The New Year marks a time for goal setting, resolutions (I'm having problems keeping mine), and deciding to make positive changes for the New Year. Commons ones like losing weight, stop smoking, career changes, going back to school, buying a new car, and even buying a house seem to pop year-in and year-out. In this blog post, How to Buy a House in 2015, we'll dive into the process, the players involved, housing inventory, and how to make it a successful venture.
The Home Buying Process in 2015
For the most part, home buying follows a specific flow, see the buyer's flowchart for a visual, and in 2015 very little, if anything, will change. Home and property buyers will still go through:
- Real Estate Agent Selection
- Getting Prequalified with a Lender
- Analyzing Needs
- View Homes & Properties
- Writing & Negotiating an Offer
- Satisfying Contract Contingencies
Who is Selling Real Estate in 2015?
Buying and selling real property is a choreographed effort between a variety of parties to ensure a successful purchase or sale of real property.
- Equity Sellers: The more common resaler that owns a home, with equity, that needs to sell either to downsize, relocation, move-up, or would just like a new home.
- Banks & Institutions: Fannie Mae, Freddie Mac, BoA, Chase, Wells Fargo, and even HUD all fall into this category.
- Short Sellers: Folks who have a home they need to sell but that home is worth less than what is owed against it. Not all these sellers are in a distressed situation (pre-foreclosure status) and may have to relocate because of work and have to sell.
- Auction Companies: Auction.com, HomeSearch.com, HubZu.com, and RealtyTrac.com are auction websites where buyer's bid on a home - like eBay. As such, these homes come with special buyer fees and conditions not found in other purchases.
How to Buy a House in 2015?
Laws, rules, and purchase and sale forms will change, that is a given. However, the process by which buying a home will remain relatively unchanged. There are still For Sale by Owners, real estate brokers, first time homebuyers, equity sellers, short sellers, bank owned properties, the majority of the same loan programs, title and escrow companies, appraisers, and land surveyors.
But here are few things to consider.
1. What Will Happen with Housing Inventory?
Housing inventory has continued to remain low to the end of the year. Homebuyers can expect housing inventory to remain low until spring.
In addition to low inventory, expect good homes to sell fast as there are still many junkie properties on the market.
2. What Will Interest Rates Do? Rise or Climb?
According to our sources, rates will remain low for 2015 to keep encouraging home purchases and refinances.
Historically, rates would have to dramatically increase to just to get back to 2007 levels.
On a similar note, I hear all the time that a 4%-5% home loan rate is crap. That is simply just not true. Anything at 5% or below 5% is a great home loan rate. However, with rates continually changing, buyers and their lenders should watch rates diligently when deciding to lock a home purchase rate.
3. How to Hire the Right Real Estate Professional
Real estate agents, like any career choice, has a variety of people that have just as much variety of personality as they do skill level. There are lot of websites that allow real estate brokers to get reviews, good and bad.
We believe, that every time we talk to a potential home buyer that we're interviewing for the job. It's a choice to be hired as the selection of real estate brokers is in no shortage.
Having a real estate license shouldn't be the only qualification for hiring a real estate broker. Take some time to read online reviews, interview agents, and discuss who you would like work with.
- Are you looking for an agent with certain skill set?
- Are you looking for an agent with higher education?
- Are you looking for an agent who is familiar with equity sellers, short sales, bank owned, HUDs, HomePath, Freddie Mac .. etc?
- Are you looking for an agent within a certain demographic?
There are a lot of factors and the internet will allow a homebuyer to answer a lot of questions upfront.
Be Prepared to Negotiate
When writing a purchase and sale offer, be prepared to negotiate and outline ever single term in writing. Terms like purchase price, closing date, earnest money, financing, home inspections (a home inspection also has a home inspection to negotiate), possession date, and more depending on what type of home is being purchased and what type of offer is being written.
And yes. It has to be in writing. Verbal offers are nonbinding in Washington State. Also, written contracts protect a homebuyer from unexpected changes. Don't fall into the the trap of "trust me".
Expect Lenders to Ask for Everything
Receiving a pre-qualification or pre-approval letter is nothing like filling out an online calculator. Lenders take into account all a homebuyers incoming cash (even grandmas birthday check), outstanding debt, pending collections (medical and non-medical), credit scores, student loans, employment, over-time, previous tax statements, current taxes, and child support and parenting plans.
It is not uncommon to have a lender request explanations for each of these items. While I hear "that is stupid why do they need that" on a regular basis think of this: if you're lending someone a few hundred thousand dollars wouldn't you want some solid verification that that money will be repaid?
Lenders have investors to answer too and a homebuyer's loan has to conform to certain standards.
Have Fun During the Process
Buying a home doesn't have to be always stressful and overly complicated.
It can be fun as well so here are a few tips to make the process fun.
- Be Prepared
- Be Timely
- Be Informed
Going through homes is fun, a unique experience, and give people an idea that cannot be seen from pictures. Also, while out showing, take that opportunity to share more of what you like, don't like, and have a few laughs in the process.
Enjoy and hopefully this online Homebuying Guide helps to prepare your for an upcoming purchase. As always, if there are any questions we are here to help in creating the best experience possible.