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Home buying: where to begin?
Dear Phyllis,
My daughter and her husband are searching for a home on the Westside. The prices and down payment requirements are overwhelming. The absence of open houses has really impacted their journey, and it’s been a struggle for them trying to get a feel for the real estate market and different areas. COVID has created a new wrinkle, and now some listing agents are requiring preapproval letters and some prequalification letters. They really don’t know where to begin. Should they start with a Realtor or should they start with a lender? Can you help us decide where to begin?
Helpful mom
Dear Mom,
As your daughter and son-in-law are not tied to a particular area, I suggest they begin with a lender. In fact, some financial institutions offer reduced interest rates for existing customers. Therefore, it makes sense to start there, but they should not call the general call center. Instead, they should ask the branch manager for a recommendation to an experienced loan officer. Alternatively, if they already have a Realtor they trust, they can ask for a referral as well. Mortgage professionals differ from Realtors in that they can efficiently and effectively work across a wide geographical area.
Next, they should aim for a preapproval letter, as this indicates approval subject only to locating a property. However, it is important to note that a preapproval typically needs updating every three months. By contrast, a prequalification letter simply means a lender has “talked” with your daughter and has not verified the information provided. As a result, it is not as strong and may not be sufficient in every competitive listing situation. In addition, if your daughter submits an offer against other buyers, a prequalification will not be taken as seriously as a full preapproval.
During home buying, especially in today’s post-COVID environment, the process is also somewhat different. For example, your daughter and her husband will likely meet their Realtor at each home rather than touring together in one vehicle. Since they are still determining which area they prefer and can afford, it is often best to begin by working with the listing agent. This is because the listing agent is most familiar with the property.
Most importantly, they should be cautious when using online real estate sites to ensure they are contacting the actual listing agent rather than an agent simply purchasing “leads.” Therefore, your daughter should avoid using generic “contact agent” buttons and instead look specifically for the listing agent or the agent presenting the property.
Finally, once your daughter identifies a preferred neighborhood or city, she will likely also identify a real estate agent with whom she can build a long-term relationship. Best of luck to them on their home-buying journey!
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