Congratulations on your decision to buy your first home. Owning property is a proven way to build wealth and protect your future. For most of us, a home is the biggest purchase we’ll ever make, so it’s natural to feel a little nervous about whether or not you’re doing the right thing.
How to Avoid First Time Home Buyer Traps
In a 2019 report, the CMHC (Canada Mortgage and Housing Corporation) found that 42% of homebuyers felt uncertain about the homebuying process. Unforeseen costs and paying too much were at the top of their list of concerns.
If you find a good real estate agent, though, those concerns disappear. The problem is, you don’t know that until you find yourself thousands of dollars out of pocket and probably many years later.
Simone had dreamed about owning her first home since she was a little girl. She wanted a wraparound porch with a swing in the front like her Grandma had, granite countertops in her kitchen, and a spacious backyard with enough room to establish a vegetable garden. She knew what she wanted and had been saving towards this dream for years.
When a home that seemed perfect for her was listed for sale just a few streets over from where she was currently renting, Simone grabbed her phone and began looking for a real estate professional to engage with. With so many options to choose from, she knew she needed to be selective. She had heard some horror stories about home buying, and so many of them centered around choosing the wrong realtor.
Simone decided to contact CleveDoesMore, who had been faithfully working with her for several years on her financial planning and wealth building strategies. She trusted their advice and knew they could help her with this decision too. One short call later, Simone was confident that she could now begin speaking to real estate agents, knowing what traps to watch out for.
Here Are 5 Tips That Helped Simone:
Beware of an agent who isn’t willing to show you a home unless you are pre-qualified.
There is a steep learning curve when it comes to buying your first home. The best agents know this and will help you learn what you need, even if you haven’t been pre-qualified for a loan yet. Agents who won’t invest this time in their clients are only interested in the transaction.
Watch out for agents who play on your emotions when looking at property.
Be cautious when an agent seems over the top in praising a property. You’ll hear them say “Wow! What a great house!” You’re looking for a home that appreciates in value and that you can afford. Buying a great house in the wrong neighborhood could lead to economic disaster.
If you hear the words "Trust me, I know what I am doing,” get out fast.
This kind of agent doesn’t want you to ask questions about what they’re doing and why they are doing it. That’s never a good sign. The best agents will take the time to explain processes and discuss concerns with their clients, instead of expecting them to blindly follow.
Watch out for agents who try to talk you into buying cheap property.
Cheap in real estate means cheap. Most cheap properties won’t appreciate in value. If an agent suggests something that seems too cheap, ask him or her to show you the long-term appreciation for other properties in the area. If they can’t show you that, it’s a definite red flag.
Look out for situations where you are the only one compromising.
Buyer’s agents are aiming to close the gap between what you want and what the seller wants, creating a scenario where both parties win. If you are the only one being asked to compromise things, then this is a sign of less than adequate negotiating on your behalf.
Making the Right Choice
- Look for an agent who understands real estate investing, not just one who knows how to fill out forms for you.
- Look for someone with at least 2 years experience, because it often takes that long to learn the business.
- Ask people you know for recommendations, especially those in industries that work with agents like banks, mortgage companies, appraisers, and other similar local businesses.
- Sign a long-term buyer-agent agreement.
If you think you’ve connected with a bad agent, what are your options?
- First, talk to your agent and explain your concerns. He or she may change.
- Next, review your contract. It should include a specific end date.
- If you’re still unhappy, appeal to the owner of the real estate company. Rather than risk a dissatisfied customer, the owner of a quality agency may recommend another agent or waive the contract.
- If it gets really bad, or your agent has done something unethical, consider contacting your area licensing board.
While you go through the process, remember most agents are ethical and want to help buyers and sellers. In 2019, 78% of buyers worked with a real estate agent to help them through the process. That’s a significant increase over the 61% of buyers who used agents in 2018. The perception of the value of agents also rose, from 28% customer satisfaction in 2018 to 35% in 2019.
Not quite ready to start shopping for your first home yet due to current financial concerns or no down payment? CleveDoesMore can help! In fact, our goal is helping people put their money to work. One way we accomplish this is by helping people locate money they didn’t even know they had with our guaranteed program called the $500 Fix. This time tested solution is easy to get started with and a great way to improve monthly cash flow or give you additional funds for a down payment on your first home.