This regularly-scheduled sponsored Q&A column is written by Val Sotillo, Northern Virginia-based Realtor and Falls Church resident. Please submit your questions to her via email for response in future columns. Enjoy!
Question: With mortgage rates in the record lows, we have decided to buy our first home this year. Do you have any recommendations on how we should start the home buying process?
Answer: There’s plenty of advice on the topic all over the internet, so I’ll include some suggestions I don’t see on most sites and also put my own opinion on advice that you may have heard before.
Your Search Criteria
Challenge yourself early to come up with 12-15 things that are important to you. Then give yourself 100 points and allocate points to each based on how important they are to you and you’ll end up with a weighted criteria list to help you focus your search and objectively compare properties.
Length of Ownership
This is one of the most important conversations to have with yourself/your partner. You should focus on the following:
- Likely length of ownership
- Difference in criteria for a 3-5 year house vs a 10-12+ year house
- Difference in budget requirements for a 3-5 year house vs a 10-12+ year house
Appreciation is not guaranteed and difficult to predict, but the value of longer ownership periods is undisputed. One way longer ownership adds value is the potential for eliminating one or more real estate transactions, and the associated costs (fees, taxes, moving expenses, etc) and stress that comes with moving, over the course of your lifetime. If you have an opportunity to significantly increase your length of ownership by stretching your budget, it’s often justifiable.
Influencers (not the Instagram ones)
Family, friends, colleagues… they’re all happy to offer opinions and contribute to your home buying process, but the input can be overwhelming and unproductive if you don’t set boundaries. Try to determine up-front who you want involved in the process and how you’d like them to be involved.
Does Your Dream House Exist?
Spend a little bit of time searching For Sale and Sold homes on your favorite real estate search website to see if the homes selling in the area you want and within 10% of your upper budget are at least close to what you’re looking for. If not, try adjusting the price, location and non-critical criteria to figure out what compromises you’ll need to make and then compare those compromises to your current living situation.
Know Your Market
We’re in a strong seller’s market right now with low supply, high demand and increasing prices. Each sub-market behaves a bit differently and comes with its own unique set of challenges and opportunities, so take time early on to understand the sub-market(s) you’ll be involved in and what you’re likely to experience. This is something your agent should be able to assist with.
Pre-Approval & Budget
There is a lot of value in working with a lender early on in the search process. For starters, you’ll have somebody who can provide real rates and advice based on your specific financial situation and needs. A lender can only do this if they’ve reviewed your financial documents and credit. The more you put in, the more you get out.
You’ll need to have a lender pre-approval to submit an offer so if you have to do it anyway, why not doing it early on so you get the most value out of your lender? It also means that you’ll be prepared to make an offer if you find the right home before you expect to be ready.
Given how competitive the Northern Virginia real estate market is, the quality of your pre-approval can make a big difference when you make an offer. You should strongly consider partnering with a local lender with a great reputation to give yourself an advantage when making an offer. Pre-approval letters from big banks and online lenders don’t go over as well in our market. If you’re looking for a recommendation I’ll be happy to connect you with a great local lender.
Find an Agent
The least surprising suggestion on this list! Agents come in many different forms and finding somebody who suits your personality and goals is important. Ask friends, colleagues and family for referrals and meet with multiple people until you find the right fit.
The worst thing you can do is choose your agent based on whoever responds to an online showing request faster. A good agent can provide a ton of value being involved in your buying process months before you’re ready to buy. Be wary of anybody who wants you to “wait until you’re ready” before working with you.
If you’re considering buying (or selling) in the DMV in 2020 and would like to meet, feel free to email me at [email protected]!
Val Sotillo is a licensed Realtor in Virginia, Washington D.C., and Maryland with Real Living At Home, 4040 N. Fairfax Drive, Suite #10C Arlington, VA 22203, 703-390-9460.