Buying a Home: How to Manage Your Expectations for a Smooth Transaction
Five things to keep in mind to make your purchase go as seamless as possible.
Speak with your real estate agent early on to establish your needs, and what you can expect from your agent.(Getty Images)
Setting appropriate expectations at the beginning of any homebuying experience is one of the most important aspects in achieving a successful transaction. By doing so, you will set yourself up for a smoother and more expeditious process, clear communication with the individuals you work with and the ability to confront problems as they arise. Here are five things you can do to manage your expectations early in the process.
Know What You Can Afford
Your budget should be an objective decision determined by a clear analysis of your current financial situation. One of the first steps, should you be financing the purchase, is meeting with a lender.
It is highly recommended you find a lender who requires a full financial work-up, including analyzing your W-2 forms, pay stubs, credit check, income and assets. By taking the time to get your ducks lined up at the beginning of the buying process, you minimize the possibility of hitting major road blocks.
And if you think providing all that information is intrusive, you haven't seen anything yet. Expect both the lender and loan underwriter will require updated information once the purchase process begins, a full paper trail for all your recent transactions, investments and, should you be receiving gift funds, the same goes for the person giving the gift as well.
Understand the Market
Today's market is more transparent than ever, thanks largely to the advent of internet sites such as realtor.com, Zillow and Trulia. These sites allow visitors to quickly and efficiently peruse homes, both active on the market and recently sold, while providing a plethora of information on individual houses, market conditions and neighborhood statistics.
Keep in mind, these sites are not updated as quickly and efficiently as a real estate agent's local multiple listing service. If you see the perfect house that you just have to have, it’s possible it’s already under contract. Be sure to check with your agent for up-to-the-minute information.
While trying to create a reasonable expectation of what a particular listing will sell for, concentrate on listings sold in the past six months. Remember, anyone can list their house for any price – it does not mean that price is a clear representation of the market. By focusing on sold homes, you will gain a better appreciation for what others have paid for comparable listings to what interests you, thus determining fair market value.
Establish the Real Estate Agent's Role
Your real estate agent is arguably the most important individual you will work with. You may need a lender to provide the money for the transaction and an attorney to help you finalize the deal, but your real estate agent is the one who will facilitate the entire transaction.
Expectations should be clearly established both for and by your agent from the very first appointment. Are you someone who likes to be contacted every day? Are they the only agent you'll work with or will someone else on their team be handling anything? Are you someone who needs hand holding? When will you be signing a buyer's agency contract? These are just a few of the questions you both will need to answer.
Your agent should be a jack of all trades, and a master of some. When viewing houses, your agent should be able to point out what gives the house value and what improvements may need to be made.
That said, real estate agents are not inspectors or contractors and what they point out should be later questioned during the inspection. The same goes for questions pertaining to loans, legal matters, etc. Your real estate agent is the general contractor of the transaction, taking all the pieces and building one smooth process.
Expect Bumps in the Road
You may expect the homebuying process to be smooth as silk and, yes, there are some people who find their house on the first trip out, have no problems with financing, get everything they want from the inspections and settle in a timely manner – but that is not always the case.
You can successfully narrow down your search parameters by understanding the market and how your budget fits in there, but it doesn’t mean the right house is even on the market yet. You may need to either continue your search or change certain criteria.
From negotiating the contract to financing the deal, problems may arise. One of the most important things you can do to mitigate any issues that come up is to surround yourself with the best group of professionals possible.
While your friend might have had a great experience with “their guy,” it doesn’t mean he is the best person for the job or the right person for you to work with. Gather multiple referrals and ask people in the real estate industry; talk to people who have had more than one experience with lenders, contractors and settlement attorneys – then choose who you want to work with.
Look for the Deal, Not the Steal
Throughout the homebuying process, you’ll need to remember what may seem very obvious from the outside looking in – the seller will expect to get the best deal possible, too. So how do you both get what you’re looking for while still making the transaction go smoothly? Aim for a deal, not a steal.
The first thing to remember is a home purchase is a marathon, not a sprint. If you look to completely hose the seller on the purchase price, they may not be willing to concede anything when negotiating the home inspection, appraisal and other key points of the process.
Secondly, set your priorities from the beginning. Which items are you willing to bend on and what is set in stone? Do you have to be under a certain price? Do you need a certain amount of seller subsidy? Factor those items in as you look at the purchase as a whole and then construct your offer and subsequent negotiations accordingly.
While you can certainly expect a smooth process, that may not always be the case. If you set clear expectations for yourself, those you are working with, and the homebuying process as a whole, you will end up with a much more satisfying experience.