Buy Your First Home in 8 Steps: Step 4

 

Buy Your First Home in 8 Steps 

A Guide for First-Time Homebuyers

Buying a home is the most money you will ever spend and the biggest decision you will make in your lifetime! And if you're a first-time home buyer, it can be intimidating. 

Avoid becoming intimidated by being prepared. Set yourself up for success from the beginning by having the tools and education you need to be confident in the home buying process.

As a Realtor®, I am committed to helping first-time homebuyers confidently navigate the homebuying process.

There are many elements that go into writing an offer. You need to consider what the current market is for your area, what is a fair price to offer, how much earnest money you will need, what the cost of inspections and appraisals are, and why they are needed. 

 

The Market

Consider the current market - Is it a buyer's market or a seller's market?  

A seller’s market means that there is a low supply of homes therefore the sellers have the advantage. This also has an effect when it comes to negotiating the price or asking the sellers to pay closing costs. They don't have to because they may have multiple offers to choose from and will pick a different buyer who isn't asking for those things. 

In a buyer's market, buyers have the advantage because there is a huge supply of homes on the market for sale. Sellers are trying to make their home more appealing to buyers by being more flexible with price, more than willing to make repairs, or pay some of the buyers closing costs.

The Offer

Be realistic with your offer.

Ask your Realtor® for nearby comparable homes to help guide your offer. It will give you a great starting point to base your offer. You don't want to overpay, and you don't want to have your offer rejected for being too low or asking for too many things.

Earnest Money  

Earnest Money is a “Good Faith Deposit” that shows the sellers you are serious about buying their home. 

It is separate from the down payment and written into your offer. On average it is 1%-3% of the asking price of the home. Ask your agent what they believe to be fair for the home you are making an offer for.

IMPORTANT:  Deposit your earnest money with the title company within 3 business days of your offer being accepted.

Down Payment

The down payment is determined by the lender and type of loan you qualify for. It is generally a percentage (3%-12%) of the purchase price.  

 

Contingencies

A contingency is a clause in a contract. It is a condition or action that must be met before the contract is binding. The most common contingencies are Financing, Inspections, and Appraisal. 

 

Inspections

A home inspection is used to give information about the home's condition and help the buyer make an informed decision. An inspection is an additional cost to the buyer and generally are $300-$600 dollars but depend on the size of home.

 

Appraisal

An appraisal is an opinion of value by a licensed appraiser hired by the mortgage company and required for all financing. Appraisals confirm to the lender the home’s value and keeps the buyer from overpaying.

An appraisal is an additional cost to the buyer and generally costs upwards of $800-$1,000 dollars, depending on size of home.

MY TIPS: 

Do your own homework- Research the real estate market in your area.

Get online and find out what homes are selling for in the area you want to be.

Have money saved for the inspection and appraisal on top of earnest money and down payment.

There is a lot to understand when it comes to writing an offer. And, now that you know more about the process, you can confidently make a good reasonable offer.

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