Real estate brokerage is becoming an increasingly full-service profession – from acting as a source of market insight and information to helping in home selection and providing support before closing. But as much as agents can assist in the homebuying process, they’re also not your fairy godmother.
The best way to ensure a smooth process is to come to the first meeting knowing a few things. Arrive armed with the following knowledge, and your agent will have an easier time making your homeowner dreams come true.
Your actual budget. A key step to successfully buying a home is to first find a lender and receive preapproval on a mortgage. The preapproval amount that the lender offers will help you figure out the home price range you can afford and what you’ll be expected to pay monthly.
But be careful here, says Camille Swanson, a Realtor with Realty Executives who serves the Phoenix metropolitan area.
“The lender will go back and see things on a credit report and say, ‘Here’s what your liability is and here’s what your income is.’ What they won’t see is if you like to take lavish vacations, or you like to go to Starbucks every morning or if you have a gym membership. Things won’t show up on the report, [but] they still are part of your monthly spending and your disposable income, and they can still detract from your ability to buy a home,” Swanson says.
Robert Crawford, a broker for Washington Fine Properties in the District of Columbia, recommends working backward from your income and subtracting any monthly expenses, excluding rent, to determine the amount you could afford on a monthly mortgage payment and any additional utilities, maintenance and home expenses.
“No one wants to be eating macaroni and cheese for the first year that they own a property, and just because a lender is willing to lend you X amount of dollars doesn’t mean that that’s the right number for you,” Crawford says.
Realistic timeline expectations. Unlike on HGTV’s “House Hunters International,” you won’t be able to find your next home in 30 minutes, including commercial breaks.
Steve McKenna, Realtor for Bowes Real Estate Real Living in Arlington, Massachusetts, says buyers should expect to spend four to six months working with their broker. During this time you’ll establish your wants and needs, search for the right home and work toward closing together.
Still, he says it can be shocking how quickly inspections and meetings with lawyers or lender representatives need to be scheduled once you’ve reached an agreement with a seller. “Everything happens at lightning speed,” he says.
Even when the process moves quickly toward closing, recentchanges to mortgage disclosure rules have lengthened the period of time it takes to close on a loan.
Effective Oct. 3, the TILA-RESPA Integrated Disclosure rule, among other things, requires lenders to provide the Closing Disclosure form to borrowers at least three days before closing, meaning if the lender is delayed in getting the form to the borrower, the closing must be pushed back.
“The days are gone where we could close in 14 days, unless it’s obviously a cash buyer,” Crawford says.
While the time it takes to close depends on the buyer’s needs, brokers who spoke to U.S. News say TRID appears to be extending closing times up to 40 to 45 days, though that could come back down once lenders get used to the new process.
Swanson tells her clients: “Whatever the timing used to be, add 10 days on the front end and potentially another six days on the back end,” referring to the start and end of the closing process.
Neighborhood insight. Homebuyers are in a better position than ever to learn about neighborhoods with a simple online search, and then compare them to other nearby neighborhoods to determine which is best for them. Online tools for house hunting are constantly developing more innovative ways to provide consumers with the best information possible.
An online search can also determine whether the neighborhoods you like best will fit your needs when it comes to local amenities, such as nearby grocery stores or public transportation, while still being in your price range.
Alley Ballard, broker for @properties in Chicago, says schools are often a key factor for her clients when selecting their next home, not just to provide a good education for their children, but also because they affect property values. “If a school is highly sought after, you are going to pay more for the same house in that neighborhood than another neighborhood,” Ballard says.
Once you’ve started touring homes, it’s also important to visit the neighborhood at varied times to make sure it suits you in the day and night. Don’t be shy about talking with neighbors, either. “Neighbors will disclose everything – the good, the bad and the really ugly – so I always encourage people to go out and do that,” Swanson says.
Must-haves and deal-breakers. Letting your broker know what home features you absolutely can’t live with, and without, can be extremely helpful, and cause far less antagonism when touring homes.
“This is your deal-killer list, so to speak. If you will never live in a house on an alley, put it down,” Ballard says. “Because to me, I might be thinking in the city you have a 20-foot alley on the side of your house, you get all day light. We [as brokers] come at it from a different angle sometimes.”
Providing your broker with a list of required and desired details helps him or her form an idea of homes on the market that would best meet your needs. As you visit homes, the list will likely evolve. More here.