How To Buy Your First Condo

Buying your first home can cause a number of emotions from being scared to being overjoyed. It’s a difficult process and there are many steps involved from choosing a real estate agent to securing financing. Here are a few tips to make buying your first home a more enjoyable experience:

Hire A Real Estate Agent

Your first step to buying your a home should be to hire a real estate agent. A real estate agent can help guide you through the process with their expertise. They have valuable market data and should know the area where you want to purchase.

Make sure you choose a buyer’s agent as a buyer’s agent will be working for you and not the seller. If you work with the sellers agent, keep in mind they have a fiduciary duty to get the best deal for their seller which could leave you on the short end of the stick.

When working with a buyer’s agent there are no upfront costs which should give you no reason not to work with an agent. Commissions are paid by the seller and will already be added to the listing price of the home. Some people might tell you that as a buyer you don’t pay commission but that’s not true as it’s already added to the price of the home.

If you have troubles finding an agent you can trust, talk to family and friends about agents they’ve used in the past. Interview each agent until you find one you feel comfortable with. One thing you should know is not all agents are the same. Be sure to ask a lot of questions about the market and how well they communicate as communication is key in a real estate transaction.

Get Pre-Qualified For A Loan

You can’t buy a home unless you get financing so don’t get too excited until you know you have the means to purchase. Many first time home buyers will go looking at homes before they talk to a mortgage professional and find out they don’t qualify to buy. Finding the perfect home and later finding out you can’t buy it can be devastating.

The best way to know what you can buy is to get pre-qualified. The prequalification process is pretty simple, and shouldn’t take longer than a couple hours. Ask your real estate agent if they know some good lenders and shop around. Be careful however, just because a lender is cheap doesn’t mean they can close a loan on time.

The lending process has changed dramatically over the last couple years making it more difficult to get a transaction closed. Don’t take choosing a lender lightly, it can mean closing a deal or not. A good lender should have great communication skills and knowledge of the current lending laws. Also, a lender with in house underwriting is a huge plus.

Finding A Home

Finding a home should be the best part of the home buying process. Shopping for a home can be fun, and you shouldn’t have to settle for something you don’t like. You have a lot of options when searching and I would recommend you try them all out.

Start your search online. There are a ton of real estate websites out there so you shouldn’t have a problem with this option. However, finding a home online is just the first step as online pictures can be deceiving. Some pictures will show the home better than it really is and other photos will look horrible, yet the home might be fantastic. You never know until you see it in person.

Check out some open houses. Open houses are a great way to start your home search especially if you don’t have an agent yet. If you like an agent sitting at an open house don’t hesitate to ask them to show you some more homes. Real estate agents can show you all homes listed on the Multiple Listing Service (MLS).

Avoid Common Home Buying Mistakes

If you’re thinking about purchasing a home I would recommend you ask your friends and family for a referral of a trusted Realtor. There are many possible pitfalls when purchasing a home that a Realtor can help you avoid. Here are a few common home buying mistakes buyers without representation make:

Giving Up To Much Information

When you’re working without a Realtor in a real estate transaction, you won’t have anyone to buffer the conversation. Talking directly with the seller will leave you at a disadvantage when negotiating terms and price. If you let them know how much you love their house, they can use that to get more money out of you.

If the sellers are working with a Realtor, their agent will use that as an advantage in negotiations. One thing you have to keep in mind when dealing with a represented seller is, their Realtor has been highly trained and educated in every facet of the real estate process. They do it everyday, and they will win.

When you’re buying a home listed on the MLS, the commission is already negotiated into the asking price. You’re already paying a Realtor fee so there is no reason you shouldn’t hire an agent of your own. So if the reason you don’t want to work with an agent is commission, don’t be fooled, you’re already paying it.

Relying On Oral Agreements

As a Realtor I have access to well over 50 different contracts within the MLS I work for. These contracts have been written by professional real estate attorneys over many years. There is a reason why Realtors have access to so many contracts, oral agreements almost never hold in a court of law.

Just because you think the seller is trustworthy, if it’s not in writing, they don’t have to comply. If the seller said they will throw in the riding lawnmower, get it in writing. Nothing is final until the ink dries on a legally binding contract.

Missed Deadlines

A real estate purchase contract has many deadlines that need to be kept. If you miss a deadline you could not only lose your earnest money, but you could be left with thousands of dollars in repairs. Some deadlines you need to keep in mind are your inspection, appraisal, and financing dates.

If you miss your inspection deadline, and later find out there are major maintenance issues, you won’t have the leverage needed to negotiate the repairs. If the home doesn’t appraise and you’re outside of your deadline, you could lose your earnest money if the deal doesn’t happen. If you can’t obtain financing in time, you could lose the property all together.

Missed deadlines can be avoided by knowing the right people to get things done on time. Realtors have access to these people everyday, and most have a trusted network of professionals they know will get the job done.

When buying a home I fully recommend you enlist a trusted real estate professional to help you along the way. You would be amazed at the amount of work Realtors do behind the scenes to ensure a smooth and timely closing. If you still don’t want to enlist the services of a real estate professional, make sure you keep an eye on every aspect of the real estate transaction, or you could end up losing out on your dream home.

Does HAFA Pay You To Short Sale Your Home?

One of the most common ways to avoid foreclosure when facing a financial hardship is to short sale your property. A short sale, by definition, is selling your home for less than what is owed, and as of April 5, 2010, you can even get a little cash from the government to do so.

The HAFA (Home Affordable Foreclosure Alternatives) program introduced by President Obama, allows homeowners up to $3,000 to avoid foreclosure after closing on their short sale. Here are some facts that you need to know about HAFA:

Home Affordable Foreclosure Alternatives Facts

The first step to qualifying for HAFA is to apply for HAMP, (Home Affordable Modification Program).  You see, in order to get the $3,000, you must try a loan modification first. Here are the rules of eligibility for the HAMP program:

  • Must Be A Personal Residence
  • Mortgage Amount Must Be Less Than $729,750
  • Must Suffer A Financial Hardship
  • Mortgage Must Have Been Initiated Before January 1, 2009
  • PITI And HOA Must Be More Than 31% Of Borrowers Gross Monthly Income

The second step is to get denied by HAMP.  If any of those five rules do not apply to you, you are not eligible for HAMP. Not qualifying is a good thing if you wish to short sale your home through the HAFA program.

If you do meet these eligibility rules it’s up to your bank to decide if they will allow you to modify your loan, and everyone knows how difficult that can be. Less than 30% of homeowners who apply for a loan mod are approved, so there’s a pretty good possibility you will be denied.

Once you’re rejected from the HAMP program, you can do a HAFA short sale or pursue a deed in-lieu-of foreclosure. In order to qualify for the HAFA short sale program, there are a few more eligibility rules.  First off, HAFA will pre-approve the short sale price and you only get four months to sell with a real estate agent.

Just like the HAMP program, the home has to be your principal residence. The mortgage must be less than $729,750. You must be 60 days behind on the mortgage. The mortgage has to be originated before January 1, 2009, and sellers with government loans do not qualify.

After jumping through all these hoops, the benefits of the HAFA program are worth it. If you sell your home within the four month time period, you will receive the $3,000 check for relocation expenses from the government. But that’s not all.

Your lender can not pursue a deficiency judgment. You wont have to make a seller contribution and the bank cannot foreclose during those four months. As you can see, short sales are a complicated process and require the expertise of a qualified short sale agent. If you’re in the San Diego area, please contact us for help with your short sale process.