First Home Buying

Two days ago my offer to buy a house was verbally accepted.  It was my first ever so now I'm qualified to give advice to other first home buyers.  Well, not really but one does feel a sense of achievement at reaching such a significant milestone.

Below are a few things I learned along the way...

A Learning Process

When first wading into the real estate market I began a period of immense learning.  Not only in the process of buying property but also about human nature and professional behaviour.

I learned that this is a very mature and lucrative industry that has little room for charity.  Fortunately there is a lot of legislation in place to protect buyers and sellers.

Real estate agents that have any sort of experience understand the importance of reputation and are happy to offer accurate general information to prospective buyers.  I also found I had access to a number of property expert friends that were only too happy to give advice and even assist in making decisions.

Negotiation Style

I'm sure I'm not the first person to think I will be able to find a home that uniquely suits me and no-one else, and whose owner is desperate to sell.  In reality, my needs are not so unique that I won't have competition for a desirable property.  Even in a 'buyers market'.  If a seller is motivated, there are plenty of techniques and contingencies to help them get something close to market value.

Personally I found the advice of one very experienced co-worker very helpful.  He said the gentleman's way to buy real estate is to always make genuine best and final offers.  This effectively removes the process of haggling over a figure.  It also dovetails nicely with a multiple offers scenarios, which is quite likely for a nice piece of real estate.  The emphasis then shifts to deciding how much one really values a particular piece of real estate.

Defensive Contact Information

I am very sensitive about divulging any personal information.  I don't like spam and canvasing.  Which is why I didn't use my valuable email address or phone number for contact information.

Next time I buy real estate I'll create a temporary email address like 'jfk.house.hunt@gmail.com' and set up a prepaid phone number that forwards to my real phone.  Naturally when making calls I would suppress my caller id and change my answering service message to be number neutral.  This way I can sever all communication with real estate agents.

Timing

I lucked out with timing.  My family started outgrowing our rental unit shortly before a less-desirable moved in next door.  Our lease expired and we entered a month-to-month style rental agreement.  The market had been a little depressed for a couple years now and our savings had reached a useful level.

Budget

Deciding a budget was a little difficult but once I saw a few houses in different price ranges it became easier.  Getting an idea of the market value spread helped me identify how much I would pay for different features.  Specifically, I didn't want to renovate and public transport was a major concern.  That said, I did consider it an investment and wouldn't pay significantly more than market price.

My long term strategy for home ownership was to not get an overly large mortgage.  This meant delaying my first home purchase AND carefully saving like I did have a mortgage (almost).  Living well within my means also had the benefit of low financial stress but it does take discipline.

To orient my budget I compared interest rates against a would-be rental rate minus property tax rate.  This gave an equivalent mortgage size (excluding maintenance costs, insurance and water bills).  Add my life savings and I should have a reasonably conservative spending limit (bearing in mind my modest lifestyle).

Strategy

I was shopping in a 'buyers market' so house hunting wasn't too pressured.  This helped me shop around and get a better idea of value for money and decide what features I wanted.  The idea of value included consideration of the size of a would-be mortgage.

Once I had a good idea of value and a 'best and final offer' policy the process of purchasing got a lot simpler.  When the right house came along I tried not to be too influenced by the asking price and decided a figure that was good value for me.  With a figure decided all that was left to do was promptly jump in with both feet.  It might be worth noting that I think my particular house was a little under valued so I was surprised when my offer was accepted over someone else's.