A home is possibly the largest purchase you'll ever make, and it’s normal to overthink even the smallest details in the process – especially if it’s your first time to invest in real estate. A lot of cash is at stake, and you want to make sure that you’re getting the best deal for every penny.
While buying real estate entails a lot of careful planning and extensive research, you won’t be going through it alone. Your agent will be there to help you every step of the way. Even so, we understand that peace of mind can still seem elusive and that your fears can bubble up to the surface even when you least expect it. To help you with this, we have listed down the top 5 fears homebuyers have, and a guide on how to overcome them:
1. Dealing with a less-than-perfect credit score
The thought of securing a loan when you have a less-than-perfect credit score can be quite stressful, and the fear of not getting approved may hold you back from working on a significant purchase such as buying a home.
If you're convinced that you’re ready to buy a home, first get a copy of your credit report and make sure that there are no errors. According to a report done by the Federal Trade Commission, 1 in 5 Americans is being overcharged for his/her financial obligations due to a mistake in his/her credit report. If you’re familiar with loans, you know that the lower your credit score, the higher your interest rates will be. The accuracy of your credit report is crucial in ensuring that you won’t be unrightfully burdened with higher interest rates.
Still, if your credit is less than perfect, you have no reason to feel embarrassed and helpless. Many homebuyers are dealing with the same thing. The most practical thing you could do is to gradually pay off your delinquent accounts, improve your debt-to-income ratio, and try not to incur any new debt. Be proactive about your credit and start improving it until you’re confident enough to apply for a loan.
2. Biting off more mortgage than you can chew
A sizeable monthly payment can be overwhelming to think about, but you can combat your fears by having a firm understanding of your financial situation. To achieve this, you will have to prepare a budget that factors in all your current and ongoing bills. List down all your monthly payables, including credit cards, student loans, car amortizations, etc.
When you have an accurate account of your monthly cash flow, you’ll find it easier to determine how much you can afford to comfortably spend on a house. And, if you’re serious about purchasing a home in the very near future, the financial boundaries you’ve set for yourself will help you create sound decisions.
3. Sudden or gradual decline in property value
A decline in property value may occur for any home, regardless of size and location, and even without any form of disaster. While it is impossible to completely predict what will happen to home prices, you can still do your part in taking wise precautions to reduce your risks.
Nearby homes, surrounding facilities, and neighborhood features play a huge role in determining a home’s property value. If you want to ensure that your home wouldn’t suffer from a steadily decreasing value, learn how to spot unhealthy neighborhoods and avoid purchasing a home from those kinds of areas. Choose a well-kept neighborhood with a thriving community – a low crime area in which people feel safe walking down the street at night, especially children and women. Make sure that the area is mainly owner-occupied and with quality schools and hospitals nearby. You can even inquire with the local government about future development plans in the area.
4. Keeping up with upkeep costs
Even homes that are in the best shape will require some amount of upkeep, and every homeowner will have to deal with maintenance costs one way or another. Don’t worry, though, because while these expenses are inevitable, there are proven ways to mitigate them:
a) Choose a well-maintained home that has recent upgrades and replacements, such as new plumbing and a strengthened roof.
b) Hire a professional inspector to spot home defects that would otherwise go unnoticed.
c) Repair small problems right away before they become major repairs.
d) Set aside a substantial emergency fund, and regularly add to it over time.
5. Unsatisfactory purchase that leads to buyer’s remorse
It is natural to doubt your decisions before a major purchase, and it’s not uncommon for home buyers to question a lot of things even after closing a deal. However, if you want to lessen the anxiety that comes with buying a home, prepare a detailed list of everything you need AND want in a house. Discuss it thoroughly only with your immediate family, as too many people pitching in their advice will just be confusing and unhelpful.
Being firm with your standards and sticking to your budget will not guarantee that you’ll feel perfect after buying a home, but it will help you properly justify the decisions you’ve made and make you feel better about your purchase.
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Counseling Session Activities
- Prepare the buyer for executing a buyer representation agreement
- Explain agency relationships to the buyer and get state required legal consent to represent, if needed
- Inform the buyer of working relationship based on state law, the REALTORS® Code of Ethics, and the broker’s business policies
Building a Relationship
- Learn the buyer’s wants and non-negotiable needs
- Understand the buyer’s budget and what will be needed financially
- Help the buyer understand what property their chosen budget will buy
- Consider having the buyer fill out a homebuyer’s checklist
- Assist the buyer in examining how much they can afford to spend
- Provide quality lender resources
- Partner with the buyer to locate suitable properties for consideration
- Match the buyer’s needs with available property
- Constantly re-evaluate buyer’s needs and refocus property showings to fit those needs
- After ensuring the buyer understands what is done for them, how it is done,and the benefit to them, obtain signatures on the buyer representation agreement
- Explain how compensation is paid, who pays it, and what the buyer’s options are for paying it
Educating the Buyer
- Communicate the working relationship based on state law, the REALTORS® Code of Ethics, and the broker’s business policies
- Explain Federal and State Fair Housing laws
- Explain what to look for in applicable property disclosures
- Reassure the buyer that their personal information will remain confidential
- Inform the buyer that you will always disclose all known material defects
- In accordance with state law, provide information on checking the sex-offender registry and crime statistics for the neighborhood
- Discuss available resources that the buyer can check to learn more about prospective neighborhoods
Preparing the Buyer
- Explain the timeline for house hunting, mortgage approval, and closing
- Explain the local market and how it impacts the buyer
- Show statistics on what percentage of list price sellers in the area are currentlyreceiving
- Inform the buyer on what home features are popular
- Identify current average days on market
- Share the dangers of using the price per square foot to figure home values
- Explain the concept of absorption rate and how it impacts the buying process
- Indicate current listing months of market inventory
- Share estimated potential out-of-pocket costs to complete the transaction
- Assist the buyer in analyzing the loan estimates
- Qualify the buyer for financial ability to purchase
- Help the buyer account for the complete costs of homeownership
- Prepare lender for listing agent calls
- Assist in comparing different financing options
- Help the buyer select for viewing only those homes that fit their needs
- Proceed in showing homes that fit the buyer’s must-haves
- Caution the buyer on posting information to social media
- Review the sample sales contract so the buyer is prepared when it comes time to make an offer
Showing Properties
- Schedule showings and provide access to all listed properties as soon as they become available in their local MLS broker marketplaces
- Educate the buyer on the immediacy of new listings appearing in their local MLS broker marketplaces and the lag time for them to appear on some websites
- Collaborate with the buyer on properties they may have learned about through their sphere contacts
- Research and assist on all unlisted properties the buyer wishes to see
- Preview properties prior to showing if needed
- Network with other agents to source properties not yet in their local MLS broker marketplaces
- Contact homeowners in focus areas to see if they are considering selling
- Set up an automated email alert system through their local MLS broker marketplaces that immediately notifies the buyer of properties that fit discussed requirements
- Arrange a tour of areas, schools, and key points of interest
- Provide resources containing neighborhood information on municipal services,schools, etc.
- Inform the buyer of negative aspects like nearby venues or operations that may result in issues that could impact value
- Collect and share any other vital information on available homes, remembering to follow all fair housing laws at all times
- Check applicable zoning and building restrictions
- Help the buyer decipher public property and tax information
- Collect and share pertinent data on values, taxes, utility costs, etc.
- Compare each property shown to the buyer’s wants and needs list and remind them of what they were looking for
- Help the buyer narrow the search until the buyer identifies top choices
Negotiating Offers
- Assist the buyer in getting the best property at the best price
- Suggest that the buyer learn more about the neighborhood prior to makingan offer
- Prepare a comparative market analysis (CMA) in advance of making an offer
- Prepare the buyer to have the most attractive offer in the current marketplace
- Explain common contract contingencies and include approved protective clauses in the purchase offer
- Ensure that the buyer receives and understands all state and federally-required disclosure forms
- Prioritize contract negotiation goals with the buyer
- Help create a negotiating strategy
- Use strategies such as an escalation clause to maintain a competitive offer
- Prepare the buyer for a multiple offer situation and develop negotiation strategies
- Write an offer that has a reasonable chance of being accepted
- Recommend optional contingencies and explain the pros and cons of using them
- Provide information on purchasing incentives that may be available
- Discuss financing alternatives
- Negotiate the buyer’s offers to arrive at the best price and terms
- Utilize hyperlocal expertise and strong communication skills to assist the buyer in being the successful offer
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