Advice from Ray Gernhart & Associates Agent Ruth Garvey
Buying a home for the first time is a lot of things: exciting, overwhelming, and probably more than a little intimidating. For those who’ve never been through the process before, Realtor Ruth Garvey, of Ray Gernhart and Associates, offers her top five tips of essential things you should know.
Garvey has been a real estate agent for five years and works exclusively in the Virginia, Maryland, and DC metro region. She works with many first-time home buyers, as well as sellers who need a bit of extra guidance and advice to get their homes as salable (and profitable) as possible.
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Have a Realistic Idea of How Much You Can Afford
There’s no use falling in love with a bunch of spacious single-family residences when all you can afford is a condo. Looking at homes above your realistic monthly mortgage might be a fun way to scroll through Instagram and to get design inspiration, but looking at those homes as actual prospective purchases is only going to be disheartening and counterproductive. As of November 2018, the median sale price of a home in Northern Virginia was $510,000. That’s over $200,000 more than the national average! If you’re looking to buy in this market for the first time, go in knowing that both price point and competition are going to be high.
Not sure how much home you can afford? Talk to a bank or other mortgage lender. They can use your income, debt, and other financial information to ascertain just how much home you will be approved to purchase. This process is known as preapproval, and it’s essential in a market as competitive as NOVA. A preapproval letter lets the seller know you’re a serious buyer, and it can speed up how quickly you close because your loan has already undergone some preliminary underwriting. These advantages can make a seller more inclined to pick your offer over others.
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Save Up for the Purchase…but Not as Much as You Might Think
Even if you’ve never bought a home before, most people anticipate it’s something you need to save for. In addition to the down payment, you’re also going to need funds for closing. Closing costs vary somewhat by region, but expect to pay anywhere from 2 to 5 percent of the home’s purchase price for closing and prepaid expenses. This covers things like appraisal, home inspection, credit report, title insurance, and more.
Here’s where most people make a mistake, though. They think that the 20 percent down rule is hard and fast. It’s not. Yes, if you put down less than 20 percent, you will likely be subject to a higher interest rate or private mortgage insurance (PMI), but sometimes getting into the market and building equity in your home can outweigh those expenses.
“If I had to give one piece of advice to anyone buying in Northern Virginia or the surrounding markets, I’d say don’t wait until you have twenty percent down or enough to buy your dream home,” says Garvey. “You obviously have to make a sound financial decision—and a good Realtor can walk you through that—but the DC market moves quickly, and costs are only going up. It’s important to start somewhere.”
Once you’re in the market, you’re in a position to use that property to grow your wealth, which can happen in several ways.
“Even if you don’t think you’ll stay in DC or Virginia forever, you could turn a home into an investment property. By renting it out, it could be a source of passive income,” says Garvey. “You could also sell it in a few years for a nice return and translate the equity you’ve built in the home to a down payment on something new. Once you’ve purchased a home, your options open up significantly.”
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Think about More Than the Home Itself
As a first-time home buyer, it’s easy to get swept up in all the amazing features of a particular home. Vaulted ceilings. Hardwood floors. That clawfoot tub you’ve always wanted! It’s important to stop, though, and to assess everything about the house. That very much includes the neighborhood. Do thorough research about the actual location of the home. If you have children, look into the quality of the school district and your distance from those schools. Make sure your commute time is acceptable. Do a bit of digging into crime rates, or ask your Realtor for information on this. It’s also not a bad idea to visit the area at different times during the day. Does the noise level, traffic, or general feel of the neighborhood change throughout the day or night? Is this home in a place where you and your family will feel safe, happy, and comfortable?
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Write a Personal “Love Letter”
In a market as competitive as Northern Virginia, your offer on a home needs to stand out. Yes, it needs to be priced correctly and contain all the enticing financial elements, such as offering a quick close, but in many ways, when the seller is sifting through a stack of double-digit offers, you need to make an impression. One way you can do that is to write a “love letter” to the current owner…or, to be more precise, to the owner’s home. This letter talks about why you adore this house, how it fits your lifestyle and needs, and why you’d be the one to take great care of it.
Sure, some people are just looking to eke every cent out of a real estate deal, but for many, homes are very personal things. It’s where they’ve raised children, gotten married, and incorporated their visions into updates and remodels. They want to see their homes sold for a decent profit, but they also want to see them go to the right people. A well-written letter can convince them you’re that right person.
For the most impact, keep it short (no more than one page), include pictures (especially of adorable kids or irresistible pets), and be genuine. Finding common ground where you can connect with the seller is gold, but a letter can quickly backfire if the seller senses it’s disingenuous or dishonest.
Ask your Realtor for guidance or advice, and then check out this killer example that helped get one family under contract despite seven other offers on the home (some of them for more money).
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Find the Right Realtor
The real estate market in Northern Virginia is notoriously competitive right now. Inventory is low, but demand is sky high. In that kind of environment, working with the right Realtor can be the difference between going under contract and missing out on a home.
“A great Realtor is a people person, but a great Realtor is also easily adaptable,” says Garvey. “In this line of work, you deal with all kinds of different people, and you need to be able to understand what is important to each individual. Every transaction is so unique, so being nimble and adaptable is essential.”
You also want a Realtor with a lot of experience in your market. Northern Virginia is highly competitive, and it’s not uncommon for a home to have multiple offers the day it hits the market. Your Realtor needs the geographic savvy to know how to write offers that get picked in your market.
Especially when you’re a first-time buyer, the entire offer and negotiation process can feel really daunting, but that’s exactly when to lean on the expertise and experience of a great Realtor. He or she can give you advice about how to make your offer maximally competitive, without disregarding your budget or overpaying for what you’re getting.
Want even more advice about how to successfully navigate your first real estate transaction? Reach out today. Want to work with Ruth? Just let us know!
