So you’re looking to buy real estate in Seattle, but aren’t quite sure where to begin looking. I’m here to help you find exactly what you’re looking for, and guide you through the whole process, free of charge!
My name is Tristan White, and I’m a real estate agent here in Seattle. My goal is to help buyers, specifically first time home buyers, through what might seem like a confusing process.
Purchasing a home is the biggest investment most people will make in their entire lifetime, so I understand why most people are intimidated by the whole process. Most people will hear a purchase price of $300,000 and their mind automatically says “there’s no way in hell I’ll be able to pay that amount of money!”. Well, the good thing about purchasing a home is that there are multiple avenues you can take to be able to pay for one, whether that be with cold hard cash, or through a home loan.
Buying vs. Renting
Before we get into the process of how to purchase a home, let’s take a look at some of the advantages of buying versus renting. First of all, first time home buyers get huge tax breaks for purchasing their first home. This means that when tax season comes around, you get to save money on deductions from just owning a home! In addition to this, you can also save on mortgage insurance, mortgage interest, and even property taxes! Contrary to popular belief, the system is designed to help those that want to own homes rather than rent.
When you rent, your landlord has the ability to change your rent based on current market conditions, so at the end of your lease, you’ll more than likely being seeing an increase to your rent, which is never fun to see. When you have a mortgage, the only time your monthly payment will change is if you have an adjustable-rate mortgage, and even then, the changes in monthly payments are minuscule compared to the increases you’ll see with rent. This means that more than likely, you’ll be guaranteed to pay the same monthly payment for 30 years! This means that you won’t need to worry about rent going up another $200 after your year lease has ended. Doesn’t that sound amazing?
Another huge advantage of buying versus renting is that you’re actually gaining equity when you make payments. This means that you’re actually paying towards owning something outright, rather than handing over money to a landlord. Once your mortgage is paid for, you’ll actually own your home, and trust me when I say there is no better feeling than owning your own property!
The Process
Ok, so now that we went over the advantages of buying versus renting, let’s get into the actual process of buying a home.
The first thing you need to ask yourself is how much can you afford. No, this doesn’t mean that you need to have $300,000 in the bank, but if you do, the process just got a whole lot easier for you! How exactly do you find out how much you can afford? Well, you have a few options. If you don’t have a lot of money in cash, the first thing you’ll need to do is figure out how much of a down payment you can afford for the home of your dreams. If you have $5,000, $10,000, or even $15,000 saved up, this is the time for to decide how much of that you’re willing to put down for a loan.
After you’ve decided on how much you’re willing to put down, it’s time to get pre-approved for a loan from the lender of your choice. Notice that I said pre-approved and not pre-qualified! This is huge! Pre-qualified means that they just take basic information and pretty much take a guess as to what you can afford without thoroughly screening you. Pre-approved means that you went to the lender of your choice, gave them all the necessary information and documents they need to screen you, and get pre-approved for a certain loan amount. Getting pre-approved as soon as you can will save you a lot of time in the long run, and possibly save you from losing the home of your dreams!
This next step is overlooked by the majority of home buyers. SEE A FINANCIAL ADVISOR! I can’t stress enough how helpful this is to home buyers. Let’s say you’re pre-approved for a $300,000 loan. This doesn’t mean that you should look to spend the full $300,000, and a financial advisor will help guide you to what amount would be most comfortable for your current monetary situation. This might also help you save some money because you’ll be more knowledgable in what you can afford. For example, you’re pre-approved for $300,000 and you find your dream home for $300,000. Your financial advisor told you that staying in the $275,000 range would be more comfortable for your current situation, so you put in an offer for $275,000, and they counter with $285,000. You accept, and technically just saved $15,000 on the home of your dreams! Without a financial advisor to walk you through what you could afford, you would have more than likely ended up offering the full $300,000. I hope you’re understanding how important of a step this is!
After you see a financial advisor and have a complete understanding of what you can afford, it’s time to hire a buyer’s agent. I know this might come off as biased seeing that I’m a real estate agent, but having a buyer’s agent on your side is crucial to understanding the market. What’s that? You don’t want to hire an agent because then you’ll be stuck paying their commission? What if I told you that 99% of the time, the commission is paid through the seller’s earnings? Well, I’m not wrong! Even though the buyer’s agent is representing you in a transaction, it’s actually the seller that will ultimately pay their commission. This concept seems s bit confusing , but it’s true. That being said, why wouldn’t you want to hire one? They study the market conditions for a living, and they will be able to provide a list of listings that suit your every need. They have access to the MLS which is where the majority of the homes for sale are posted. They also know good deals when they see one, and will be able to handle all of the negotiations on your behalf. Finding the perfect agent should be a priority, and you should definitely interview more than one to make sure you choose the one that you feel is right for the job.
Now that you have a full understanding of what you can afford, and a buyer’s agent at your side, it’s time for the fun part, VIEWING HOMES! This is easily the most exciting part of the whole process, putting yourself in so many different homes to see which one fits you perfectly. Sometimes it takes one day of showings, and sometimes it takes weeks, but that’s all a part of the process! You shouldn’t feel like you’re settling for a home, you should feel like the home you purchase is the perfect home for you. This can get frustrating at times, but when you find the perfect home, you’ll know!
Once you do find that perfect home it’s time to put together a strong offer! Keep in mind that when you make an offer, you usually write a check or have a cashier’s check prepared with your down payment. This down payment will go to the escrow company dealing with the transaction. We’re currently in a seller’s market, which means that your offer has to stand out from the crowd, and there are a ton of ways you can do this! One thing I would say to never negotiate is the inspection contingency, which is where you have a home inspector come and take a look at the home to make sure there is nothing wrong with it. Sometimes sellers will try to get you to waive this contingency if there’s something they know about that they don’t necessarily want to disclose. There are, however, other contingencies that you can waive, such as the appraisal contingency, which means you won’t need to get an appraisal to confirm that the home is actually worth the price it was listed at. Your buyer’s agent should be able to tell you whether the list price was a good deal or not. Another thing you can do is write the seller a love letter (yes, that’s what they’re called). Basically, a love letter is a letting you attach to your offer telling the seller why you love their home so much, and why they should choose your offer. This isn’t always effective as the seller’s agent will try to keep the seller’s emotions out of their decisions, but sometimes it really does work when the seller is having trouble deciding between multiple offers, and in today’s market, a love letter will definitely help your offer stand out!
Congratulations! Your offer got accepted! Now it’s time to sign the Purchase and Sales Agreement, which pretty much outlines that the seller will be selling you their home for a certain price, and you’re agreeing to pay that price in exchange for their home. Once that is signed, it’s time to take that to your lender so that they can get you approved for that loan they said you should be able to get approved for. Once that whole process starts, you’ll usually want to get a home inspector to inspect the home ASAP. It usually takes around 10 days to schedule an inspector and have them complete their report. If they find any issues, it’s up to you whether it’s an issue that the seller will have to fix, or if it’s something that you can do yourself once the deal is closed. You’ll also want a list of items that will be left in the home so that you can get an idea of what you might need to purchase once the deal closes. For example, will the sellers be taking their washer and dryer or leaving it in the home? It’s very important that both you and the seller are on the same page when it comes to matters like this. I’ve seen deals fall apart because of appliances before!
Now that all the details have been hashed out and your loan has been approved, the only thing that’s left is for you to do your final walkthrough! This is where you quite literally just walk through the home to make sure that everything looks good and in working order. The home will usually be empty with only the items that the seller agreed to leave behind (if any). Once this is done, you just wait for the closing date and collect your keys. CONGRATULATIONS, YOU’RE OFFICIALLY A HOME OWNER!
I hope this guide helps you understand a bit more about the w hole buying process, and answered any questions that you might have had. If you’re ever ready to talk more about the subject, feel free to call me at any time at 206-216-3431, I’d love to help you throughout this exciting process!
Once again, my name is Tristan White with Coldwell Banker Bain, and I’ll see you next time!