So, You’re Buying A Home in Farmington,
But… Are You Even Ready?
Buying a home is very exciting! We love helping home buyers turn the idea of purchasing a home into a reality. There are, however, 4 steps that need to be taken prior to writing a winning offer on the perfect house that you just finished touring.
I have compiled a list of items that all homebuyers should check off prior to beginning the house hunt.
Step #1 Choose your Farmington real estate agent
When buying a home in Farmington, the first step, and I cannot stress this strongly enough, is to choose your real estate agent. Sure, you may know several people that are real estate agents, or maybe your third cousin’s, aunt’s dog groomer knows someone that sells houses in their spare time. That doesn’t mean that you should give them a call.
Buying a house is a very large investment, most likely the largest investment most people will ever make. This makes hiring your representative for this transaction a big decision.
You could call any agent to show up and just open a door for you, but that isn’t what you need or deserve.
First, make sure you are working with a reputable real estate agency. In Farmington, the #1 agency year after year is Coldwell Banker Hulsey.
Secondly, you will need to choose an agent that you trust to always have your best interests in mind. You need an agent that knows the local market and can give you the right advice and guidance when you need it. You need an agent that understands your why.
What is your why? That is a great question.
When you speak to an agent they will likely ask you about your wants and needs in a home. This is a common question that you would expect all agents to ask you when you are looking at houses. It is a valid question, but it isn’t always the right question.
I like to ask clients for their why? Why are they moving? Why do they require 4 bedrooms instead of just 3? Why is the extra-large dining room a must-have?
By asking these questions you begin to learn what buyers truly need in a home. They are moving because they have a new baby on the way. They need a 4th bedroom to use as an office because one of the buyers works from home. They need an extra-large dining room because the buyer’s grandfather built them a custom dining room table for a wedding gift.
These questions not only help an agent really understand the buyer’s needs but also helps the agent find the right home for the buyers. Maybe a three-bedroom home with an extra nook off of the dining room is large enough to work as a home office. Maybe this three-bedroom home, that an agent would have otherwise ruled out, was the perfect home all along. Just as important, there is no reason to waste your time and energy showing you homes that will not accommodate your cherished wedding gift. That is something you just can’t compromise on.
Most importantly, by choosing the RIGHT real estate agent from the beginning, they can help you check off the remaining items of this list. Remember, agents do this every day, and can make the process much easier if you start working with them from the beginning.
Click this link to learn how to choose the top real estate agents in Farmington MO.
Step #2 Decide If You Need To Sell Your Current Home First
When purchasing a home, you need to first determine if you need to sell your current home prior to purchasing your next home. As of writing this article, the real estate market in Farmington, MO is a VERY strong seller’s market.
If you are currently in a home, you may be able to obtain a loan to purchase your new home, and then sell your home afterward, or even obtain a bridge loan. We will discuss obtaining loans more in just a moment.
These options allow you to make a strong offer when you find the right home and can make the move from one home to the next much easier and less stressful. This, however, is not an option for all Farmington Home Buyers.
In a strong seller’s market, it is very difficult, to get an offer accepted contingent on you selling your current home. It is a much different market than it was just a couple of years ago.
Currently, it is not uncommon to have multiple offers within the first day of a home being on the market. Often times, you may even be competing against cash offers that are not subject to a loan contingency.
A contingency is a clause in a contract for the sale of real estate which gives the parties the right to back out of their contract if certain circumstances either do or do not occur, depending on the terms of the contingency. The contingency must be agreed upon by both buyer and seller.
Imagine this situation for a second. You are looking at homes for sale in Farmington and you find one that you love. This is the perfect home and it checks all of your wants, needs, and most importantly your whys. You decide that you are ready to make an offer and turn this house into your home.
You have your trusted agent write up the offer contingent on you obtaining the loan, and also contingent on the sale of your current home which isn’t even on the market yet. The seller has two other offers to choose from. Your offer is the highest by $2,000 The other offers are for the same price, but one of the other offers does not have a home to sell first, and the other offer does not have a home to sell, and it is a cash offer.
Your offer may be for $2,000 more, but that $2,000 doesn’t mean anything if you aren’t able to sell your other home. Sure, the market is hot, and homes are selling quickly, but your home isn’t even on the market yet and the seller has no idea if it will be priced to sell, or if you are going to price well above market value. If it isn’t priced right, the seller could be tied up in a contract contingent on you selling your home, but you cannot sell your home because the price is way too high.
When sellers select an offer to accept, they want the offer that will put the largest possible amount of their equity in their pockets, but also the contract that will most likely make it to the closing table. Uncertainties, such as a contingency on the sale of a home that isn’t even listed yet, is never in the buyer’s favor.
You may be wondering how to know if it is a buyer or seller’s market. Watch this video to learn more.
Step #3 Choose A Farmington Mortgage Lender And Get Pre-Approved
This is such a vital step, for multiple reasons, prior to starting your home search.
First of all, this is an important step for several different reasons:
- Informs you if you are qualified for a mortgage
- Reveals the price range that you should be searching in
- Provides you with an estimation of your monthly payments
- Provides you with an estimation of total loan costs
- Proof for the seller that you, as the buyer, are capable of obtaining financing
The loan pre-approval process can require a little bit of work on your end. This process all varies by lender, but you may be required to complete a loan application and provide a series of documents such as information for a credit check, proof of income such as pay stubs, and outgoing expenses.
This process can take a little time, but there is another option as well. A mortgage pre-qualification is a less formal option for home buyers. A mortgage pre-qualification is a much quicker process, which can often be completed over the phone.
All lenders are different about how they go about this process, but in general, the pre-qualification process is based on information provided over the phone to the lender, and submission of documents is not required. A pre-qualification is not a guarantee that you will be approved for a loan since the information provided is not verified, but will still provide you with a much closer idea of what the specifics of the loan will be.
I cannot speak for every transaction, but in our area, many homebuyers actually make offers and get them accepted, with a pre-qualification, and not a pre-approval. With that said, if you have time, I would always recommend completing the extra steps to obtain a pre-approval.
I strongly encourage you to speak to your lender about tips during this period to ensure you do not hurt your chances of obtaining a loan. This consists of things such as not making large purchases, large deposits, or taking on new credit or debt during this period.
Step #4 Let The Buying Process Begin
Now that we have covered the above steps it is now time for the fun part. Let the showing begin. Reach out to the Farmington real estate agent that you have chosen, hopefully, an agent with The Jennings Team, and begin the process of finding your next home.
I really hope that you have found this information helpful and that it makes your home buying experience a better one. If you are preparing to purchase a home or selling your current home, contact The Jennings Team today and we will help you from start to finish to ensure that you have a great transaction!
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