First time home buyer Cape Coral
Buying your own home is the American dream, it’s something most people aspire to do in their life, it’s very exciting, you’ll always remember the buying your very first home, it’s a BIG DEAL! It can take months or years of work to get your credit ready, save enough money. There’s also a lot to know, what should you look out for, so you don’t have buyers remorse. I’ve been a real estate broker since 2004, I’ve sold thousands of homes and bought many myself, its become no big deal to me, I recently bought a home with failing foundation and plumbing that didn’t work for 7 years with no inspection and wasn’t nervous…..but my first house….it was a nice starter home and I was terrified…was I making the right decision? Was I paying too much, was the property condition ok? What if I buy a bad house and have expensive repairs afterwards? Was I making a good decision with the lender? The first home is always the hardest, in this blog I’ll share my years of experience and teach you what I’ve learned through the years, lets dive in.
How will you finance your Cape Coral home purchase
Will you buy your Cape Coral home with cash or get a loan? If you’re using cash it makes the purchase part a lot easier but most use a loan, so let’s focus on financing home purchases. I would reach out to a few mortgage brokers and check with your bank, I prefer using a local established mortgage broker or lender. A mortgage broker will shop around for different products and might be able to save you money, a lender usually has less products but sometimes give a better rate, check with both. Brokers and banks are like contractors and some will charge more than other, its good to get a few quotes. I would get a free copy of my credit, to share with the mortgage brokers and lenders let them quote me based on the information I provided and not let them pull my credit. To many inquiries could drop your credit score. Once you find someone you like ask for references, lenders dropping the ball can make the process very stressful.
You are entitled to one free credit report annually, you can read about it here, free credit reports
Once you have your lender, have them run some payments for you. This will help you put together a comfortable budget to know what price range you should look.
Pick a real estate agent
Buying a house is the biggest purchase in most peoples lives, hiring a real estate agent that represents you should be a high priority. This can get tricky when dealing with family members that are also real estate agents, its fine to work with family members if they are really good but if they are new or very part time, make sure someone who is very experienced is also helping supervise. When you buy a house its customary the seller will pay the buyers agent fee, so if you hire the best agent or the worst agent, it’s the same cost, you might as well hire the best. A good agent will guide you through the process and help you with the many decisions you will need to make. When looking for an agent its ok to ask them questions, remember you are hiring them for an important job.
Some people start with finding an agent, it really doesn’t matter the order you start, your lender and agent will be the crucial part of your team. I like when they know each other and regularly work together, if they are good, this will usually benefit the buyer in a smooth transaction.
You have your team put together, what’s next
Now you’ve selected your real estate agent and lender, you have a very good idea of what your budget is. I suggest working with your agent and put together a criteria of what you’re looking for. Then have the agent set you up on 3 automated MLS searches. These will send you everything going on in the market. I would use the same criteria for all three searches. Most agent will not charge for this.
Active MLS search – this will email you everything available to purchase in your criteria.
Pending MLS search – this will email you every home in your criteria that had an accepted offer to see what homes are selling and how fast offers are being accepted.
Sold MLS search – this will email you all homes that sold in in your criteria so you’ll know what they actually sold for.
Example – you will receive an email a home was listed active, then receive another email when it pended and then closed.
This will inform how much homes are listing for, how long it’s taking for them to sell, how much did they sell in comparison to the list price. This will quickly teach you how much you can realistically negotiate for and what to expect. I’ve done this for clients for years, I’ve found it to be the fastest way to teach a buyer what the market is doing. The more involved a buyer is in the process the easier it goes because you can have realistic expectations. I would ask your agent to set these searches up right away even if you’re not planning to buy for a while, if you watch the market you will be very informed.
Now you’re ready to start home shopping – what to look for and what to avoid
I know you’re buying a home but for a minute I’m going to switch gears on you and ask you to imagine selling your home, because one day you will. Many people buy a forever home and sell with in a few years….life changes…when you buy a home, try to buy a home that most people will like, that way one day when you sell, it will be easier. Most buyers don’t like:
Railroad tracks super close to their home
Backing up to free way
Gas station next door
Unsightly business next door.
Weird floor plans.
Most buyers want:
Home backs up to a park
Home backs up to private view
Quiet street with low traffic
Next to walking/biking trails
I think you get the idea. I’ve had buyers tell me they like a home right on a railroad track and say… but Troy I love trains it won’t bother me…and that may be true but one day when you move you will have a lot more trouble selling your home, why not avoid that problem now when you’re in control.
If you buy a home that most buyers wont like, make sure you get a really good deal. For example, if you’re looking for homes in the 500k range and one home is on a busy road and the other is not, the one on a busy road should be considerably lower. I’ve sold many hard to sell homes, you need to get a good spread difference to protect yourself.
Property condition what should I look for
Remember when you’re looking homes that are super cute with décor, will look very different when the seller moves and takes their furnishings with them. Don’t get caught in that trap, its easy to fall into. Its fairly easy to spruce up a home, I’m always amazed how far flooring, counter tops and paint can go and its fairly inexpensive. I look for big ticket items that cost a lot to repair:
Roof – how old is it
Windows – will they need to be replaced
Appliances- Furnace, AC, water heater. If included, kitchen appliances and washer and dryer
Foundation – does it slope, cracks in the walls
Siding – does it need to be replaced
Driveway and sidewalks
Functional floor plan
If you find a home that’s in great shape with all the high-end repairs but dated, you might be able to get a good deal on a very solid house that will benefit you for years to come and all it needs is minor work, paint, flooring and counter tops.
Most homes you find will need some things, you want to be aware going in and have a budget for them. Most agents recommend buying a home with a inspection contingency. With a home inspection contingency, you can hire (most likely your agent knows a good one) a good home the inspector, they also represent you. They will inspect the whole house and give you a report, this will cost you ($300-$700, ballpark). Some buyers like to be there for the whole inspection, others just come at the end and want a summary report. Every home inspector will find problems, they always do. You need to know what’s a major issue and what’s minor. For example, a new roof was installed 2 years ago, the inspector goes up and sees there is substantial damage from wind, you can negotiate a new roof. Remember, this is a negotiation; the seller can say yes or no. This happened to me on a home I bought, it had a fairly new roof and I marketed it that way when I sold it, they found the roof was bad during an inspection and I replaced it and paid for half the costs. If you know a general contractor, ask them to review your inspection and advise you on repair costs and the importance of repairing the inspectors’ recommendations. Don’t be discouraged by a home inspectors’ findings, it’s a bit of a mind screw, you find a house, you’re so excited, your offer is accepted and now an inspector comes in and finds a bunch of repairs, you second guess yourself…its just part of the process, try to manage your expectations.
I suggest doing due diligence by calling the county and city and ask if there are any open permits, or if they know of any future assessments. If there are open permits, ask the seller to close them before closing.
***If you’re looking at townhomes or condos, put your focus on the homeowners association (HOA) docs, the bylaws, rules and regs, resale disclosure.
Will the HOA cover, windows, siding
Is the HOA in a lawsuit or is title clouded
How are the financials
You need to know what the HOA covers and what it doesn’t. If it covers all the big ticket property concern items, then focus on appliances.
Here’s where you’re at in the process. You’re pre-approved, found an agent, found a house, made an offer that was accepted, you’re past the home inspection, now what?
If you’re using financing the process will go from a lot of activity with your agent to low activity…if you listen you’ll hear crickets. The process will shift to your lender and low activity with your agent. Once the home is found, offer accepted, fully negotiated, the agent is mostly done, they will check on the process weekly and engage as needed. Now is when the lenders job really gets going. They order an appraisal. The bank wants to make sure the home is worth the value you’re paying for it and doesn’t have any adverse property condition issues. The appraisal usually takes a week or two. If the value comes low, many buyers will negotiate the price down to the appraised value, again it’s a negotiation, so a seller can say no. If a home appraises low and a sell wont negotiate, the buyer will need to come up with the difference between the appraised value and the purchase price. For example, a home purchase for 300k and the appraiser says the value is 280k, the buyer would need to come up with 20k difference. In most cases when this happens the buyers will ask for price to match the appraised value.
The lender will order title search from a title company. The bank lending you the money will require title to be clear and want title insurance, similar to car insurance but title insurance protects the title. If something comes up on a title search, it might need to be resolved prior to closing. Example, a patio was built on a city easement and the title company wants title insurance policy exception for the patio, the buyer may negotiate the patio price down, in most cases title is clean.
When the lender has clear title, appraised value and the file fully through underwriting, they will issue a clear to close. Meaning they are now ready to close. They should email you and your agent a settlement statement with all the cost broken down and showing your mortgage rate, this should be a few days before closing. A good lender will give you ample time to review, ask questions prior to closing.
Final walk through
Your agent schedules a final walk through before closing, many agents will do this the day or closing or the night before. You’re walking through the home to make sure its in the same condition it was when you made the offer. No trees fell through the roof, no damage from the seller while moving, or unwanted items left behind.
You picked a lender and got pre-approved
You hired a very good agent who will represent you and set you up on MLS searches
You found a home, made an offer that was accepted
You had a home inspection
You called the city and county to check future assessments or if any open permits
Your appraisal value is good, and title is clean
Walk through went well
Go to closing and close.
If you have a good team, this process will give you a lot of confidence in buying a home. You watched the market with your agent on MLS searches, you looked at comps when making an offer, an inspector gave you a detailed report on the condition of the home, the bank did an appraisal to double check and make sure value and condition are satisfactory, a title search was performed to make sure title is clear, you called the city and county to make sure no future assessments or open permits. After going through this process you are now an informed buyer.
After you close activate the utilities in your name and enjoy home ownership.
In summary, be patient, trust the process. Home buying is different for everyone, some buyers get pre-approved find the perfect home the first home they see and they’re done. For others, they write offers on multiple homes and lose out to other buyers or fallout from bad inspections and it’s a long process but in the end if you stay persistent, have a good team, you will find a home you love.
Thanks for reading, if you’re looking for a home to buy in Cape Coral or the SWFL area please reach out to us. We’re happy to get you started on a free MLS automated search