3 tips for first-time homebuyers in 2023 by Treadstone Law
Author: Umar @ Treadstone Law
The process of buying your first home can be an emotional one: excitement, stress, and even anxiety. It’s one of the biggest decisions of your life and probably the biggest purchase in your life so far (the only one that might beat it is buying your next home). A lack of understanding of the process, combined with the pressure to make a major life decision, can make the experience overwhelming. You’re not alone.
A 2022 study by Treadstone Law found that most first-time home buyers reported feeling stress and pressure during the purchase process, which was due to a lack of understanding. The study also found that home buyers felt they were forced to take a reactive approach towards the process. Did you know that first-time homeowners comprised over a quarter of real estate sales in 2021? Yet, you’re probably still struggling to find the right resources or support during your home buying journey.
While the real estate process can be complex, and you might feel that it’s impossible to understand, focusing on a few key areas can help you feel confident as you navigate the homebuying journey. It’s important to focus on key areas of the process. Being prepared and informed helps you set yourself up for a successful and (somewhat) stress-free home purchase. In this blog post, I'll share three tips to help first-time homebuyers in 2023.
1. Assemble your team on day one
The homebuying process can move quite quickly. You’re busy watching for new listings, viewing properties, getting your mortgage paperwork in, and trying to learn about the market while getting the right team involved to help you secure your home.
When you set up your team from day one, not only do you have access to more support and resources to help you navigate through the process, but it also allows everyone to coordinate and ensure a smooth closing. There are three members in your real estate team: real estate agent, mortgage professional, and real estate lawyer.
Real estate agent
Your real estate agent will be able to help you answer any questions regarding the neighbourhood you’re looking at, the history of housing prices in the area, and coordinate contacts for home inspections or condo doc reviews.
Finding a good real estate agent can have a big impact on your home buying journey. You can use sites like RankMyAgent, Zillow, or Realtor.com that let you view ratings and reviews before you reach out.
Your mortgage professional can help you understand your budget by starting your application and getting you pre-approved. This will tell you how much you’re approved for and what interest rate options are available to you.
They’re also there to help you figure out if you’re better off with a fixed-rate or variable-rate mortgage and how much you should put down. They probably have recommendations regarding home insurance options too.
Real estate lawyer
Contacting your lawyer early allows you to ensure your transaction closes on time. There are many complications that can come up during the purchasing process, and the more time your lawyer has to resolve any issues, the better. This is a good preventative measure as the earlier you contact your lawyer, the better support you can receive if things go sideways.
2. Understand how market conditions influence the offer process
There are seasons within the market where properties stay on the market for a long time, and other seasons where properties are being sold sight unseen and all conditions waved. In other words, the market conditions will have an impact on your negotiating power.
When you put in an offer on a property, you have the option to place conditions. When you put in conditions, you are setting criteria that need to be completed prior to the transaction going through (closing). This lets you put in an offer while protecting yourself from risk.
Common conditions include obtaining financing, a home inspection (and having any major issues fixed prior to closing), and a condo document review that can let you know about any potential previous or upcoming issues with the property. Honestly, you can even set a condition to have the home professionally cleaned.
When the market is moving very quickly, sometimes people drop conditions to have the offer go through faster. While some are comfortable with that decision, it’s not particularly the best, or recommended, practice. Conditions are set up to protect you.
3. Think long-term
When it comes to real estate, it's important to think long-term. A 20% annual growth in real estate value isn’t sustainable, so buyers need to return to normal expectations. Realistically, you shouldn't expect to sell and move for several years. This is why it's so important to make sure you're happy with your purchase—you don't want to be stuck in a home you don't love for years.
It's also important not to get caught up in inflated expectations about growth. Just because the market has been booming recently doesn't mean that it will continue to do so at that same rate. Slow and steady growth is more realistic, so plan accordingly. As they say, time in the market beats timing the market.
Pro tip: You can ask your real estate agent to pull the selling history for properties in the area and see what long-term patterns are occurring.
Based on our research, a stronger understanding of the process can contribute to a better overall experience. Feeling prepared means you can be more proactive than reactive.
If you’re looking at purchasing your first home, congratulations! While this very well may be one of the biggest decisions you’ve made to date (ergo the stress), it’s also very exciting. Utilizing your team will go a long way in reducing the stress of this new experience. They can help inform you of the process, answer all your questions, and support you from day one.
This article provides information and is not intended to provide any personalized tax, investment, financial, or legal advice. You are encouraged to seek professional advice before making financial decisions.