A Comprehensive Guide For First Time Homebuyers

Amy and I just hosted our first “First-Time Homebuyer Webinar” the other day where we shared a ton of helpful information on the home buying process. We even had the pleasure of having one of our favorite mortgage brokers, Eric Eisenberg, join us to share some information on the financing process. I highly recommend you watch this webinar at some point, as we go much more in depth on the process, but if right now, you just want a quick rundown you can scroll through, keep reading!

Buying a home is an exciting (and expensive) milestone in life, especially for first-time homebuyers. It's a major financial commitment and a process that can feel a bit overwhelming at times. Don’t panic! The key to conquering this exciting journey lies in arming yourself with knowledge about the homebuying process. When you have a good understanding of how it all works, you can navigate the twists and turns with confidence, making informed decisions along the way. So, grab a cup of coffee, get cozy, and let's dive into the essential aspects of buying a home for first-timers in Los Angeles.

Understanding The Market

Before you jump in head first, it’s important to back up and understand what is going on in the current market. With interest rates spiking, banks closing, and the new ULA tax, the Los Angeles housing market has been all over the place. While I don’t have a crystal ball to predict the market, I can tell you one thing for certain - inventory levels are extremely low! However, the market remains relatively competitive for well priced homes. On one end, the great houses are being swept off the market in multiples, while other homes are sitting for months. For these homes with longer days on market, buyers have some leverage and increased negotiating power. Of course every micro neighborhood in LA is going to look a little different, but understanding the bigger picture will help you make smarter decisions down the road.

Choosing Your Team

Choosing the right real estate agent and lender is crucial to navigate the homebuying process effectively. There are about 1.6 million agents in the US, but that doesn’t mean you should just choose anyone. When looking for an agent, consider the following:

• Experience and Expertise: Look for an agent who has experience working with first-time homebuyers and has a successful track record. Going to take this opportunity to toot our own horn here - 86% of our buyers get their 1st or 2nd offers accepted. That’s huge in this competitive market!

• Reputation: Your agent is a direct representation of you! In a real estate transaction, every touch point matters. You want an agent who has a great reputation in the field and will make a killer impression on the listing agents.

• Market Knowledge: Work with an agent who is an expert in the areas you are interested in. What do they know about the lifestyle, neighborhoods, schools, restaurants, etc?

• Personality: Finding a home is an intimate process and you will be spending a lot of time with your agent. Make sure whoever you choose is a good personality match! Pick someone you have chemistry with and that you trust - they will help make the process fun :)

The Pre-Approval Process

Getting pre-approved for a mortgage is an essential step before starting your property search. The last thing you want to do is start shopping for homes and come across your dream home, only to find out offers are due tomorrow and you don’t have your preapproval! Your real estate agent should be able to point you in the right direction to lenders with competitive rates and terms. You will consult with a lender to determine the loan amount you qualify for based on your financial situation. They will be able to assess your financial standing and provide you with a pre-approval letter, which will put you in a better position when searching for homes.

Additional Expenses to Consider

Aside from the down payment and mortgage, there are other expenses to keep in mind when buying a home. I’ve broken them down into one-time expenses and recurring expenses:

One-Time Expenses

• Down Payment

• Closing Costs

• Appraisal

• Home Inspections

• Moves Expenses

Recurring Expenses

• Mortgage Payments

• Property Taxes

• Homeowners Insurance

• HOA Fees

• Home Maintenance and Repairs

The Property Search

The property search is the fun part! Before you begin touring homes, it’s important to set a list of expectations. What are your must-haves vs. your nice-to-haves? Keep in mind that you will have to make some compromises, so having a list of the necessities will help keep you on track. Be realistic about your current lifestyle and what we call your “triangle” - where you live, work, and play.

When looking at homes, don’t let the staging fool you! There’s a reason that we, real estate agents, stage homes when we’re trying to sell them. Interior design has such a huge impact on the space and how people feel when they are in it. Even a nice smelling candle can affect how someone feels about a home. So, if you just toured a home and are obsessed with it, ask yourself - Do I really like the home or is it just styled in a way that makes me excited?

So you’ve found a home that you really like. We always recommend seeing the home more than once and at different times of the day AND at rush hour. The last thing you want is to be stuck in a home that was peaceful during Sunday’s Open House and absolutely chaotic during the week. Evaluate the neighborhood - do the neighbors care for their homes? Are the neighbors friendly?

Making An Offer

When you make an offer, you and your agent will be submitting what is called the Residential Purchase Agreement. I’m not going to lie, this is a lengthy document but there are 5 key elements that you should be aware of. These include the price, closing date, possession date, contingencies, and inclusions/exclusions.

So how do we decide our negotiation strategy? We will always speak with the listing agent to get as much information as possible, such as what the seller is looking for and what their motivations are. We will also do what’s called a CMA, or Comparative Market Analysis, to help you understand the market value based on what other properties in the neighborhood have sold for.

The Escrow Process

There is a lot that happens during the escrow process, and that is why having a great agent who will help you through it is important! So what is escrow anyways? Escrow is a neutral third party that helps manage the transaction and ensures a smooth and secure exchange of funds and documents between the buyer and seller. Once your offer is accepted, your first step will be depositing 3% of the purchase price (which is called earnest money) into the escrow account. Throughout the escrow period, various tasks are completed, including property inspections and title searches, and the resolution of any contingencies or issues outlined in the purchase agreement. Once all conditions are met, such as obtaining financing, completing repairs, and obtaining insurance, the escrow officer coordinates the final closing, where the remaining funds are transferred, and the title is officially transferred. You now have a new home!

Homeownership and Beyond

You have a new home! But the fun doesn’t end there. Your home is an asset (probably one of the most expensive assets you own), and you want to take care of it. Once you’re all settled in, start making a home maintenance schedule for things like you HVAC and your sewer system. And remember, we are your real estate advisors for life so if you have any questions, need advice, or recommendations, please reach out! :)

Now, let’s plan your housewarming party!