Travis Farris
Real estate is like the stock market; it’s good to get in while you’re young if you can. Home ownership has obvious benefits compared to renting — perhaps most important — it’s much more likely to boost your credit score than renting, which can afford you new opportunities down the line. Learning to make responsible decisions in the real estate market sooner than later can help set you up for financial success.
A few important tips for younger home buyers or sellers to keep in mind:
Understand the market
As a buyer — especially as a potential first-time buyer — it is important to understand a few basic principles of the real estate market. Some real estate professionals will refer to “the three Cs” — credit, cash, and collateral.
Credit — Your credit score. Your credit score will be a major factor in the home loan and mortgage programs you qualify for.
Cash — The amount of cash you have available to spend as a down payment on a home has a proportional effect on the terms of a loan, if needed, to cover the remaining balance of your home.
Collateral — Your mortgage or home loan will include a number of terms, dictated by your credit score and available cash and assets. If you fail to keep up with mortgage payments your home could be repossessed, which means your home is collateral in the terms of such a loan agreement.
Commit to the market
Don’t be afraid to invest. Don’t be afraid to spend time looking for the right property to invest in. Don’t rush the process — have faith you’ll find the right deal. Too many young buyers bail on the market after one or two of their offers don’t get accepted. On the flip side, first-time sellers can often feel remorse after compromising to close a deal. In today’s market, I’m preparing potential homebuyers to submit upwards of 30 offers before closing on their dream home. Similarly, we’re working with sellers on evaluating just as many offers to be sure they’re getting the most bang for their buck.
Make an attractive offer (or counter-offer)
More often than not, negotiation is the trick to feeling like a winner when you’re buying or selling property. For a buyer or seller, the three pillars of an attractive offer look a little different depending on which end of the deal you’re on.
Price — Buying property is a rare opportunity to work on your haggling and bartering skills, but these days the safest bet is to make an offer above asking price for a home you really want. Sellers respect the initiative.
Cash — Cash on-hand is a good thing for both buyers and sellers. All-cash transactions are more common in todays housing market than ever, so it’s important to be prepared with a solid down payment ahead of a mortgage plan.
Terms — The real cost of a major real estate transaction falls in the specific terms of the agreement; evaluations, inspections, and prolonged negotiations often cost one or both parties more money in the long run. Sellers tend to appreciate confident buyers that feel comfortable closing quickly.
Finding your place in the housing market may seem daunting but it is entirely possible. The better your understanding of the market, the better off you’ll be. Stay involved, stay engaged, stay educated, and stay motivated — there is no place like home, and nothing quite like home ownership.
Learn more about working with Travis Farris and The Farris Team here.