This regularly-scheduled sponsored Q&A column is written by Adam Gallegos of Arlington-based real estate firm Arbour Realty, voted one of Arlington Magazine’s Best Realtors of 2013. Please submit follow-up questions in the comments section or via email.
Question: What advice do you have for a first time buyer? I’d like to purchase a condo in Arlington but literally have no idea where to even start. It also doesn’t help that my credit is a little shaky. Are there things I can do to mitigate that and how do FHA loans work?
Here is a condensed list of the steps usually taken during the home buying process when working with myself or my team:
I like to start by meeting with a new home buyer in person for an initial consultation. This gives us a chance to discuss your timeline, goals and expectations. We also talk about the steps to buying a home and the unique ways in which I help my clients along the way.
I offer all of my clients a list of lenders who consistently provide a high level of customer service and competitive loan programs. Based on our conversation, I will recommend one or two that I think will be a good fit for your needs.
Because you are a first time home buyer, I may recommend someone who is going to take extra time to explain your options. It sounds like it would also be helpful to introduce you to a lender with experience repairing damaged credit. You mentioned FHA, which is a wonderful program for some people, but everyone’s situation is different. It is usually best to complete a mortgage application so that a mortgage lending expert can gain a deep understanding of your situation and provide you with all your options. From there, you can decide if FHA is the best program for you or not.
Based on the information we gather during your initial consultation, I will create a custom home search in the multiple listing service (MLS) database. Most of my clients prefer to be updated on a daily basis. Depending on your needs, I can set this up to let you know the instant a new listings hits the market or as infrequently as once a month. Simultaneously, I will be working in the background to try and find you homes that are not listed in the MLS.
Together we will decide when is the right time to begin looking at homes. This process really depends on your situation. Some clients are so precise about what they want that we may only see one or two homes at a time. Other clients have very broad criteria and like to see as many homes as possible before narrowing their search. How long the process takes, also varies. Some people find the right home immediately while others take months or years. During this stage of the process, we try to add as much value as possible by providing insight about the homes and locations you are exploring.
Once you have found a home that appeals to you, I put together a detailed market analysis. I start by picking out the most similar homes that have sold (“comps”). My preference is to use homes that have sold within the last three months, but I sometimes need to reach a little further out. It sounds backwards, but I deduct value for positive attributes and add value for negative attributes. This allows me to level the playing field with an adjusted value for each comp. I also provide you with any additional information I have learned through my research and conversations with the listing agent.
If you decide to proceed with an offer, we will discuss the terms of your offer in detail. From there, I will construct your offer in the form of a contract. We will then review it together. I do my best to discuss all the important components of the contract with you, but it is important that you ask lots of questions and read the contract on your own so that you are 100% comfortable before signing.
I’ve written a guide to making your offer more competitive that you may want to review.
In my opinion, one of the most important things you hire me for is to negotiate effectively on your behalf. This is where my experience, deep understanding of the market and knowledge of every intricacy in the contract comes into play and directly affects your bottom line. Don’t listen to anyone who tells you they have a negotiation strategy that works every time, because every situation is different. As you can imagine, the way we approach a stale listing in a slow market differs greatly from a hot property in the current market. Together, we will discuss the best strategy before each stage of negotiation.
Once both parties have agreed to the terms and sign the contract, we move on to the next stage. A multitude of service providers enter the picture at this point (appraiser, home inspector, radon inspector, title attorney, surveyor, insurance provider, mortgage underwriter, etc.) and it is my responsibility to make sure everyone is on track for your closing date.
I’m also responsible for making sure you are hitting all the dates you have agreed to in the contract. For example, if you have a seven day home inspection contingency… I need to make sure the inspection is complete and we have provided the seller with the report and formal notification of your requests by that seventh day at 9pm or your home inspection contingency will expire. Mistakes at this stage are costly. I have a person on my team who works full time to manage these details because they are so important.
Settlement usually occurs at a settlement attorney’s office. This is the point at which you sign all the documents for your mortgage and transfer of ownership. You get the keys to your new home and it officially becomes yours. You are welcome to move-in anytime from that point forward.
This response to your question turned out to be considerably longer than I expected, but I hope you find the overview helpful.