By Iniya Nathan
Dear first-time buyer,
You are probably confused about what’s going on in the market and wonder how to proceed. After collecting advice from some real estate agents, I now have answers to some of your questions.
1. What is going on in the market right now?
“In 2005 to 2012, we were going through a recession and there weren’t a whole lot of offers on properties,” 40-year broker, Kenneth Washington, Sr. said. “Now we have different companies who have moving people from New York, key brands moving from California, and we have all these investors buying homes. That has made it difficult for an individual to be able to compete in the market we’re in now.”
For the past few years, the market has been a seller’s market as opposed to a buyer’s market. This means that the market is in the seller’s favor, there are too many people wanting a house and not enough homes in the market. A buyer’s market, by comparison, is when there are houses on the market and not many people looking to buy them. Because of that, many houses are being sold over the appraisal value, which makes it harder to find a home within a smaller budget.
2. Where do I start?
According to real estate agent, Lee Holtzman is to get pre-approved for a loan.
“Let’s say you’re hooked up with your realtor, you’ve found your property,” Holtzman said. “There’s 3 or 4 other people putting offers on it too. If they already have a pre-approval letter from a loan officer and you don’t, you are not going to be considered. You’ve wasted your time and the agent’s time.”
Holtzman also mentions the importance of getting pre-approval from a mortgage broker, not an online lender.
“Online lenders get paid when you take the application,” Holtzman said. “Whether you get approved or not. Where’s their motivation to make sure you actually get qualified and get the interest rates they promised you? Mortgage brokers that are not online get paid at closing.”
The next step is to get a real estate agent.
“Always get hold of a good Realtor who knows the market area, knows the city, because they are going to take you to the best places,” Realtor, Hemlata Mistry said.
3. Should I be renting or buying?
“When you rent, just lift up the toilet seat every month,” Holtzman said. “Put a couple of 100 dollars in there and push it down. All you’re doing is putting a roof over your head. If you own a home, you’re not opening up a toilet seat, you’re opening a bank vault.”
The general consensus says you should be buying, not renting if you can afford it.
If you can buy a house now, then you should buy it, according to Hemlata Mistry, instead of waiting for prices to drop.
“What I’ve noticed in the real estate industry is that the price is not going to go down,” Mistry said. “They stay there for long term.”
“When you’re buying, you are building some equity,” Realtor, Bina Todi said “When you are renting, you are paying someone else’s mortgage.”
Many first-time buyers don’t need all the space a house provides, which is why Hemlata Mistry suggests buying smaller properties such as townhouses or condos. These properties are less expensive and more suited to people in their 20s.
“All that money that you’ve spent on rent, you can’t get that back,” Mistry said. “But if you bought it, that goes toward equity, and sooner or later you can sell it and get a bigger house.”
4. When is the best time to buy a house?
According to Holtzman, it depends on preference.
“In the summer there might be a higher interest rate because there’s more activity, more buyers, people selling, schools letting out, vacations being planned, and people want to be in a home before summer vacation is done,” Holtzman said. “So, in the spring and summer, you’re going to find quite a few homes out there that may be higher priced than in the dead of winter. Homes that are on the market during the wintertime are going to be priced more reasonably. You might even get a better interest rate. That’s because there’s less activity. If you don’t mind a house that might need a fix-up or a few changes, look during the fall or winter. But if you’re looking for something specific you might find it in the summer or spring because there’s more to choose from.”
While this is true for the Dallas area, it might not be for all other areas. According to Washington, who worked in Florida early on, Florida had more activity in the market during the winter due to people retiring and escaping the cold of the north.
5. What else should you know?
You will probably have buyer’s remorse after buying a house, according to Lee Holtzman.
“When you get a contract accepted your brain says, ‘I just committed to 30 years,’” Holtzman said. “‘That’s a long time.’ It could scare you. Everybody gets buyer’s remorse. But here’s the thing, you’re going to pay to stay anywhere. If it’s an apartment, you’re going to pay to stay, in a house, you’re gonna pay this guy. So don’t worry about the buyer’s remorse.”
Washington recommends looking into new home buyer programs in your area and buying new constructions to help compete against the current market.
“If you get a contract on a new construction, a new construction can’t take more than one contract,” Washington said, to better explain.
Bina Todi recommends making decisions based on your finances.
“Even when the market is crazy, don’t go beyond your limits in your budget because if you’re paying too much you will be stressed,” Todi said. “Buy a house if you are comfortable.”