For clients who are first-time buyers, today’s real estate market can prove to be a challenge, with home prices hitting record highs in many markets, often selling for more than the asking price.
In some areas, homes are going from list to contract in a record 37 days, according to Redfin. According to Redfin Spokeswoman Rachel Musiker, it can be a turbulent market for clients.
“We’ve never seen a faster or more competitive market. Basically, this market isn’t for the faint of heart.”
According to a report by CNN Money, there are seven key mistakes that first-time home buyers to avoid. Agents can make sure their clients have a smooth buying process by avoiding these common mistakes.
A client should never assume they won’t get approved for a mortgage. Options like Federal Housing Authority loans are designed to help out low-income and first-time buyers.
Second, clients should interview more than one lender. Fees and rates can vary from lender to lender.
Another key mistake is not getting pre-approved early in the process. A pre-approval gives your clients a realistic idea of how much home they can afford and it shows sellers your clients are serious. Keith Gumbinger, vice president of HSH.comm said buyers also can make it less stressful by gathering up relevant financial documents like bank statements, tax returns, and pay stubs, and by checking your credit report for errors in advance.
“Given the competitive interest rate environment and the competitive housing market, it’s a good idea to be prepared and organized before you start the process.”
Another key mistake is maxing out the mortgage limit. Even though a lender might tell a client they can borrow a certain amount, it doesn’t mean they should. Clients should create a budget that includes housing costs.
Letting emotions control decisions also can be a problem. Purchasing a home can be a long and frustrating process.
Waiving contingencies without understanding the risks also can be an issue. This is becoming more common in competitive markets. Know the risks and be prepared to counsel your clients on this issue before they elect to opt out.
Lastly, allowing their credit score to change before closing can result in a lender changing or rescinding an offer. Clients should always pay bills on time and avoid large purchases on credit, even if that means they have to wait to pick out furniture.