Buying

Buying a home is a major accomplishment that should be celebrated. Whether it is a first home or a second, the thrill of closing on a home never gets old. However, many fall into the trap of overpricing their home. Homeowners come into the process pricing their home on what they believe it’s worth instead of looking at market indicators. If a home sits on the market for over three weeks, the homes appeal with buyers and demand will lower. 

What is Market Value? 

Market value is the amount a home will sell for in a competitive market place. Many factors will affect the price of a home. A higher volume of home inventory with little demand will affect the market price for homes in that area. Conversely, a limited amount of homes for sale with many buyers will increase the home’s value. The location of a home can also increase demand and affect market value. Some buyers will value the amenities in a community more than the actual characteristics of a home.  Amenities like parks, schools, freeway access, closeness to work, and shopping can supply more value to the home buyer. 

Some homes are not as desirable to the average buyer, and value for these homes are lower, so they sell at a discount.  The value could be affected because it is near trains, power lines, or a cemetery. A home can also sell for less for expensive repairs and features that might be less valued. 

Why Get a Comparative Market Analysis (CMA)? 

A Comparable Market Analysis (CMA) will supply an estimate on the market value of a home in the current market. The goal of the CMA is to make an apples-to-apples comparison on homes that have similar features of the home you’re selling. For example, if you are selling a home with 3-bedrooms and 2-bathrooms with 2800 square feet, you want to use comparable properties with these same characteristics. You also want to make sure that these properties are in a range no farther than a 1/4-mile distance from your property. The closer the comparable is to your property, the better the estimate. Recent home sales 6-months or fewer are more reliable comps to capture the current market conditions. 

The home should ideally have the same number of bedrooms, bathrooms, square footage, lot size, condition, and age. However, not all properties will be the same. Therefore, you want to find comparables that have the most characteristics and adjust the home price based on the comparables gathered. When the analysis is complete, you will have a better understanding of your home value. As a result, this will allow you to price your home correctly and put you on track of achieving your home selling objectives. 

Once you have decided to buy a home, there are some things you should be aware of before you start your home journey. Most buyers understand the need to save for their down payment for a loan. However, other steps in the process should be considered to make sure you put yourself in the best position. Whether you decide the Conventional or FHA route, it is imperative to consider the following:

Know Your Credit Score

Your credit score is the driving factor in the type of interest rate that could be available to you. Lenders will look at your credit score along with items on your credit report to determine how likely you are to repay your obligations. A credit score can range from anywhere from 300-850. The loan originator will review items on your credit report that will include things like your payment history, how often you apply for credit, how you use credit, the total debt owed, and the type of credit used. It is vital to understand what is on your credit report to allow an ample amount of time to fix any discrepancies.

Gather Financial Documents

There are financial documents that your lender will require when applying for your home loan. It will save you a lot of headache and time if you are prepared and have these items ready for the loan process. The documents will vary depending on your situation. However, most lenders will require pay stubs/w2’s, tax returns, bank statements, proof of assets, social security numbers, and ID. These documents will be a great tool for yourself to have an understanding of your financial condition. This will be useful as you navigate how much you can afford monthly on your mortgage.

Work with Lenders to Get Pre-Approved

When you have an understanding of your financial condition, it puts you in the driver seat when you work with lenders. If your credit score is high enough, you will be in a great position to negotiate. When you work with an agent, getting a pre-approval is an important step when searching for a home. Therefore, the lender that you choose to work with will assist you in getting pre-approved. You are not obligated to use the maximum amount of your pre-approval. You’ll want to stick to the financial plan that you set up at the beginning of your home journey to make sure you stick to your goals.

Your real estate agent can assist you through this process if you have any additional questions or concerns about the home buying experience.