Just a few months ago, Holly and I started our home buying process like this:
And just a few weeks ago, ended it like this:
Even though we’re both obsessive about research and folks have been publishing home buying advice for decades, there were still parts of the process that surprised us.
From the most common mistake that American homebuyers make when choosing a lender to a how-to-guide to survive the process with your relationship intact, here are five things I wish I’d known before buying my first house.
1. Your family REALTOR® may not be the right fit for you
Provided you’re house hunting in the same city where your folks live, their first reaction to hearing that you’re looking for a home might be:
“Oh, that’s so exciting! Do you have a real estate agent? You should call Tanya; she’s amazing.”
Now, Tanya might be dope, don’t get me wrong. But real estate agents aren’t one-size-fits-all. Just because Tanya helped your folks get a fantastic deal on their house in the ‘90s, doesn’t necessarily mean she’s the right REALTOR® for you today.
The best REALTOR® for you is the one who:
- Works full-time.
- Enjoys working with first-time homebuyers.
- Knows the neighborhoods where you’re looking to buy.
- Has the capacity to take you on as a client in a hot housing market.
Your family REALTOR® might fit the bill perfectly, or they might not. To find out, take advantage of the referral and schedule a call with them. During your friendly chat, ask them the questions from our How to find a real estate agent guide.
Don’t worry; the questions won’t make you seem cold or standoffish; they’re straightforward and professional, and the agent will appreciate you asking them.
If the REALTOR® seems to be a match for you and your needs, excellent! Keepin’ it in the family.
If not, go back to our guide and connect with the perfect agent who’s a better fit.
2. Helping your REALTOR® help you is the fastest way to win the game
Once I found the right REALTOR®, I naively thought that it was a done deal. They’d find the house; I’d write the check, simple as that.
Maybe in an ideal world, but not this one.
In reality, a good REALTOR® has about 10 to 20 clients at a time. That means that even if they’re working 80-hour weeks (and the top REALTORS® typically are), they’re still only spending about four to eight hours a week thinking about you.
Do you know who does think about your home buying needs full-time? You do!
That’s why it’s best to think of your REALTOR® as someone who plays a supporting role in the process while you perform tons of research yourself. Take it from us; helping your REALTOR® dramatically accelerates the process. For example, as you start actively sending your REALTOR® listings in neighborhoods that you like, that also narrows down their search parameters.
In the end, Holly (my better half) is the one who found our house while our REALTOR® was with another client at a showing. And as we sat down at closing a few weeks later, we realized that our success was the result of a team effort.
3. You want a small lender, not a big bank
Before doing any research, I assumed that my big bank (which I won’t reveal but whose name is synonymous with “pursue”) would also make a great mortgage lender.
But I could immediately tell from the cringed look on my REALTOR®’s face that defaulting to your bank for a mortgage is not the right move.
It’s not that the big banks are greedy or deceptive; it’s that they’re way too busy. According to the Consumer Financial Protection Bureau, half of consumers only seriously consider a single lender. When you factor in that the no. 1 consideration was “having an existing banking relationship,” it’s safe to say that most of these borrowers are using their local “Pursue” branch.
By contrast, a small local lender — whose reputation is staked on winning deals and making clients happy — will provide every key advantage you need to close.
Drawing from personal experience, our lender had to perform the following ninja moves to help us win this house — sometimes without us even having to ask:
- Calculating the ideal number of discount points to apply based on our savings and income.
- Answering his phone on nights and weekends.
- Performing a pre-underwrite (which is like a super-pre-approval).
- Securing an appraisal waiver for us to greatly improve our offer.
- Closing in 18 days.
All five of these ninja lender moves were necessary to win this house, and an associate at a big bank wouldn’t have been able to do any of them.
I think I’ve made my point: avoid using your big bank as your lender even if you love and trust them.
4. The home search will stress-test your relationship — but make it stronger in the end
This point has little to do with personal finance but a lot to do with your happiness. And since joy and financial stability are inextricably linked, I figure it was worth a mention:
If you’re shopping with a partner, the home buying process will test your relationship.
I don’t mean to say you’re going to fight the whole time. Will there be some disagreements? Sure. However, what I’m trying to say is that the entire, months-long home buying process feels like a stress test to the relationship, bending it (but not breaking it) just enough to cause some frustration.
It’s funny; I feel like at the same time that our lender was checking out our:
- Credit score.
- Bank statements.
- Tax returns.
- 1099s and W-2s.
- Past addresses.
The arduous process of finding a home itself was testing our:
- Active listening.
And more. If you pass the first test, you’ll be able to buy the house. If you pass both tests, you’ll be able to cohabitate inside of it.
I’m no relationship coach, but here’s a tip that helped Holly and me: Make time for dinners out, long walks, and watch Hulu in your matching Snuggies with your significant other. The home buying process can be incredibly stressful and exhausting, so dedicating your calendar blocks to levity and low-stress evenings are an essential part of the process.
5. That crazy adage our parents said about home-shopping is true
Remember what they say: “right after you think you’ve lost the perfect house, that’s when the actual perfect house comes along.”
Momma Butsch repeated this line after we’d lost house no. 5, and I couldn’t believe it anymore. Interest rates were rising. Cash investors were buying up 60% of the homes in our target zip codes. There was no perfect house waiting. We’d have to settle for a shack or a converted school bus.
But she was right; the perfect house came along, and I’m typing this from inside it right now, surrounded by boxes.
Weirdly, 100% of my friends who’ve bought in the last 18 months said the same thing was true for them. Despite the onslaught of cash investors, there seems to be some ethereal force — like the invisible hand for real estate — that guides and protects homebuyers and eventually puts you into homeownership.
When you’re looking to buy your first home, in addition to trusting in an invisible force, it helps to support your REALTOR® by doing your own research, finding the right local lender, and perhaps most importantly, underunderstandingstand that this homebuying process is not a sprint, but a marathon.
Being a first-time homebuyer in 2022 is difficult but not impossible, and Money Under 30 is here to help.
For more tips on acing the home buying process, check out:
Featured image: fizkes/Shutterstock.com