In part 4 of my “Buying in 2018” series, I will explore how to choose a real estate agent. The order of these first four steps isn’t that important, you may choose to work on them simultaneously or in whatever order works best for you. If you missed the first 3 columns, here they are:
One of the most important yet underrated steps in the homebuying process is choosing who you plan to work with. This is, and should be, an intentional choice. The person you choose will be responsible for helping you make one of the biggest investment decisions of your life, a decision that will impact your financial future, day to day happiness and overall life trajectory. I can’t emphasize this enough, choosing the right agent matters.
Tips for finding a real estate agent:
- Start the process before you find the house you want to buy. You may notice a common theme with my last few columns, one which I cannot emphasize enough, do not start your home search by looking at properties. Please do not go to an open house, with the intent to submit an offer on that house, before you have an agent. Don’t get me wrong, I love DIY, but not when it comes to a major financial investment.
- Accept that you may not fully understand why who you decide to work with is so important before you begin the homebuying process. You will understand by the end of the process. The majority of horror stories that I hear from buyers are a result of working with the wrong person (or with no one). Working with a good agent does not guarantee that you will have a smooth transaction, but it does guarantee that you have someone representing your interests and have the best possible chance for success. Real estate transactions, more often than not, will come with challenges, overcoming these challenges requires skill and experience.
Hello February! It’s so hard to believe that we are already 1 month into this year. If you’re thinking about buying in 2018 you have plenty of time, and this week were moving on to Step #3 in this series. If you missed the first 2 columns, you can find them here:
After you’ve decided what you want to buy (and why) and how you plan to buy (and how much you want to spend) the next thing to figure out is where. I completely understand if you’re thinking “Do we really need to spend time on this topic? I already know where I want to live.” The answer is, yes. To make an informed decision you should know what your options are in a variety of different locations.
When you think about location for renting, the typical mindset is what can I get for my money where. When you think about location for buying the decision is magnified by the fact that you will be investing money in you and your future life, money that you hope will grow into more, and you will need to consider your future happiness and needs along with your present.
I’m not suggesting that you include the entire DC area in your home search, but I do recommend considering a few different neighborhoods, with different price points and offerings, so that you can compare what you get within your budget in each. Here are a few things that I think are helpful consider when exploring different locations for your home purchase: (more…)
In part 2 of my “Buying a home in 2018” series, I will discuss financing — How to explore your loan options and why this is an important preliminary step of the homebuying process. If you missed part 1 of this series where I went over defining home purchase objectives, you can find it here.
Unless you are planning to purchase a home without financing, a nice luxury that many of us don’t have, then you are likely planning to get a mortgage. Figuring out how you plan to pay for the house that you want to buy is equally as important as figuring out which house you want to buy.
It is important that the loan option you choose is a good fit for your financial objectives. With interest rates expected to rise, refinancing isn’t likely to be an advantageous option and a mortgage will be a long term commitment to a payment plan. Exploring the full range of mortgage options will help to ensure that the payment plan you go with is the best fit for your personal financial situation.
Now you might be thinking that by exploring financing options I mean shopping around for the lowest interest rate, but this is not the case. Interest rates are just one factor and, in my opinion, by far not the most important factor in choosing a loan and lender for most buyers. For more on this topic, check out my column from last year on choosing a lender.
Step 1: Research lender recommendations. Ask friends or neighbors who they used as their lender and if they would highly recommend them. Ask your trusted real estate professional for their recommendations based on the type of loans you are considering. There are a lot of lenders out there, only consider those with raving fans. I strongly recommend using a direct local lender who will serve as your knowledgeable financing guide on your journey to homeownership. Here is my list of questions to ask when interviewing lenders. (more…)
Whether you are planning to buy a house in 2018 or 5 years from now, it’s never too early to start planning. I’m sure that I sound like a broken record when I say that buying any kind of real estate is one of the biggest financial investments you will ever make, and that careful planning and preparation will help to ensure that your investment fits your objectives.
Knowing where to start when you are thinking about buying a home can be more than a little overwhelming, but let’s take it one step at a time. Like many aspects of buying a home, I can’t promise that it will be fun, but I can promise that it will be worthwhile.
Over the next few weeks I’ll be sharing with you my recommendations on each step of the home buying process, from planning and figuring out how you will pay for the house to the actual search.
Step 1: Define your objectives
I know that those email alerts that you get from Zillow or Redfin are super tempting, but I would caution that until you have a clear outline of your objectives it’s really easy to get off track and distracted before you ever even begin your search (If you’ve already done this, thats OK too, we can always work backwards if you’ve gotten ahead of yourself).
It’s completely natural to be excited and want to jump right into a home search, but I can’t caution strongly enough that in order to have a successful experience and outcome, planning is needed. (note: for the purposes of this post, and all of my posts, a house or home is not defined by a specific type of physical structure, whether its a condo, tiny house, McMansion or anything in-between).
The number one mistake that I see buyers make is getting ahead of themselves, finding a home that they think they want to buy before they have clearly defined their objectives. I definitely understand that the charm and character are irresistible, or the location is amazing, and that you will feel like you have found a once in a lifetime opportunity. (more…)
For the first time in a long time, buying a home in DC has gotten less expensive! While it may not offset rising prices, every little bit helps. In October 2017 a new benefit to first time homebuyers in DC went into effect, reducing the recordation tax that eligible buyers pay when they purchase their first home in DC.
The reduction is between 1-1.3% depending on the sales price, which is not a small amount of money with DC prices being what they are. In my research, there doesn’t seem to be a great deal of information available on this subject, so I wanted to share with you the specifics.
What is recordation tax?
Recordation tax is a one time tax that is paid at settlement on the purchase or sale of a property. This goes by different names and is a different amount in different areas, but in all cases it is essentially a tax on the sale that goes to the state, county or other jurisdiction that is calculated as a percentage of the sales price. This is different from property taxes which are paid annually or semi-annually. Recordation tax is one of the closing costs of purchasing real estate.
In DC, it is customary for a seller to pay the transfer tax and a buyer to pay the recordation tax. Before the first time home buyer (FTHB) recordation tax reduction, the amount paid for the transfer and recordation taxes were equal.
What is the new recordation tax amount?
How to Qualify
This gift doesn’t come without restrictions and is not automatically applied, rather buyers need to apply and qualify for the reduced recordation tax. The application with additional details can be found here. The main requirements include:
- First-Time District Homebuyer
- Either a current DC resident or plan to immediately become a DC resident after purchasing
- Has not owned a residential property in DC
- Income Restrictions
- Calculated by the combined federal adjusted gross income for anyone who will live in the home
- Maximum income limits based on number of people in household
- 1: $139,140, 2: $158,940, 3: 178,740, 4: $198,540
- Eligible Property
- Property purchase price must be $625,000 or less
- Houses, condos and co-ops are all eligible
- Homestead Deduction Application must be included in application
- Applicants must simultaneously apply for and qualify for the Homestead Exemption
- Verifies that the property will be used as a primary residence and owner occupied