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Crucial First Time Homebuyer Tips and Tricks

Ryan Rodenbeck

Ryan started in Austin real estate as an investor in 2001. He looked at all investment opportunities — Austin foreclosures, condos, homes for sale...

Ryan started in Austin real estate as an investor in 2001. He looked at all investment opportunities — Austin foreclosures, condos, homes for sale...

Dec 12 23 minutes read

Transcript

Matt: Welcome to Austin real estate insider where we tackle all the issues that buyers and sellers face in the Austin, Texas market. On today's show, we have a special guest, Angelina Ashton. Say Hello. And today's topic. We're covering what first time home buyers should look for and the steps they should take when they're first getting started in the process. And that's why Angelina is our guest today because she is fantastic at working at first time home buyers in there.

Angelina: So I'm excited to be here today and to talk with you guys about first time home buying and thanks for having me Matt. And there's a lot of stuff we want to cover today and I think the most important, if I'm correct, Matt, we want to start out with the number one thing that you have to do and finding an agent and what you should do as a first time home buyer.

Matt: Exactly. So you know, as you get started, once you've made the decision that you want to buy a home, right. There's always that first step and that first step is finding the right agent because there's everybody knows there's an agent on every corner. Your cousin, your cousin's probably an agent, but does that make them right for you Probably not. In all honesty. And you should definitely interview a couple of different agents until you find the one that is the right fit for you. Angelina, what are some things they should look for in an agent and how do they know that agent is right for them

Angelina: Well, I would say, you know, first of all, first time home buying is a very overwhelming idea to a lot of first time home buyers because one, a lot of people don't think they can get approved or that they can find a house or that it's just not for them. So finding an agent is so important because it allows you to have somebody who's truly your partner, who really can educate you, who's experienced, who can communicate well and who's transparent. And I think when you find that agent, first and foremost, whether you're buying and three months, whether you're buying in six months or a year from now, it's really important to find that agent right from the beginning because you want somebody who can educate you along the way and you're really understand the process.

Matt:  Alright, so you just listed off four key things that agents should have. So let's kind of dive into each one of those. So experience, every agent has experience in different fields, especially these things like that. What would you recommend agent be experienced in working with first time home buyer?

Angelina: Your agents about first time home buying or that you want to buy a house I would simply just say, how many first time home buyers have you worked with? What is your experience with first time home buyers? Because as you and I both know, you might be a very experienced agent but you might not be experienced with first time home buying anymore and you really need somebody who's got the patience who can really take their time and guide you.

Matt: Right.And you know, that kind of goes back to how many first time home buyers has that agent work with and that's going to be able to provide them the knowledge and the education that they can provide to that first time home buyer. Correct?

Angelina: Right, right. Because if you get somebody who's a very experienced agent, they might just be working with a lot of second time, third time or investor type of clients. And it's not that they don't know the process, they probably know it very, very well. It's just that they're going to assume you know, it just as much. And it might make you as a first time homebuyer feel a little anxious because you're not being guided the way you need to with an agent who's used to working with somebody who's never bought a home.

Matt: So that's a very great point. So prime example is myself and Angelina. I'm not the best first time home buyer agent, but you know, I have no. My focus isn't, is in other areas. Whereas Angelina, she crushes it with first time home buyers and she's even created a binder or a google drive doc with all kinds of steps, documents, education, things like that. Can you elaborate more on that and how you have educated your clients in the past?

Angelina: Yeah, so I mean just quick, high level. When I first meet a client that's a first time home buyer. I kind of tried to get where they're coming from, what their goals are. Once I have all of that information, it's always nice for them to have a a point of reference to go to because it's hard to remember all the things that we're going to throw at you. So what I do is I create a Google doc and I put in there one folder or one tab that is basically all of the files that we're going to have along the process. The most important task for them in this Google doc is going to be the timeline and so what I do in there, I put kind of like a standardized timeline in there with dates so that way while they're sitting there going through the process, there's some highs and lows during your home buying where you're busy, busy, busy looking for houses and talking to lenders and then you find a house and you sit there for a minute and you feel like you're supposed to be doing stuff. So to have an agent who can put a timeline together that you can go, you know, let me go look at that on my google doc and see where we're at in the process. It really gives a first time homebuyer some ease.

Matt: Yeah, that makes sense. That way they're not always worried like what's going on Okay, oh we've got three days here, we've got four days here or this needs to be done here. You know, and that kind of leads into the communication and transparency. It's, you know, laying out all the steps that are needed when buying a home. And then as well as once the homes under contract, there's things that need to be done and costs associated with those things that a lot of people don't frankly know when they could get quickly overwhelmed with white, I got to write another check or I got to spend money here. And by having that outline and put together like, Hey, here's what to expect once the on our contract, here's what we need to do, here's the average cost. Things like that. I think that goes a long way to base. Yeah. To your point, what I mean put them at ease, right?

Angelina: I kind of want to say something about is that goes back to our conversation about experience and working with an agent who's used to first time home buying, because you said something there where there's a lot of costs that you don't realize in buying a home other than the loan and your regular principal and interest. Right So a good first time home buyer agent is going to explain a lot of that stuff up to you upfront so you're somewhat aware of. You might not understand it, but at least you know, hey, I need to maybe reevaluate certain aspects of my financial situation because I didn't know about these things. Whereas an experienced agent who normally doesn't use work with first time home buying, they might skip over that because they assume, you know, it kind of ties in with the experience and the communication and how they're presenting that information to you because you remember your agent is your advisor. Right And so the goal of having an agent is to take workload off of your plate and help you find the right house, not for you to do all the work, especially when it's your first time buying.

Matt: And so before we go on to our next item, so you tell me if this is a good idea or not, but like I think people should basically list out, you know, maybe come up with a list of 10 questions and put the agent through an interview and see don't need to hire the first agent they meet with even though, you know, maybe they would. But I'm kidding.

Angelina: Yeah, they were, they would just be like, I have to work with them.

Matt: Yeah, I mean you're spending your hard earned money, you're buying a large asset and so...yeah. So do your due diligence. And so once they've got the agent interviewed, picked out, ready to go. Step number two is picking the right lender.

Angelina: Right. That is huge. So I think that's just as important what you say as finding an agent.

Matt: Okay, now what, why is that So a lot of people sometimes even do that before they even find an agent, but wait and do because the agents always going to have somebody that recommend and then they should always pick, pick another company over here and compare the two. Right. And so what are things that the first time home buyers should look for in a lender?

Angelina: Well, let me, let me answer your first question on why is it just as important I think it's just as important because a lot of people overlook the importance of a lender during the process and how they can dictate how your home buying experience can be. And when I say experiences, not the warm and fuzzies, it's how much they can hinder or make the process very smooth. So taking, you know, going into your second question, when picking a lender, did you want to add to that?

Matt: Yeah, we've all seen deals fall apart, you know, they found the home, you know, they're ready to go, we're through option. And behold the lender missed something on due diligence on a, on that and then all of a sudden, you know, they can't approve the loan for the buyer falls apart. And that is the worst thing that can happen. And it's something that is avoidable by picking the right lender.

Angelina: Absolutely. And you know, unfortunately it happens even as a good agent, you can recommend a lender all day long and sometimes like you said at the beginning, you know, there's a friend of the family that's a lender or you know, they saw something and like a good deal through their major bank and they choose something thinking they're getting, you know, someone who's gonna take care of 'em or you know, oh, it's a big bank. They should know how to do this and then you get to like a week before closing, this has happened to a fine of mine who decided to go a different route and it pushed closing out two and a half weeks because the lender didn't get all the right information. So I think when you think about picking a lender, one, if you have the right agent and you picked a good agent, they should be able to give you at least two to three references on good lenders that they've either worked with.

Matt: The most important thing really drive home for first time home buyers is don't look at it when you pick a lender with rates only in mind, meaning your interest rate only in mind. I think a lot of people get short sighted by seeing, oh, they have a lower rate. I'm going to go with them. You really need to look at it like I need a good lender versus just a good rate because really your rate is all dependent on your credit score anyways. So the reason that good lender is, like we said earlier, you don't want somebody who's not experienced with the process or doesn't understand the market in Austin. That's another big thing.

Angelina: Yeah. You here's always recommend picking a lender that only does mortgages and one that has local meaning. They at least have an office here and a presence here. Right So by doing those two things, you really put yourself over and above going with like an online lender or big bank where a pre-approval underwriting all of this stuff gets shipped out. It's on somebody's desk, eight states away, this, that and everything else. Whereas you know somebody that just does mortgages and is local, it's definitely a lot more efficient. The process is going to work smoother.

Matt: I think one of the things that you have to think about when you're finding a lender, it's like what we said earlier, like you've got to find a good agent. You have to have a good lender because as a first time home buyer, there's all this stuff you have to understand about the buying process alone. There's also all this stuff you have to understand about your loan, you know, and some of the things you really want to understand is, you know, one a, I think you hit it the nail on the head, a local lender is key, not only because they're local and you can go to their office and sit down with them and talk to them if you want to, but when you put in offers, especially in our market, which gets super crazy in the busy season and it's just nothing but a multiple opera after multiple offer eight, believe it or not, I have had listing agents that are working with the sellers notice a local lender and they say, wow, you're working with them. They're great to work with. I know the loan's going to get fully approved. Will won't have any issues. I'm so happy you were working with them.

Angelina: Know when I was a house, two offers were identical to different lenders. Though I went with the offer with the lender that I knew that was here in town. I knew they did a great job and they have no idea who the lender was. I didn't know if it was gonna run smooth, so I went with the offer on that had the lender that I knew who they were. I didn't personally, but I knew the company so

Angelina: And for everyone that's watching Matt, he works with a lot of investors, so he has a lot of listings, so he's on the other side. He's the one that's working with our sellers and listings and I'm usually the buyer's agent trying to get him to take our offer and the reason he's saying that he chooses a local lender versus somebody who's not as familiar with is just kind of like what I said earlier. When you don't have a lender who one is doing their due diligence up front and getting a lot of that paperwork during pre-approval. A lot of lenders don't do that. They just look at your credit score and they're like, yeah, you're preapproved. That's not 100 percent guarantee, and so with a good lender, they're going to get all that information. You're pretty much to that closest to being preapproved and what happens is as a seller, and Matt, you can probably attest to this, is that they get nervous when they are not recognizing who that lender is and they maybe have had a bad experience with outside lenders and so they might solely pick an offer even have an offer that's maybe not as aggressive as the one that's a different lender.

Matt: They might pick the local lender because they feel more comfortable that the deal won't fall through. Exactly.

Angelina:  It's a lot of work when that happens, 20 days into it and you're closing in six days and then all of a sudden it falls apart because the lender both for the agents and the seller, that is, well, it's not worth it. So. So okay. So we've covered that. We know we've got the right lender, so definitely pick your agent at the right lender. What are three things that first time home buyers could do personally to get them.

Matt: So I would say there's really three top items that I would focus on. You know, why is really preparing yourself mentally, really understanding the process. So I think, you know, there's always this like excitement when you first start, you have gotten your preapproval, you have your agent, now you're out there looking at houses, right Don't lose the momentum. And what I mean by this is, especially in aggressive hot markets like Austin, you are going to probably lose on one property, most likely. I mean even the best of agents are going to lose a deal. And it can be a number of reasons. It can just be that maybe you know, the multiple offers, you could only hit a certain threshold with your buying power, the amount of that you have on your loan and you know you did your best, but don't let that discourage you.

Angelina: You know, a good agent is gonna. Put all that information upfront. So that's number one, like prepare yourself mentally. Don't lose your momentum, stay involved, understand the process. Even after you go under contract, you know, don't feel like, oh, I can sit back and I can relax and not worry about anything until I get to closing day. You're in the game, right But a good agent is going to guide you. And you're not even going to have to worry about that stuff. So I think that's number one, just being prepared mentally for that kind of thing. I mean, when you add to anything about that, is there anything you can add to that kind of mindset.

Matt: Yeah, it's just don't get discouraged. Um, yeah, sometimes, I mean, you're competing against other buyers. You may win, you may not. It just keep the momentum going forward. Um, and that's all you can do, right Everyday is different. So you never know what's gonna come up, you know, Monday to Tuesday to Wednesday, so keep the momentum going and then what's next for him

Angelina: So I would say nice to be, know the costs involved, know your financial situation. So when you're first evaluating like, do I want to buy a home All of that. I mean, a lot of people overlook the costs that are involved in buying a home. It's not just, like I said earlier, the loan and the principal and interest, there's got option money that you put in. You have all these costs that you have to bring to the table for closing. So I think understanding that with your agent is very important. So that's one of the questions you can ask her that when you're interviewing, like talk to me about the process, what costs are involved and if you have an agent that's like kind of beating around the Bush or whatever, it doesn't really give you the full breadth of what is all involved. That's a red flag.

Matt: So I would say coupled with knowing your cost is knowing your financial situation, understanding your credit score and that's where a good lender can help you. Even if it's like six to 12 months out, you can go talk to a lender and by law you're protected to get your credit pool three times a year when buying a home, it doesn't hurt you. And the reason that's important is if you have six months, you might have time to actually do some work on your credit. That will help you get a lower interest rate. So that's a very important step. So that's number two. Number three is just be ready to act. And I would say be ready to act as so important and I would love to hear your thoughts on this because I have my own. I kinda want to hear your thoughts on it.

Angelina: That is so important because so many people tend to drag their feet, you know, and I've seen and I've been part of deals where it's like we lost it because you were too slow to make the decision. And I think what it lacks forget is if the house is almost perfect form right, go get it under contract because you had that option period. And the state of Texas right now, whether it's a 100 or 150 or 200 bucks, if that money is not worth losing, why are you even trying to buy a house Right? Because then you can take that option period and do your due diligence. Make sure that's the right house. And if it's not the right house, no after a couple of days there and option. Okay, cancel the contract, lose 150 bucks and onto the next one. Right But much better mentally to do that.

Matt: Then to get this. Oh, we missed out, they accepted another offer. You took too long, right. And then you know, you're getting that, you're willing to take the risk and you know, take that step and jump in. So it's not like, Hey, we got the house under contract, you're stuck buying that house. You've had that option period and it's well worth it. I tell clients that all the time. I was like, is it better to have the house under contract and then cancel it, lose 200 bucks or missed a great opportunity to buy this house because we're so close for sometimes due diligence when it's time to get you know that house under contract, let's just get it done. Right. Let's get it under contract and get the ball rolling.

Angelina: I think too though, like coming from a first time home buyer agent now me working with a lot of first time home buyers, I think that's also kind of goes with picking the right agent is you know, a lot of my clients that are first time home buying, I usually know about six months out, you know, or have some leeway. I have time to work with them and I'm not saying like we beat the streets constantly for that six months, but I think what prepares you to be ready to act as one a, you have a good agent that's getting you in front of a lender, helping you understand your financial financial situation and then two is you know, a good agent is going to be patient and actually take you out even if it is six months out and let you see the market and I think that's a thing that a lot of first time home buyers don't do.

Matt: They look on Zillow, they look on Redfin, they look on all these sites, which is not a problem because they're. They're syndicated from our site, but what happens is you don't get the real feeling of a home and you don't really understand the market until you're out there and I think a good first time home buyer agent is going to take you out there and they're going to show you like, Hey, this is the area you really want. This is your price range. Are you willing to buy that type of home in this area Are you willing to sacrifice certain things so that way when you get down to the timeframe of, okay, we're ready to get serious.

Angelina:  Yeah, that's why I'm very patient with first time home buyers. I love it. You know, I mean experience to see them find the home that they love and you always know when it's your home, you can feel it. Like people will be like, this is it, you know, and it's such a great experience to see young people building their wealth and I think a lot of people, I think what I like to end us with today is, you know, a lot of people think, oh, I'm too young. I can't buy or I don't have 20 percent down, but you don't have to have that much to the down and you can buy. And if you're renting and spending 1200 to $2,000 a month on rent and you're renting more than six months, then you should really consider buying. And you can do it. You just have to have the right team behind you.

Matt: Couldn't have said it better myself. Today's show, if there's a show topic that you want us to talk about, leave a comment, let us know. We'd love to do a show on it. Angelina, thank you for joining me today.

Angelina: Yeah, anytime. I'm happy to come back.

Matt: We will see you next week, but definitely not answering. I'm kidding guys.

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