If you’re ready to explore buying your first slice of the American dream in Los Angeles, it’s smart to read 5 Worst First-Time Homebuyer Mistakes-Los Angeles as a first step. It’s a quick read and worth its weight in gold.
Home shopping is exciting, scary, confusing, and nerve-wracking all at the same time, your goal is to find the perfect house for sale, not spend too much money, and not purchase someone else’s headache, right? unfortunately, many first time homebuyers in Los Angeles do things which prevent them from achieving their goals by making avoidable mistakes.
Follow these tips to get the most out of your home purchase experience and avoid making costly and time-consuming mistakes that could put a hold on your home purchase or even worse you’re out of the market and continuing to rent – paying someone else’s mortgage instead of your own.
1. Not Understanding What You Actually Can Afford
This is a big one for most people. Just because you earn six figures and plug your income into a mortgage calculator or feel comfortable with the estimated monthly payment on Zillow or Trulia, doesn’t mean you can afford or comfortably pay for a specific home purchase price. If you don’t already have a budget, make a list of your monthly expenses including, vehicle costs, student loans, cell phone, icloud, credit cards payments, groceries, health insurance, retirement, savings, and whatever else you pay out on a monthly bases. Also, do you like to vacation or buy yourself gifts? Once you fully understand your budget you’re ahead of the game.
Next, it makes sense to narrow the house hunting scope to Los Angeles homes for sale in your financial neighborhood. I know it’s fun to walk through open houses but it’s a waste of time if it’s not in your budget. You’ll end up disappointing yourself and lose focus on the goal of finding the best Los Angeles home for sale in your budget. Do yourself a favor and look for homes for sale within $25,000 of your buying power.
2. Skipping Mortgage PreApproval
This is a huge step sometimes skipped. As a professional Los Angeles Realtor I will not tour a new client one single home for sale until they have completed the pre-approval process, I have spoken with their mortgage broker, and I have their pre-approval letter in my hand. Period. It’s like playing darts in a dark room to home shop without a PreApproval letter. Without a PreApproval letter, we don’t know what you can comfortably afford or what your loan payments including PITI (principal, interest, taxes, insurance) will be. Plus, what happens if we do find the perfect home for sale and you’d like to write an offer immediately? We won’t be able to submit a complete offer package without a preapproval letter and the letter will take time to get which could lose you the house. If the seller is working with a skilled Listing Agent they would NEVER accept an offer from a buyer without a PreApproval letter. Do the right thing and take the time to work with a reputable mortgage broker before you think about stepping into your first open house.
Also, once you’re PreApproved for a home loan it’s important to remember don’t make any large purchases like a new car loan, or vacation, or large credit card purchases while you’re house hunting for your new home. You could cause your loan to be denied if you change your debt to income ratio. Ouch!
3. Too Picky
Feel free to create a wish list for your first home and communicate that list to your Real Estate Agent. If you’re working with a highly skilled and efficient Realtor they will listen to your wants and needs and help you decide what should be a deal breaker and when you have a real opportunity that may not check all of your wish list boxes but it’s close enough. It’s very important to remember you will most likely not get everything you want out of your first home purchase unless you have unlimited amounts of money. You may have to buy a home on a busy street, or not have the bedroom and bathroom count, or the master bathroom doesn’t have a double sink, or the kitchen and bathroom are outdated, or there is some deferred maintenance, so on and so on. Of course, if you have your heart and mind set on finding a home that’s worth $1,000,000 and your budget is $800,000 I can honestly say you’re better off continuing to rent because the likelihood that will happen in Los Angeles is slim to none. Have your expectations based on reality and the current market condition and you’ll be miles ahead of the game. Buy a house you can afford, make it a home, and move up in the market once you have enough equity to move on to whatever is next. Make sense?
4. Have Some Vision
My real estate clients who get the most bang for their buck are ones with a vision for the home and the future value of a neighborhood. It’s critical your Realtor is a neighborhood expert who understands the current value and what’s happening in the area. Anyhow, If the house is outdated, the grass is dead, termites ate the fascia board, the electrical is older, the roof has a small leak or the tile is Home Depot special of the week 1992 – it’s all good! This type of home has the making of your dream home. Even if you aren’t handy and hire a contractor it’s still most likely significantly cheaper than buying a recently renovated flip house for sale.
5. You need your own Realtor.
Okay. So you’ve found a mortgage broker, you have a PreApproval Letter in your hand, your expectations of home value are aligned with reality plus you have a vision for outdated kitchens/bathrooms and landscaping. Now what? It’s time to hire your own Realtor. Wanna hear something interesting? When hiring your own Realtor there isn’t any money that comes out of your pocket, in fact, the seller of the home you decide to purchase pays your Realtor to represent you! How do you like them apples? Please don’t just wander into an open house without your Realtor and work with the listing agent. The listing agent has a fiduciary contractual obligation and ethical rule to work in the best interest of the seller NOT you as the buyer. You can see how this doesn’t make sense, yes? It’s like going to court and having the other parties attorney give you advise. The listing agent can write an offer for you and represent you in a sale, but they cannot give you advise on how to negotiate with the seller as that is a conflict of interest. Do the right thing, and research local Los Angeles Realtors on Yelp, Zillow, or Google, or get a referral from a friend. Make sure you’re represented and have your own Agent.
If you follow these simple (not always easy) guidelines you’ll be miles ahead of the game, and that much closer to grabbing a great house in an upswing neighborhood to call home. I’m Glenn Shelhamer a local Los Angeles Realtor and it would be my pleasure and privilege to have a chat with you.
Your Los Angeles Real Estate Expert
This article, 5 Worst First-Time Homebuyer Mistakes-Los Angeles was provided by Glenn Shelhamer of The Shelhamer Real Estate Group. If you are selling your Los Angeles home, I have a comprehensive marketing plan, including preparing your Los Angeles home properly that will help get your home sold in less time and for more money. Call me at 310-913-9477 or contact me to discuss how I will get your home sold.