Buying a new home can be a stressful process, especially when you're on a time crunch. To help alleviate this self-made stress, consider a strategy that starts with how you want to end in mind.
It’s easier said than done. Having the presence of mind to begin the home buying process with the end in mind does not come naturally to most. As a result, consumers hurry into transactions with cost as the sole focus and rarely do they pause to consider what they want the experience to feel like, and how we want it to play out in the end. When it comes to finding and financing the roof over your family’s head, taking pause to ensure you are working with the right professionals can have an impact on your success and the overall enjoyment of the home buying experience. A haphazard approach to choosing your REALTOR® and lender, which doesn’t take into consideration, reputation, service, expertise and other key variables, can result in a tremendous waste of time, money, and increased stress over where you are going to live.
By rushing, you can miss over the simple details such as making sure the realtors you’re looking at use the spelling REALTOR®. This is important because the REALTORS® that use this spelling are members of the National Association of REALTORS® making them more than just a real estate agent but someone that adheres to a strict code of ethics to protect their clients.
Also, in the rush to “get it done” and move on to the next urgent matter, it is easy to lose sight of what’s really important. For instance, if you consider your time and energy—you’re most valuable resource—you will want to choose a real estate agent and lender who don’t waste your time and instead go out of their way to make buying a home easier on you. Rest assured, it is possible to design an easy home buying process, one that ends with you getting the right home, without adding significant stress and complexity to your already very busy life.
1. Use the best technology available to search for your home and educate yourself on the market. Zillow, Trulia, Realtor.com, and other online real estate search engines have become a powerful resource for would be home buyers. Having the power to search for your own home can be fun. The hunt is exhilarating. Realizing that you are not looking at real time available properties for sale and getting pummeled by REALTORS® and lenders every time you request additional information about a property is NOT.
I was a frequent user of the aforementioned real estate sites until I discovered that those companies are not real estate companies, as marketing companies they buy their data from the local Multiple Listing Services, but the data is not real time. The data can be delayed by weeks or sometimes even months. That means the home you just fell in love with may very well have gone under contract to someone else weeks ago. Arghh!
As marketing companies, their revenue model for these search engines is literally to capture your contact information and then sell it to REALTORS® and lenders, who have paid good money for your information and have every intention of reaching you whether you like it or not.
One of the primary causes of buyer-burnout is the emotional stress that comes from falling in love with a property, only to find out that it is being sold to someone else. That is why great data and being able to educate yourself on the market without stressful sales pitches, is key to your success and overall enjoyment of the home buying process.
HomeScout is the mobile app we recommend to clients. It allows consumers real time access to most Multiple Listing Services in the U.S. They never sell your information to anyone, and the user interface is easy to configure your search via your mobile device. Don’t miss their save search feature, which allows you to set your search criteria, save it, to allow the app’s artificial intelligence to automatically send you new listings as soon as new listings hitting the market. It’s completely secure, delivered in live time, and automates home searching. You can download HomeScout here.
2. Find the right lender before you fall in love with a home. The vast majority of stress in the home buying process stems from buyers not having their ducks in a row before they start looking at homes. One of the most important recommendations is to become the most qualified buyer possible. That enables you to make the offer you want and to ensure you have a lender who can perform without running into any last minute underwriting surprises.
The best way to find a great lender is to ask colleagues who they used and how their experience was. Presumably they will have a similar financial situation as you. If the service they received was excellent, chances are pretty good you will get the same.
You can also visit a site like Consumer Affairs and type in the name of the bank you are considering, followed by the word mortgage. You may find it enlightening to see how a bank treats clients during the application and loan process, as well as afterwards when their loan is being serviced by that lender.
Google and Facebook reviews are also another great place to research your lender. Find out what kind of experiences they create for their clients and how they handle complaints online. Banks are filled with humans. Like the rest of us they are going to make mistakes, but how they handle and try to make amends for those mistakes is what is most insightful. You can learn a lot from reading online reviews.
3. Identify a physician-focused REALTOR® who can educate you and respect your time. Buying a new home from across the country is a challenge, especially for those have only been to their new home city once or twice and know relatively little about the areas in which they are considering buying. If this is your situation, find a REALTOR® who can educate you and will be sensitive to your time constraints and efficient with your availability.
There are REALTOR®S in nearly every market that specialize in working with doctors. Often, they have family members who are physicians and are deeply rooted in the local medical community. These professionals will be able to educate you on the markets around your practice, the best schools, and important nuances like drive times between popular neighborhoods and your hospital. Bear in mind, when relocating to a new city or state, your REALTOR® will be meeting with the home inspector, appraiser, and conducting much of the due diligence for the property on your behalf. Using Joe Blow agent off Zillow is not a winning strategy, so take the time to find a physician-focused REALTOR® with a great local reputation.
4. Insist on full credit and income approval. A fast and easy pre-approval is not enough. The reality is that loan officers are prone to say “yes.” They want to help you, and they want your business. Truth be known, however, they are not the final decision maker on your loan. That ultimate responsibility falls upon the mortgage underwriter, whose job it is to ensure you meet the exact specifications of the underwriting guidelines. Underwriters are the gatekeepers. They have the right and the responsibility to decline your loan if it does not fit the guidelines.
Why then do most companies wait to present your loan file to the underwriter until the week or two prior to your home loan closing, when you are most vulnerable and most susceptible to damages if something goes wrong? The reality is it comes down to cost. Paying an underwriter to review loan files for clients whom have not yet found a home is cost prohibitive, and most banks prefer to pay the loan officer (who is mostly compensated via commission) to complete a fast and easy pre-approval. This represents a red flag and obvious conflict, which can leave you and your family susceptible for surprise and disappointment.
That’s why it’s important to insist on a full credit and income approval up front, before you fall in love with your home and write an offer. When you are asking for a full credit and income approval, you are also asking the lender to have an underwriter review your income, credit, and assets prior to finding a home. Also called a TBD approval (meaning the address is To Be Determined), most banks will offer this service if you insist upon it.
5. Stay in communication throughout the transaction. Make sure your loan officer, REALTOR®, and settlement agent (title officer, escrow officer, or attorney depending where you are buying) are in communication as soon as your offer is accepted. I’ve seen instances where the client assumed the REALTOR® was sending the purchase agreement, and the REALTOR® assumed the client was sending the purchase agreement to the lender, and nothing happened for weeks.
Even the best loan officer and REALTOR® are human and can become disorganized and disjointed. It’s well worth the effort to ensure everyone is on the same page and in communication as soon as your offer is accepted.
6. Take responsibility for your real estate purchase agreement deadlines. Each state’s real estate purchase agreement will differ slightly, but most call out specific dates for you to have completed your physical inspection (also called due diligence deadline), make application with a lender, obtain financing approval, complete the appraisal, and have your financing completed and ready for close of escrow.
Most clients assume their REALTOR® and loan officer are managing these dates for them; and if you have carefully chosen the right professionals with whom to work, they probably are. That said, you will be asked to write an up-front good faith or earnest money deposit when you write the purchase agreement. If you fail to hit any of your deadlines, it’s your earnest money on the line.
The up-front good faith or earnest money is typically one to two percent of the purchase price. As such, the penalty for missing your dates or running into financing trouble late in the transaction can be significant. To avoid the potential loss of your earnest money deposit, create calendar reminders for these important dates, and make sure to follow up with your lender and REALTOR® as these dates approach.
You can design a home buying process that is enjoyable, even exciting, if you begin with the end in mind and implement these easy to follow steps. The process works and has been successfully implemented by hundreds of physician clients we have advised and served over the years. Happy house hunting!
For more home buying tips, read on here!
About the Author:
Josh Mettle NMLS #219996 is an industry leading author and ranked top one percent of all mortgage originators in 2018 by Mortgage Executive Magazine, specializing in financing physicians, dentists, CRNA, and other professionals with highly specialized professional loan programs. Based in Salt Lake City, Utah, Josh is area manager for Fairway Independent Mortgage Corporation. Email: firstname.lastname@example.org.