Today, let's navigate the emotional rollercoaster of the homebuying process together. As a real estate agent, I've witnessed the dreams and plans of my clients, and I'm here to share insights that will help you prepare for the journey.
The emotional toll on the homebuyer has different phases, let's talk about them one by one in today's market:
Searching for Home In a Seller's Market
Allow your real estate agent and your loan officer to set your expectations. Accept the information as facts, not as deterrents to your dreams, but as crucial insights to be aware of and prepared for.
In today's market in the Lehigh Valley and in many other areas of the country, there is a very low inventory of homes available. Many factors go into this including big companies investing in the rental market, which to do so, they had to amass the necessary inventory; inflation has not allowed people to move and buy the bigger houses; inventory in the Lehigh Valley area has gone down 33.5% since 2022.
Therefore, it's important for those that are ready to buy to understand that the first home that you put an offer in, there is a great probability that you will not get it. Even though there are a lot less buyers than last year, interest rates have gone up, and no one seems to be sure what will happen next, the inventory is so low that multiple bids on home sales are unavoidable.
Phase One: Searching
1. Be Selective, Even in a Seller's Market:
Resist the urge to settle for a house due to low inventory.
Recognize the substantial investment of homeownership.
2. Take Your Time:
Understand that finding the ideal home may take months, even up to a year.
Patience is crucial; aim to be pleasantly surprised rather than disappointed.
3. The Perfect Home Might Slip Away:
Mental preparation is key when offering your best for what seems like the perfect home.
Acknowledge the possibility of not getting the house, a tough reality for your mental health.
4. It's Okay to Feel Disappointed:
Allow yourself to feel disappointment if your offer isn't accepted.
Taking a break is fine, but don't let it derail your dream of homeownership.
5. The Mental Toll Continues:
Understand that the emotional journey persists even after your offer is accepted.
Prepare for the challenges and fluctuations of Phase Two.
Negotiating Tips and Key Aspects in Phase Two: Under Agreement
1. Time is of the Essence:
Importance of timing and dates in the agreements of sale.
Breaching contract consequences and renegotiation necessities.
2. Deposit Money Risks:
Understand the deposit amount at risk in case of contract breach.
Agreement terms, return policies, and potential hostilities in deal scenarios.
Negotiating:
Clarify when the money should be returned in the agreement of sale.
Mental preparation for potential challenges and hostile situations.
3. Mortgage, Title, & Insurance Companies:
Promptly provide necessary documents once under contract.
4. Inspections: General Inspection:
Buyer-funded; costs depend on home size and tests (water, septic, mold).
Service shopping, asking for advance cost estimates recommended.
Specific Inspection from Specialists:
Additional costs for specialized inspections (e.g., water, roof).
Negotiation possibilities with the seller.
Clear C/O (Certificate of Occupancy):
Negotiable inspection by local government.
Commonly paid by the seller but can be used as a negotiation tactic in a seller's market.
Appraiser Inspection:
Paid by the buyer at closing; determines the house's actual value.
Part of closing costs; no option to shop for the service.
5. Other Professionals:
Surveyors and attorneys may be involved; ensure they are local.
Local expertise is crucial, especially with lawyers familiar with local laws and culture.
Mental Preparation:
Be prepared for the unexpected.
Anticipate challenges and fluctuations in the negotiation and inspection processes.
Navigating the Underwriting Stage of Phase Three: Unseen Forces at Play
Meet the Underwriters:
As someone under contract, you're familiar with the mortgage company's demands.
Enter the underwriters – the faceless figures in the mortgage process.
Understanding Underwriters:
They operate behind the scenes, devoid of direct interaction or emotional ties.
Necessary for impartial assessment ensuring a viable mortgage investment.
Their presence can induce nervousness, especially days before closing.
Dealing with Underwriter Stress:
Last-Minute Documentations:
Expect requests days before closing.
Reassure yourself – documents might have been misplaced, not overlooked.
Pre-Approval vs. Final Approval:
Acknowledge your pre-approval status.
Final approval is pending until the closing day.
Stress Reduction Strategies:
Shop for Insurance:
Take charge; shop for your insurance.
Seek multiple quotes for informed decision-making.
Credit Caution:
Avoid significant credit purchases (furniture, cars).
Protect your credit and pre-approval status. Lock your credit.
Bank Account Vigilance:
No unexpected deposits without explanation.
Be ready to provide evidence for unexplained deposits during the under-agreement period.
Loan-Specific Rules:
Different loan programs have distinct rules (FHA, USDA, VA, Conventional, etc.).
Ensure comprehension for a successful closing.
Secure Money Placement:
Avoid unconventional money storage. AKA, under the mattress or tin can.
Deposit funds in a local bank or credit union five months before initiating the home-buying process.
Document Preparedness:
Equip yourself with essential tools – a home printer for scanning and sending documents.
Know your bank's contact details for swift query resolution.
Mental Preparedness for Surprises:
Stay mentally prepared for unexpected situations.
Industry veterans still encounter new challenges – it's an inherent part of the process.
Navigating Title Company & Closing in Phase Four : The Final Steps
Title Company Responsibilities:
Ensures all owed payments are disbursed to the rightful recipients.
Verifies contract signatures and adherence to bank instructions.
Examines the home's title, delving into ownership details and debts.
Potential Surprises:
While usually smooth, some homeowners discover unknown facts.
Examples include mistaken land ownership and erroneous tax payments on unclaimed portions.
Unveiling hidden debts, like child support, is not uncommon.
Disclosure Preparation:
If hiding financial aspects, especially recorded debts, prepare for revelations.
Open communication with your spouse about any undisclosed matters.
Final Walk-Through Preparation:
Conducted the day before or hours prior to closing.
Mentally prepare for potential worst-case scenarios while being open to pleasant surprises.
Potential issues: Sellers still occupying, property damage, or breaches of contract.
Conclusion:
Maintain excitement and readiness for the closing phase.
Equip yourself with knowledge and surround yourself with reliable guides.
Embrace the unexpected – it's part of the journey to homeownership.
As you embark on this exciting journey, remember you're equipped with knowledge, support, and a clear path. Follow my blog for more empowering tips on your homeownership adventure. Until next time!
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