Home Buying Tips with Jill Davis

Are you thinking about buying your first home? First off – congratulations! Purchasing a home is especially exciting for first time home buyers, but we know that the process can be a little stressful, too. Knowing how to prepare for the home buying process before you start looking and having a list of questions to ask your real estate agent can help to relieve some of that stress, though. That’s why we’ve teamed up with Jill Davis from Re/Max Premier Partners and The Lueken Group to ask her what every first-time home buyer should know!

A little about Jill: She attended Purdue from 1999 – 2003. During her time there, Jill fell so in love with the Greater Lafayette area that she never left! After graduation, she worked as a restaurant manager for several years before obtaining her real estate license. This year, Jill will be an agent for 10 years! She currently resides on the south side of Lafayette and has a special place in her heart for first time home buyers, and finding them the home of their dreams. So, we asked Jill, what should every first-time home buyer know? These were her top tips:

Is pre-approval that important? What if I’m just looking/not ready to buy yet?

Getting pre-approved is the FIRST thing I have my new buyers do. Many first-time buyers are so eager to start looking, or see a certain home, that they skip this step altogether. Finding the home of your dreams and then it being sold by the time you get approval or finding the home of your dreams and then finding out you can’t qualify for it are very real probabilities if you look before getting pre-approved. In addition, I really don’t recommend “just looking” when you’re not ready to purchase. When you ARE ready to buy, chances are that the property won’t be available any longer, and it’s not fair to ask sellers to vacate their property for a showing when you’re not serious about buying just yet. If you “just want to look,” an open house would be a good time to do so, as that doesn’t require a special showing time for the seller and/or your buyer’s agent.

How many houses should I look at before making a buying decision?

As many as it takes! I have had buyers purchase the first home I show them, and I’ve shown other buyers countless properties. The days of Internet has helped many people narrow down the number they want to see, especially when you can input certain search criteria and specifications. Multiple photos and virtual tours are helpful as well. However, you can’t see everything from photos, so many times a buyer will want to see multiple properties. I feel that my buyers that have very specific “must haves” (i.e.: specific school district, certain features like a basement, etc.) look at less homes than someone just wanting to stay within a certain price range.

How should I “prepare” for this process before we start?

I have my buyers do several things before we start visiting properties, beginning with a pre-approval. It doesn’t make sense to look at homes beyond your price range. Plus, I have had buyers discover something unexpected on their credit that needs to be fixed before we can proceed. I also recommend that my buyers make a list of MUST HAVES and WOULD LIKES in what they’re searching for. That way I know how to narrow down the search. I always offer to have them come into my office and discuss the process, going over their list of specifics prior to going out and seeing homes. This especially applies to first time buyers. This eases them into the process, makes it less overwhelming, and allows the chance to ask questions that they may not think of when we’re out looking at properties.

How does hiring a Real Estate Agent benefit me?

Hiring a real estate agent has numerous benefits. As a seller, you have somebody in your corner, somebody who is looking out for your interests, and whose #1 goal is to maximize the amount you sell your home or property for. They take care of all the advertising and marketing for you, and collaborate with other Brokers in the area to sell your home as quickly as possible. The seller traditionally pays for all commissions when a property is sold, so you want to make sure you are selecting someone who is going to best fit your needs and hold up their end of the bargain. As a buyer, it is also very beneficial to have/hire your own agent. After all, if you go through the agent that is representing the seller, they are looking out for the seller’s interests as well. Plus, assuming the commissions are already paid by the seller, you have no extra cost in working with a Broker who is just looking out for you! Your agent will help you through all the forms and documents when it’s time to make an offer, and also assist you with inspections, repairs, a final walk-through, and other miscellaneous items during the purchasing process. You definitely don’t want to go it alone!

When walking through a potential house, what are the biggest “red flags” to look for?

That’s a tough one. I always let my buyers know that I am NOT the expert, and that is why we have inspectors! That being said, sometimes items you may think are big red flags are relatively minor and easy to fix, while other, more hidden items are major red flags. I always recommend having an inspection completed to know for sure what you are dealing with and how to best approach certain repairs. If you and/or your agent DO see something that could be alarming, I always recommend having your agent ask the seller’s agent to see if they have any additional information… you’d be surprised what you can find out by asking!

What is the process of buying a house?

When buying a home, you want to start by getting pre-approved. From there, once you have found the home you want to buy, you will work with your Realtor to write an offer. Once an offer is submitted, you then wait for your offer to be accepted or countered. Occasionally an offer will be rejected, but that is only typical when there are multiple offers or your offer is far below asking price. Once you have an accepted offer, you will want to get all documents to your mortgage lender to get the loan process started. He/she will also order an appraisal, which is to make sure the home is valued at or above what you are paying for it (the bank/mortgage lender won’t loan more than the home is worth). Within the first week, you will also set up any inspections. Once your inspection is complete, you then have a set number of days to ask for any repairs you would like the seller to complete prior to closing. This is all completed with your agent. You will also need to contact an insurance agent to get the ball rolling on your homeowner’s insurance. Even though you don’t begin any coverage until you take ownership at closing, you will still need to have your coverage set up and ready to go. Additionally, if any major repairs are completed from the inspection, some buyers go ahead with a re-inspection, which is done at a reduced fee so the inspector can make sure the repairs were completed correctly. Prior to closing, which is typically 30-60 days from accepted offer, I also recommend doing a final walk of the home, to make sure everything looks the same, or better, since last viewing the property.

Is there a best time of year to buy a house?

When the right one comes for sale!  While spring and summer are considered the busiest buying and selling months, and chances are there may be more for sale (and therefore selection) during that time of year, you are also competing with more buyers in those peak months. The more competition in the market, the better chance of multiple offer situations and higher purchase prices. The fall and winter are typically less busy, which may mean less inventory to choose from, but ultimately a slightly better bargain. It really comes down to what works for you and when the right home for you hits the market.

What “hidden costs” should I consider when buying for the first time?

Your inspection ($300-500), your appraisal for the loan ($400-500) and the upfront earnest money that is collected at time of offer. This is a good faith deposit that shows you are a serious buyer for the property, and you can usually estimate about 1% of purchase price. This money does get credited back to you at closing, and would be returned if something out of your control (appraisal, inspection, financing) didn’t work out. You can work with your mortgage lender on a loan type/program that works best for your situation, and there are programs out there that require $0 down payment. A traditional FHA or conventional loan will require anywhere from 3.5% to 20% down, depending on what works for you, and this money is paid at time of closing. After purchase, it is important to remember that when something breaks, you don’t call the landlord to fix it… it’s yours! So oftentimes with new buyers I will recommend we ask the seller to provide a first-year home warranty that will help cover many major expenses should something go wrong that first year (appliances, HVAC, plumbing, etc.). The cost of these warranties run around $500, but offers some additional peace of mind.

How long should I plan to stay in this house if I buy?

I remember before getting into real estate hearing people say to always plan to live in a home at least 3-5 years. Now that I am in the business, I see there are many unique situations where that is not always the case. I have had buyers sell their home within a year or two and still walk away with some proceeds. It really depends on how well you did when purchasing (did you buy at a good time, get a good deal?) and whether or not any improvements were completed during your time there. If someone is not planning to be in a home for at least 3+ years, it may be best to rent, but every situation is different and I would recommend talking to a real estate agent to see what options are out there!

Yes, buying your first home can seem overwhelming, but with the help and expertise of an experienced real estate agent like Jill Davis, you’re sure to find the home of your dreams! Want Jill to help you find your new home? Call her at 765-414-0579 or email her at [email protected]. And when you’ve found “the one,” don’t forget to call our staff at Isch Insurance at 765-838-2781 so we can get you all the coverage you need. You’ll be glad you did.