Roughly 1 in 3 millennials under the age of 35 own a home as of the end of 2018, according to the U.S. Census Bureau. To me, this statistic is not surprising at all. I am also a millennial and before I decided to make real estate my career, I couldn't tell you the first thing about buying property. Almost all of my friends who fall into "millennial" are still renting. Which is completely understandable, buying property is a huge decision. But, as some of us are getting married, starting families, succeeding in our careers, and gaining financial independence, the notion of owning property becomes more real. We begin to realize "renting" is giving our money away to someone else and its time we begin investing in ourselves. So, you decide its THAT time; now what?
1. GET PRE-APPROVED
What is pre-approved? Pre-approval is when a mortgage lender tells you what you can afford. A lender can be from your bank (i.e. Bank of America) or from a mortgage company (i.e. Movement Mortgage). These lenders look at your financial assets and credit score in order to give you an idea of a your maximum purchase price. They'll also be able to tell you how much money you will need for a down payment and what to expect for a monthly payment. In this competitive market, having your pre-approval letter ready to give to home sellers is very important. It gives them the peace of mind that your credible. It also lets the real estate agent know what to send or show to you. A lot of times, a real estate agent can refer you to a mortgage lender they trust and have worked with before. Either way, before any offers are made, you will need to acquire a pre-approval letter.
2. HIRE A BUYER'S AGENT
100% hire a buyer's agent!!! They will help you naviagate the market, explain contract and real estate lingo, and will represent and protect you; keeping your best interest in mind and not the sellers. I think the biggest misconception among home buyers (in NC) is that they will need to pay the buyers agent. This is FALSE. Commission is paid by the sellers and is written in the listing agreement with the sellers agent. Therefore, not hiring a buyers agent does not help you in negotiating. So 1,000,000% hire a buyers agent; theres really no excuse not to.
3. HOME SHOP
Your buyer's agent should set you up on a "portal." This is a direct link to our multiple listing service (the multiple listing service or "MLS" is where every licensed agent puts there listing's online for the rest of the licensed agents to see). Your buyer's agent is able to put in parameters that will automatically send you any new listings that pop up within your criteria. In a sellers market, acting quickly is the key to getting the house you want, so having this portal set up is very important. If your agent does not have you on a portal, ask, or at least use realtor.com. DO NOT USE ZILLOW. Terribly unreliable.
Once you see a house you like, tell your agent, and she can request a showing. Your agent must accompany you to the house for the showing. Usually the listing agent does not need to join. Discuss with your agent what you like and what you do not like, so she can edit your portal off your comments. The more information you give your buyers agent, the better luck you'll have to find your dream home. Love the house? Time to make an offer.
4. MAKE AN OFFER
In NC, we have a 13 page "Offer to Purchase." You and your agent will need to discuss the terms of the contract. The main points of interest are purchase price, due diligence fee, earnest money fee, due diligence period, and settlement date.
What is due diligence fee? It is a non-refundable deposit. Once that seller agrees to the terms, you will have to have a check ready made out to the seller and you will not see that money again.
Earnest money is a "good faith" fee. It is what holds the deal together after the due diligence period is over. It is held in escrow (either attorney holds or real estate firm) and is returned at closing.
During the due diligence period the buyer can do all their "due diligence" this includes (but is not limited to) home inspections, appraisal, well water test, etc. The seller CANNOT deny the buyer access to the house during this time. Furthermore, while you are under contract you can terminate the contract for any reason at all. While your due diligence fee will be forfeited, you will be returned your earnest money, but ONLY IF you terminate during the due diligence period. After the due diligence period, if you terminate not only do you lose your due diligence money, but you will also lose your earnest money.
The settlement date in your "offer to purchase" is the date you want to close. Majority of the time, the buyer chooses the attorney that will host the closing. The buyer also pays for majority of the attorneys fees (negotiable but thats for another post). A misconception is that once you close, the house is yours. It is not necessarily "yours" yet. After you sign all the paper work at closing, the attorney heads to the court house. Once the sale is RECORDED, the house is yours and you're an official homeowner!
These steps are all generalized, but its an over view of what you can expect. If you have any specific questions in regards to the post, please leave a comment!
Although originally from WV, I have been traveling to Denver for over 15 years to my family’s vacation home. From my years of traveling to the lake every summer, I fell in love with North Carolina ....