The world of real estate can be a confusing place. Overwhelmed by real estate jargon and lending lingo, many novice homebuyers and sellers make the mistake of reaching out to a real estate agent before they’re ready. However, there are a few things buyers and sellers need to do before contacting an agent. To make the most of everyone’s time, knock these four items off your list before picking up the phone.
1. Get Your Finances in Order
You’re mentally ready to buy a home, but are you financially prepared? A down payment isn’t necessarily a major obstacle thanks to mortgage options that allow homebuyers to put down little or no funds. However, your credit could affect your ability to get a mortgage or to secure an affordable mortgage rate.
Sit down and review your financial life. Look at your credit report and score, create a household budget, and list financial goals like paying off student loans and saving for retirement. If you expect your financial life to change considerably in the next couple of years, such as if you’re up for a promotion or growing your family, factor those changes into your budget. Writing everything out helps you decide how much you can afford to spend on housing. Then, use a homebuying calculator to estimate how much home you can afford based on monthly payments.
2. Get Pre-Approved for a Mortgage
A good credit score doesn’t guarantee that you’ll secure a mortgage loan. With that in mind, homebuyers should talk to several lenders to discover financing options, learn how much they qualify for, and address any issues that could be a barrier.
Mortgage pre-approval is different from pre-qualification. As Bankrate explains, pre-qualification is an estimate of how much you could qualify for, but pre-approval is the exact number an institution is willing to lend you. Pre-approval makes you a more competitive buyer and increases the odds that an offer is accepted.
3. Know What You Want
Before you start shopping for homes, make a list of your must-haves. Do you need a home within a specific school district or neighborhood, with convenient access to the highway, or with a backyard for your dogs? What about the nice-to-have features you’re looking for, like a two-car garage, a spare bedroom, or a dead-end street? Couples should aim to align on as many home features as possible, especially when it comes to the must-haves.
4. Get Your House Ready to Sell
Start with the basics of deep cleaning and decluttering your home. If you’re unsure of what home improvement projects you should complete next, ask friends and neighbors to come to your home and get their advice. It could be something as simple as updating fixtures in your home, adding curb appeal, or simply staging your home. You should wait on any expensive upgrades until you speak with your real estate agent to ensure you get a return on your investment.
In addition to cleaning and staging the home, sellers should schedule an inspection. Completing an inspection early in the process gives you time to take care of issues to avoid losing an offer in the future.
Your real estate agent will be an invaluable resource as you sell or buy a home (or both!). Your agent will help you market your house, find your dream home, and navigate the piles of paperwork. But before you reach out, make sure you’re prepared for the homebuying and selling process.