Hi gals. I am currently in my late 20s and have been renting (in a very expensive area) for the last five or so years. I consider myself very lucky to afford the luxury of living by myself and supporting myself in these troubled times for my generation. Most of my peers cannot afford renting (or the cost simply isn't worth it) and either still live with their parents or with roommates. However, I am getting to the point where I think I would like to buy a house. I just honestly have no idea where to start because I don't know anyone my age who has done it. I'm looking for basic tips and maybe some advice on how to determine if I can actually afford it. For example, if I'm looking at the "estimated monthly cost" on a website like zillow, how reliable is that really? Do I have to learn how to negotiate pricing or haggle when it comes to bidding? And, potentially, if i were to view a house, I have no idea what types of questions I should ask about it or what to look out for. I only know that my state requires a house inspection to be passed prior to signing any contracts, so there's that.
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Are you based in the US? My tips below are if you're based in the US. Also I'm not a realtor, it's very possible I'm missing something important, so please keep doing your research. I get it when you don't even know where to start though, so hopefully this novel of a post will help give you some direction.
You will work with 1) the realtor, who helps set up viewings, handles the paperwork, helps find you homes with what you want, and who communicates with the seller; and 2) the mortgage broker, assuming you're taking out a loan; this person usually works at a bank or a credit union and handles the loan approval.
If this is your first time buying a house, you could be eligible for a First Time Homebuyer Loan (FHA Loan). That is something to keep in mind. The big thing about this is that you can put a lower down-payment down, sometimes as little as 3%. There are pros and cons to this loan though. It would be something to ask the mortgage broker.
I found a lot of home-buying information from my local credit union, which had free home-buying seminars over Zoom. Those are super useful, I strongly recommend tuning in to one. Or just search for "Home Buying Seminar" in your area--sometimes community centers will have a presentation too. It's just good for information-gathering.
So usually the first step is to get approved for your loan. Credit unions also typically have better rates for mortgage loans. You'll typically want to get a mortgage quote from multiple places and pick the best one. Let's say, the broker says you're approved for $250,000. And maybe you have $50,000 in cash saved up as well to put towards the purchase.
Then, you contact a realtor and say "Hey, I'm looking to buy a house, my budget is $300,000." You tell them you want a three-bedroom house with a backyard and a bathroom with two sinks within a 50 miles radius of xyz city, or whatever it is that you want. The realtor then sends you listings, based on your preferences, and you go view them. You can also look things up yourself too on Zillow or Trulia or wherever and send them to the realtor to book a viewing.
So you view a bunch of houses and you find the house you love. You tell the realtor. They'll contact the seller. Sometimes, the seller is already in-progress with another buyer, but sometimes those fall through and you'll get your shot. So in this scenario, let's say you got your shot at the house you love.
Then, you get a shit ton of info about the house. They send you everything. They'll tell you if there was an oil spill at the gas station two miles away in 1994. There is also an appraisal, and the house inspection, and a pest inspection. Maybe some other things. You might need to pay for some these inspections, sometimes an extra couple hundred dollars. Probably depends on the area.
BE THERE FOR THE HOUSE INSPECTION. I had a friend who bought a condo and did not go in for the inspection. The inspector said everything was in order. Turns out the AC didn't work. Inspector swears it worked when he was there, but she was never able to get it to work. Had to pay a few thousand dollars to get it fixed. The inspection will (or should) tell you important things. Water damage here. This electrical outlet doesn't work. The AC doesn't work. The garbage disposal is broken. Etc.
So, you can tell your realtor, "Well, it'll cost $2,000 for repairs, so I want a $2,000 credit on the house." The realtor will talk to the seller about that. That's kind of how the negotiation side works. You won't be expected to do the negotiating, your realtor will negotiate for you, you just tell the realtor what you want.
And you might go back and forth. The seller might say "We'll only credit $1,000," and then you decide if that's ok or if you want to cancel the deal. You won't get reimbursed for the appraisal or inspection fees you paid though.
So you say cool, that's fine, I still want the house, so I'll take the $1,000 credit. Then you sign a godforsaken amount of paperwork.
Keep in mind, there are also closing costs. These can be something like an additional $5,000-$10,000, and that's just like...fees for closing out or some shit, I can't really remember. So you'll want that cash on hand.
Having a good realtor makes a big difference. I would suggest finding some realtors in your area and interview them, see if you vibe with any, and ask them all your questions. You could even tell them you're a first-time homebuyer and ask what you should be thinking about. Some realtors prefer to work with first-time homebuyers too.