After years of living together in a small apartment, my wife and I knew it was finally time to purchase our first home. We had been casually looking online at homes in the DFW area and narrowing down locations for more than a year. We knew that the market had tightened in our price range considerably in the past year, and that we would need to be prepared to walk into a competitive environment.
Fast forward a few months, and we have found and bought a house we love, on terms we felt comfortable with.
What helped us?
Patience, persistence, a little luck, and a willingness to push past some of our preconceived notions as first-time buyers.
In the normal home buying journey, there are plenty of lessons to be learned — the need for a ‘must-have” list, the difference between what you see in photos and in person, the importance of sticking to a budget, etc. Now, throw in a pandemic and a fast-paced market, and things get a bit more complicated.
Here are five key lessons that we learned along the way in our home buying experience.
1. Special circumstances require special strategies.
With homes in our price point and location coming on and off the market in a matter of days — and many with multiple offers — we decided to take a closer look at homes that had been on the market for a bit longer, or had gone under contract then were put back on the market.
By going this route, what we ended up finding was a home that had been thoughtfully updated and maintained, with one issue that the sellers did not want to fix before moving out. We were quickly able to connect with professionals to get generic estimates and made an offer that took the required maintenance into consideration. During our option period, we had more thorough inspections done which allowed us to negotiate repairs with peace of mind, and no competition to take our leverage away.
In the end, we bought the house on fair terms, and the risk paid off. It’s important to acknowledge that every scenario may not work out quite this way. For example, you may find yourself wanting to go the other way by competing for the most in-demand properties by finding unique ways to make your offer stand out. The lesson here is to keep an open mind in your search and look for opportunities that other buyers may not be recognizing.
2. Protect your mindset, and remember why you’re buying in the first place.
In today’s market, certain areas of the market are moving very quickly and feature high levels of competition. The market is shifting quickly and requires us to shift along with it. As a first-time homebuyer, odds are you’ve waited in anticipation for some time to buy your first home, and it’s all too easy to envision a result that isn’t fully realistic.
Six months before we were ready to buy, my wife and I came across a property we fell head over heels for. It was well priced, in a great location, and had everything we wanted, but the timing simply wasn’t right. So what did we do once we started a more serious search? You guessed it — we compared every property we looked at to that first house.
We were sabotaging ourselves, and it wasn’t productive. Could we have waited for a carbon copy of that house to hit the market? Sure, but how long would that take? Would interest rates stay low? Would rising prices cause it to be out of our price range? How much money would we waste renewing our lease on a month-to-month basis? That’s a lot to risk.
We knew that the best thing to do was get realistic, align our expectations with the present market we were looking in, and most importantly — reconnect with our original motivation for buying a house in the first place.
That last part changed everything. We still maintained our “must-have” list, yet determined that we would need to be flexible in some other areas in order to achieve our broader, more important goals. The excitement created by reconnecting with our true motivation allowed us to stop fixating on smaller issues, and in some cases, completely change our thinking and view them as opportunities.
The lesson here is simple — protect your mindset. You can’t always determine what happens to you, but you can always determine how you react.
3. Leverage the wealth of technology available to you.
Technology has improved by leaps and bounds in recent years, and even more so in the COVID era. While photos and virtual tours offer a ton of value in your search, we found that Google Maps was an easily overlooked lifesaver.
We consistently used Google Maps (the street view in particular) as part of our screening process. I wouldn’t suggest putting your full trust into maps that may be out of date, but for us, it served as a great tool for getting a feel for neighborhoods and finding showstoppers that we might not have seen in photos.
It saved us more than a few wasted trips and helped us to quickly narrow down our list while feeling confident in our choices. The lesson we learned was to find as much leverage as you can in technology, and use it to create processes that make your search easier.
4. Know the property taxes in the areas you’re searching.
Rates can vary, even in areas that are close to one another, so it’s important to know how these changes will impact you. As you look at specific properties, take notice of the nonexempt tax figures for different homes. Also, if there isn’t anything specific tying you to an area with a higher tax rate, you may be able to save some money by looking in a neighboring area with lower rates.
Although you won’t know the exact amount of your monthly PITI payment until you have a specific property to apply for, one thing that helped us was confirming with our lender how rates in the areas we looking would influence payments at our price point. Those conversations were helpful in ensuring that we were comfortable and weren’t going to be surprised when we saw our loan estimate.
If you’re looking to get a basic feel for how rates will impact your monthly payment, a simple calculator such as this one is a great place to start. You can find a roundup of recent tax rates in the DFW area HERE.
The lesson here is to eliminate surprise as much as possible. Take note of the details, and run yourself through some different scenarios to ensure reality aligns with expectation.
5. Allow your Realtor to get to know you well enough to save you from yourself.
As you’ve read above, buying a home can be quite an emotional roller coaster. It’s all too easy to set limits for yourself upfront, then watch them go right out the window once you find a home you love. Though I am a licensed agent, my wife and I brought in a Realtor we trusted to serve as an objective third party and help us with negotiating. We are so glad we did.
When making what is, for most of us, the biggest financial decision of our lives, objectivity is crucial. Hot markets can fuel impulsiveness, and despite our experience and knowledge, we’re all human. After you’ve combed through hundreds of listings and watched countless favorites fly off the market, it’s all the more tempting to throw caution to the wind once you find a house you love.
This final lesson is to be transparent with your feelings and concerns throughout the transaction and allow your Realtor to coach you through the moments when emotions run high. We made it a point to do so, and it saved us a good bit of money in the process.
Hopefully, these lessons learned are helpful if you’re considering making a move, especially as a first-time homebuyer. If you’ve recently bought and have learned some lessons of your own, I’d love to hear from you! You can email me at email@example.com.