upgrade package (hardwood floors instead of carpet, or higher-end appliances), there isn’t any way to track that.
What could amount to thousands of dollars in upgrades could end up being a better deal than simply getting a price reduction.
For many first-time buyers, new construction could be a great idea.
Thinking of buying a home this year? We compiled five New Year’s resolutions that can help you keep your financial resume in tiptop shape.
Employment history and income are two of the biggest factors lenders look at when evaluating a mortgage application. A new job may be a good career move, but if you plan to buy a home in 2018, know that it can be a red flag to some underwriters — especially if you’re moving to a different industry.
A steady job history and few or no gaps in employment over the past two years are ideal, as it helps lenders more easily forecast your future income.
If you do get a new job while home shopping, let your lender know as soon as possible. It doesn’t mean you won’t qualify for a mortgage — just be prepared to show extra documentation.
If you’re moving from a commissioned or hourly job to one that’s salaried with equal or more compensation, it may help your application, as lenders often prefer borrowers to have steady, predictable paychecks.
Monthly subscription services are certainly convenient, but they can add up. Even if you pay off your credit card every month, you could be dinged for high credit utilization if your credit report is pulled midcycle.
If you’re thinking of buying a home this year, consider keeping your monthly subscription services to a minimum.
One of the first things a lender will look at is your credit history. Lenders like borrowers who have a history of paying off debts, like credit cards, on time because it signals that you’re less of a risk and a responsible borrower.
If you don’t have credit, securing a home loan may be significantly more challenging and time-consuming, but not impossible. Records of paying rent and utilities on time, as well as student loan debt or cell phone bills, can help show a potential lender that you have a history of managing monthly payments.
Your credit score can have a significant impact on your ability to buy a home. A low credit score can negatively affect how much money a lender is willing to loan you, as well as your interest rate.
Just a few percentage point differences in an interest rate can cost you thousands over the life of a loan. Monitor your credit closely, especially for fraudulent activity, to prevent any surprises that could delay the loan application process.
If you’re unsure of your credit score, many financial websites offer credit score monitoring, or you can get a full credit report once a year.
Avoid taking on large amounts of debt — whether it’s buying a car or planning a large vacation — before buying a house, even if you’re already preapproved.
Your debt-to-income ratio, or how much money you make compared to how much debt you have, can significantly affect how much money a lender is willing to give you. Keeping debts to a minimum can help make the home-buying process go a lot more smoothly.
Just like proofreading your resume before you apply for a job, cleaning up your financial resume can help improve your chances of buying a home.
Take advantage of online tools and resources, which can help you determine how much home you can afford. Zillow's mortgage calculator can also provide custom down payment estimates based on home price and interest rates. And as you search for your future home, check out our extensive lender and agent reviews, which can help you find the best real estate partners for your needs.
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