If you are thinking of buying a home in 2022, here are some quick tips to consider.
1. Always buy a home with the help of a real estate agent.
This may seem like common sense to some, but you would be amazed at how many people go directly to the listing agent or attempt to figure it out on their own! Even (and especially) when buying new construction!
When you use a buyer’s agent, it is almost always 100% free to you (some exceptions may apply if purchasing a For Sale By Owner, or other situations where the agent fees were not negotiated up front). In most transactions, the listing agent has pre-negotiated with the seller a commission to be paid, and here in California it is common to split that commission 50/50 between the listing and buyer’s agent.
A buyer’s agent will walk you through the transaction process, negotiate on your behalf, make sure you understand what you’re getting into, and a good one will help you weigh the benefits of a property (not try to sell you on it). They can also connect you with service providers if the property you’re considering needs work, and help you get estimates so you have a clear understanding of what projects will cost you. You have everything to gain (and nothing to lose) by using a buyer’s agent.
2. Talk to a lender first (or second)!
Another great provider an agent can connect you with is a local lender (or a lender can connect you with a great Real Estate Agent). Talking to a lender about your finances is crucial! Not only can they let you know IF you qualify for a loan, they can walk you through different programs, discuss what your goals are, some can even help you work on your credit. As this market has shifted if you have time (and a need) to repair your credit score, get started right now! Knowing what payments you are comfortable with is THE most important step, and one you will want to make before you start shopping (trust me!) The next step with your lender is getting pre-approved for financing BEFORE making an offer on any property. Most sellers won’t even take your offer seriously without a pre-approval, and although the market is moving slower, it may be beneficial to get your loan fully underwritten so you won’t have any surprises along the way. The down payment isn’t the only thing that will need to be saved. Make sure there's room in your budget for closing costs, inspection fees, and other expenses that come with buying a home. Make sure to have all of these discussions with your lender so you have concrete numbers in front of you.
3. Know what you want in your new home before you start looking.
This is another very important step so you don’t get side-tracked by *sparkly* homes along the way. If you know you absolutely need two bathrooms you can eliminate all one bathroom properties from your search (assuming you don’t have the ability or resources to add another bathroom). This is important because it’s very easy to fall in love with an updated and staged home (that’s why Real Estate Agents use staging!) or to start wavering on your must-list because a house almost meets the criteria (ie: everything but the 2nd bathroom!). If you have your ‘must-haves’ list written out and front of mind, it will be easier to focus on the bones of the house and look past what others may not be able to see (meaning you can get a better deal). It’s also ok to want a fully renovated home just be prepared to pay a little extra for having the work already done.
4. Use the rising interest rates in your favor.
We’ve all watched as the interest rates have gone up a lot. This has affected purchasing power for all buyers (unless you’re paying all cash). It has also put buyers back in the driver’s seat. Buyers can now ask for credits (towards closing costs or to buy down interest rates), leave contingencies in place (to inspect, get the property appraised, secure a loan, and even sometimes to sell another property). It’s still harder to negotiate a property that is brand new to the market down in price, however, if you can find a property that has been on the market for a while (greater than 15-20 days), it’s a good sign that the seller will be more open to negotiations.
If you learned a new tip from this post, please leave a comment below. I’d love to hear from you.
~ Alyssa
