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Today, we have Jessica, Real Estate Agent spilling the tea on buying your first home, picking the right one, and saving $$$ along the way!

 

What is the biggest misconception that people have when buying a house?

The biggest one is that you need $30,000+ dollars to use as a down-payment. There are so many loans with zero money-down that you can take advantage of!

We can help you find first time buyer loans and Veteran loans, neither one require a down-payment. Some loans such as FHA and Conventional can require as little as 3% of the purchase price down , so it simply depends on what works best for you.

How do you know what price range to shop in?

I strongly encourage preapproved before you start your search! A realtor can help you with this process. By getting preapproved, you know exactly how much home you can afford (dollar amount, and monthly payment), and the moment that you find the perfect house, you can put in an offer for it. Majority of sellers require proof that  you can actually afford their home and want you to submit your preapproval letter before they will accept your offer.

What advice do you have for first time buyers?

LISTEN TO YOUR REAL ESTATE AGENT. I cannot say this enough. Real estate is a profession that we are formally trained to do, and all realtors are required to take continuing educations all year long. Many people will be exposed to the home-buying process once or twice in their entire lives. A Real Estate Agent go through this same process many times each month. We are here to protect you!
Here is an example of a situation that I see fairly often.
Somebody finds a home that they loved for $140,000. Against my guidance, they insist that we offer $120,000, and ask the sellers to pay for their closing costs in the amount of $6,000.
This happens a lot and if you do the same, I can almost always guarantee one of three things will happen:
  • You are going to insult the sellers. You are essentially asking for $26,000 right off of the top of their sales price (-$20,000 for the home; -$6,000 for closing costs). Would you want to work with someone who has just basically said that your house isn’t worth your asking price?
  • They will counter offer at the full asking price.
  • They will decline your offer and refuse to speak with you. 
Unfortunately a lot of people still think that we are in the housing crash of 2008 and that they can shave thousands off a purchase like they have seen on television. That is not the case.
People are emotionally attached to their homes. A home is the largest purchase that one usually makes in their life. They make memories and raise families, so the process of selling a home is never easy.
Let your realtor help guide you to the right price. We want to get you a good deal on a home! Typically, after some back and forth, I can negotiate with the sellers and reduce the purchase price by $5k – $10k, plus you your closing costs paid by them. This is a great, and realistic deal.

What is the biggest mistake you see, but try to help with, when buying?

The biggest mistake I see usually comes with the offer price.
Most people will fall in love with a house and decided not to put in a strong offer. Then, when the house gets sold, they will end up paying MORE for their “backup” 2nd choice just because they don’t want to go through the heartache of loosing another home.
I have a friend who fell in love with a home priced at 120k. He decided to offer 110k and the offer was rejected. The house he loved sold soon after, and he ended up buying another home that he didn’t love as much for 135k.
By not increasing his offer by $10,000; he ended up spending 15,000 MORE for a home he didn’t love as much.

What are some costs that many buyers forgot to consider when buying?

When you start the real estate process here are a break down of costs to expect:
  • Earnest Money: Typically $500, this is a good faith deposit that shows the seller that you’re serious about buying the home and removes it from the market. The $500 will be deducted off of your purchase price once the sale is completed.
  • Home Inspection: A home inspection will give you a better overview of the homes history, the condition of the roof, HVAC unit, foundation, and much more. The inspection ensures that you are not purchasing a home with foundation issues or other expensive and serious repairs required. Home inspections are also fantastic negotiating tools! I always return to the sellers with a list of repairs that are important to my buyers and either have them fixed (at no additional cost to the buyer), or the price of the house reduced accordingly.
  • Closing Costs: These are the “cost of doing business” fees associated with your mortgage company, and title company. They include some of your city/county property taxes for the year, title searches, credit reports, and more. Closing costs vary depending on the purchase price of the home, but we usually see them hovering around $6,000. As a realtor this is one of the first things that we negotiate that the seller pays these costs for the buyer, which is another great reason to have a realtor on your side!

Why should somebody work with a realtor?

Real Estate requires a strong set of skills, knowledge, and regulation. Realtors know the market, the area, and navigate hundreds of buyers and sellers through their transactions every single year! We know our stuff!
My ultimate goal is to get you the best deal possible. I make sure to protect your interests and walk you through the process because it feel intimidating! We’re here to help you with every step of the transaction; From getting pre-approved , to house hunting, to your negotiations, through inspections, and into your new home!

Who is responsible for paying for a realtor? 

If you are buying a home, then your services are 100% FREE to you!
If you are selling your home, then you are responsible for paying realtor fees that we negotiate that up front and are usually deducted from the proceeds of the sale.

Do you advise a home inspection?

Absolutely. We always encourage a home inspection! A home is a BIG purchase and is often the most expensive item we ever buy. It is worth the $450 (appx) to make sure that you aren’t walking into a home needing $20,000 worth of repairs!

What are some ways that a first time buyer could save $$$?

There are plenty of ways to save money on your first home!
  • Be realistic about your budget: Get pre-approved before you begin your search, so you know exactly how much you can comfortably afford. Don’t look at homes above your comfortable budget UNLESS you are willing to pay for it. Otherwise, you will be setting yourself up for disappointment.
  • Find a home in the right  neighborhood for you. Pick your neighborhood, and pick your location INSIDE that neighborhood carefully. Those factors can NEVER change. Paint colors, flooring, and kitchen counters CAN change, though!
  • Ask your realtor to check the resale value of a home: You might find a 100k home in a 160k neighborhood that just needs a little updating!
  • Try and qualify for a THDA or USDA Rural Development loan: These are offered by many lenders and require $0 down!  With certain programs, if you take an 8 hour homebuyers class, they will give you free money towards your down payment or closing costs!
  • Keep in mind the area of town you are living in: For example: Some parts of the city may offer lower tax rates, but their utility companies charge higher rates!
  • Watch those taxes: Property taxes play a HUGE part in your monthly payment! Example: A $135k house with $800 in property taxes typically has the same monthly payment as a $120k home with $1,700 in property taxes.
  • Homeowners Insurance: Be sure to get a quote for homeowners property insurance on any property you are seriously considering buying.

I want to see a house. Do I call the phone number on the for-sale sign? 

No way! This is a very common misconception that will hurt you in the long run. The realtor who’s sign is in the yard is the realtor that is representing the homeowner. In other words, this person has the homeowner’s best interests in mind, not yours. The realtor who’s name on the sign will be fighting to get their client the highest price possible…and therefore cannot also help save you money.
As a buyer, you need your own realtor to fight for you. As I said earlier, realtor services are free to you whenever you are purchasing a home, so find somebody you can trust!
Don’t forget, any realtor can open the door to any house for sale that you want to see. Always contact your realtor first if there is a home that has your interest.

When is the best time to buy?

NOW! The interest rates have never been this low in the history of the country and we are expecting them to rise in January!
In my opinion, the best time to buy is October -January. Here’s why… no one wants to move during Christmas or a snow storm. Therefore the prices on the homes go down during these months, sellers see less activity, houses stay for sale even longer, and there is less buyers competing for the best homes.
During the spring and summer months, there are significantly more buyers, which makes the homes go UP in price and leads to a lot of bidding wars.
Jessica is a Real Estate Agent with 5+ years of experience in residential sales and investment
properties. She has built a strong career helping people achieve their dreams 522192_10150936190314314_1614712104_nof home-ownership, and saving them thousands of dollars along the way.
She holds her degree in Interior Design and is in the process of opening an arcade and bar downtown. When she isn’t working, she enjoys naps, and making memories with her husband & two dogs.
You can reach Jessica at JesBPenner@gmail.com or on Facebook if you are interested in buying or selling in East Tennessee.