So, it’s time to make your first real estate investment. Whether you’re buying yourself a condo or house, or looking to flip one for profit, you’re taking a big step. We asked experts for some advice.
Don’t go into real estate investing alone
You might be living alone, but you shouldn’t approach this task alone. Your people skills should be sharp for this because you’ll be talking to realtors, homeowners, bankers, and maybe even lawyers and contractors. This isn’t the time to be shy, not least of all because you have to be bold and assertive when you make your offers.
Select an agent you like who has experience in the area where you want to live. Ask them about their history and how many places they’ve landed in recent years. Be clear about what you must have, whether it’s a garage or a convenience store in walking distance, and what you could live without. Outline which areas you’re interested in, which ones you won’t go near, and which ones you’re open to considering if the right property happens to be there. If the agent gives you feedback you don’t like or tries to temper your expectations a little, don’t rebuff them entirely; this is a learning process and you should listen to people who know what they’re talking about.
“It’s important the buyer has a strong team behind them. They should have a buyer’s agent that they trust to give guidance, highlight any red flags, and advise them on the valuation and correct offer price,” said Jessica Levine, one of Douglas Elliman’s top agents in both transaction volume and gross commission income since 2011.
Build trust with your agent, and if you promise them you aren’t looking around with any of their competitors, don’t go looking around with any of their competitors. Be respectful to everyone involved in the process because each person you encounter has some degree of power over whether or not you get the place.
“Don’t try to be a wiseguy or you’ll lose the house,” said Shawn Elliot, Managing Director of Nest Seekers International. “Come in with your best foot forward.”
Be prepared for disappointment
It happens all the time: Multiple people like the house. Multiple people make an offer on the house. Only one person can get the house. Everyone else will be disappointed.
“Bidding wars are common in the current market, so strategy and approach and timing can be critical,” said Levine.
Elliot added, “It’s a seller’s market. In a seller’s market, homes tend to go either at ask, or over ask. In a seller’s market when interest rates are at historic lows, you don’t come in and lowball it. If you come in, you have to come in guns blazing because there are 10 other families behind you who want the same thing. That’s in every market: New York City, The Hamptons, South Florida.”
Do not expect to get the first place you put an offer on—but be glad if you do. Manage your expectations, give yourself time to find a place, and communicate with your agent every step of the way. Ask them questions—lots of questions. Eventually, if you’re qualified, you’ll get somewhere, but this is usually not a one-and-done deal.
Boost your chances of buying the type of place you want
“If you know you’re credit worthy and you’re bankable then you have to waive the mortgage contingency as a cash buyer, which actually means you look better because your terms are better than the people you’re competing with,” said Elliot. “A prequalified letter from your bank also will help with the offer, along with giving the seller discretion on the closing date.”
Levine noted, “An offer that is ‘non-contingent on financing’ is almost equivalent in strength to an all-cash offer. The buyer should also make sure they understand the mortgage they qualify for and the different products and options on the market. This helps stay within budget and in the event of a bidding war, allows the buyer to feel comfortable with increasing in price point. This can help put a buyer at a competitive advantage in a currently cutthroat market.”
If none of that made sense to you, take a step back. Run it by your agent. Have a look at a home-buyer’s glossary and forums for first-time home buyers. The more information you read and questions you ask, the better prepared you are to make an offer on your first home. Now get out there and schedule some visits to prospective properties.