By Sneha Bora

 Purchasing your first home is a major milestone that requires immense preparation and guidance. 

Before embarking on your housing search, you’ll want to have a crystal-clear understanding on the step-by-step process and responsibilities required to make this exceptionally worthwhile investment. Though the upfront effort is demanding, I promise the payoff of homeownership far outweighs the complexities along the way! 

This comprehensive guide was provided by one of the special guest speakers during the Fall 2023 PLAN 720: Planning Methods class, Kitty Stockton (Kitty@KittyStockton.com), a real estate agent in North Carolina. This guide will equip you to confidently navigate the first-time homebuyer journey with the assistance of trained, ethical professionals. Let’s explore the key phases together: 

1. Get Financially Prepared 

You can’t begin house hunting without a stable income and credit. Spend the next 1-2 years establishing yourself professionally while paying down debts and avoiding unnecessary expenses. Aim to save enough cash for a 10-20% down payment and cover closing costs. Meet with mortgage lenders to get pre-approved with a competitive interest rate. They’ll evaluate factors like your income, savings, credit score, and existing debts to determine an affordable loan amount. 

2. Assemble Your Real Estate Team 

A reliable real estate agent and lender well-versed in guiding first-time home buyers is absolutely vital. Have candid conversations with them about your financial reality. Together, you’ll create a realistic timeline for achieving homeownership based on local housing inventory and costs. Lean on these partners for insider tips! Foster relationships rooted in trust by asking questions. 

3. Perform a Methodical Property Search 

Once pre-approved, now the fun part begins – browsing listings in preferred neighborhoods! Your agent will ensure accessibility to all houses on the Multiple Listing Service (MLS). Take your time identifying must-have features. Schedule showings for contenders that measure up on paper. Then vet the homes thoroughly in person, possibly revisiting favorites. 

Even if emotionally attached to a home, refrain from compromising on defects or restrictions incompatible with your lifestyle vision. Consider conveniences like proximity to public transit, tailorable spaces as your family grows, low-maintenance yards, and ample natural light. New buildings may better suit long-term needs but come at a premium cost. 

4. Submit Your Offer & Negotiate 

When confident a home perfectly matches your wish list, collaborate with your agent to compose an enticing offer highlighting your strengths as a buyer, including a large down payment, ideal financing, waived contingencies, and flexibility on possession date. Outline proposed purchase terms like price, deposit amount, desired closing date, and inspection response deadline to convey your seriousness as prospective. Brace for some back and forth before aligning on an acceptable sale contract. Even in ultra-competitive market conditions, keep your composure and responsibly advocate for yourself. Don’t be afraid to walk away from properties if you are feeling forced into uncomfortable compromises that do not reflect your budget and priorities. 

5. Complete Due Diligence & Finalize Transaction 

This next stage entails securing an appraisal to confirm a fair market value while also thoroughly assessing the condition of the home’s systems, structures, and surroundings. Schedule inspector walkthroughs to uncover any issues. If you uncover any defects, request that the seller covers specific repairs or provide a closing credit. At the same time, submit documentation for mortgage underwriting and apply for homeowners’ insurance based on property specifics like age and location. Carefully review policies from multiple insurance providers. You are nearly at the finish line! Connect with your chosen attorney to handle closing logistics and paperwork as required in our state. 

During the final walkthrough 24 to 48 hours prior to closing, verify that the dwelling is vacant and damage-free. Then, review with agents and the lender to finalize the amount of money due. Secure a wire transfer or cashier’s check for this amount owed. At the closing appointment, sign the paperwork to transfer ownership officially. Once recorded, you will gain the keys to your sparkling new residence. 

The satisfaction of planting roots in a home personally tailored to your family is well worth weathering the many intricacies of purchasing real estate. Stay the course with your trusted advisors until you settle into your ideal abode! 

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KEY POINTS TO NOTE: 

Agents must establish clear contractual relationships – termed “agency” – with home buyers and sellers per state regulations. These affiliates owe certain ethical duties based on client type. Let’s explore common structures. 

Seller’s Agent 

A listing agent solely represents the home seller’s interests. They market the property to try securing optimal terms and price. The agent must disclose all the important points to potential buyers. Compensation comes from the final sale commission. 

Buyer’s Agent 

As a buyer’s agent, all efforts focus on locating ideal homes for clients and negotiating advantageous deals on their behalf. Buyers pay fees upon closing. 

Dual Agent 

Occurs when one agent or agency represents both the buyer and the seller in a transaction. This poses an inherent conflict of interest. Confidentiality gets compromised as neutrality is maintained among both parties. Strategies to reduce risks include designating one salesperson to exclusively assist only the buyer or seller. 

Non-represented (“For Sale by Owner”/FSBO) 

Sellers acting as their own agent must still ensure buyer agents understand they solely assist the buyer. If sellers offer the buyer’s agent compensation, then the party must develop a payment agreement that pre-outlines commission terms to avoid misunderstandings. 

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KEY TALKING POINTS: 

1. Buyers should inquire: 

– Will you act as my personal buyer’s agent? If not, who do you represent? 

– What are your fiduciary responsibilities to me as the client versus to the seller? 

– How will you be paid at closing? 

2. Sellers should inquire about: 

– Marketing plan and timeline to list/show my home 

– Expected compensation structure and split if co-op agent procures buyer – What paperwork is required for listing representation? 

– Under what conditions can the buyer’s agent preview my home? 

– Can I expect direct referrals or do you rep buyers with other firms? 

3. Additionally, both buyers and sellers should clarify: 

– Length of the agency agreement 

– Typical commission rates in the local market 

– Options if unable to reach concurrence on fees 

– Steps the firm takes to reduce risks in dual agency situations 

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Edited by Annie Oommen

Featured image courtesy of Zillow