Navigating the Real Estate Market in a Challenging Economy: A Must-Read for First-Time Home Buyers

The real estate market changes continually, and first-time buyers can face daunting challenges. The journey — from finding the right agent and a desirable property to successfully closing escrow — can be intimidating.

The good news is that a first-time home buyer can still find an excellent home to call their own. It just takes reliable information, some flexibility, and awareness of hidden pitfalls. Let’s look at some crucial steps in navigating the real estate market for the first time.

Find A Good Agent

The most important initial decision a person can make is choosing an agent. Inexperienced buyers will need to be guided through the process and will need lots of advice. A very well-informed and proactive agent is essential.

Agents do a great deal of work behind the scenes, all based on the possible commission when a property is bought or sold. First-time buyers will get the best treatment when they show respect and appreciation for the efforts that agents make.

An alert agent will carefully consider your needs and financing options and help you find properties to look at. They can tactfully point out good and bad features of each property during a showing. Buyers should realize that the homeowner may have small cameras streaming video from their home. Be polite and never discuss possible offers or financing during the showing.

A good agent is a good listener and is genuinely honest. Yes, they can be hard to find, but it’s worth looking around, reading reviews, and asking friends for suggestions. Talking to several realtors and getting local recommendations is a good idea before you sign up. However, if you still find your agent is dishonest or negligent, you’re within your rights to choose a different agent once your contract expires.

Be careful not to pick a realtor just out of kindness to a relative; do some research and make the best choice for yourself. Finding the right agent is a huge first step to success. But what about actually choosing a property to buy?

Plan for the Future

Ask yourself how long you plan to own the property you’re choosing. Will this be the house you raise a family in? The condo you retire to? An investment property? Each buyer has unique circumstances and long-term needs. The time to figure out your plans and needs is BEFORE you go house-hunting.

Most first-time home buyers are Millennials. They should remember all the underwater mortgages and foreclosures in 2007-2008. When the housing bubble burst, millions of subprime mortgages were foreclosed and hundreds of thousands of families ultimately lost their homes. Take a lesson from those rough years and be extremely cautious not to overextend on a high-priced property and large mortgage. If you face a personal financial crisis, you want the ability to keep up the minimum payments even on a basic income.

If you are moving to a new area, plan ahead by learning about the potential natural disasters you could face. Insurance will be far more expensive if you’re in a flood zone or an area prone to earthquakes or hurricanes. If you’re considering an area that frequently faces mandatory evacuations, consider your family’s health and safety and plan your escape routes in advance. Remember, these drawbacks will affect property value, too.

“Location, Location, Location” is no joke. Neighborhoods can go from nicely middle-class to dangerous drug-war zones in just a few blocks. Be aware that even the best agent cannot tell you where you should or should not buy. This is called “steering” and is actually illegal. Draw them out with leading questions, like: “Would you move your family here?” “How easily could I resell this home?” “What kind of reputation does this area have?”

When in doubt, talk to the police about the safest neighborhoods for kids. Meet your potential neighbors and get a feeling for how well you’ll be received in the area. If you are buying into a very conservative area, consider what changes you’ll need to make to keep on good terms with the local residents. This may sound objectionable, but it is a reality. People will judge you on your appearance and behavior, as well as how well you maintain your yard or fence. What they think of you will either make your life easier or more difficult.

If you’re moving a long distance, you may want to rent initially. This allows you the freedom to become familiar with the local neighborhoods and allows time for you to wait for suitable properties to come on the market. If you decide to make trips to the area of your choice, be prepared to make several trips and rely heavily on your realtor. Virtual walk-throughs via video calls aren’t ideal but can help you make an informed decision. Good realtors are happy to accommodate you since they want you find what you’re looking for.

While it goes against popular cultural ideals, your home doesn’t need to be flashy, new, or overly expensive. Being realistic and modest will help any buyer find a good piece of real estate and make a purchase they don’t live to regret. How can you make a reasonable choice?

Identify Flexible Criteria

Some criteria will be set in stone, which makes house-hunting easier. Location or view or distance from a job or school, for example. Other things will be more flexible. Decide now how flexible you want to be on the age and condition of the property. Less than 20 years old? More than 20 with a full remodel in the last 10 years? Garage or shop? A big yard or acreage for kids and pets?

Identify which features you’re willing to compromise on. If you’re buying with a spouse or family member, make sure everyone agrees on this. Many things can be changed once you buy a property, but basics like location and neighborhood will remain out of your control once you’ve signed on the dotted line…

Flexible criteria will allow you to look at a wider range of properties and get a feel for what you can expect within your price range. It also means you may decide to look at homes far below your price range. You may be pleasantly surprised by listings that are less expensive. A smaller home that is well cared for and in just the right location can be an excellent choice. You’ll need a smaller home loan or save some cash you can spend on an addition or remodel.

Again, ask your agent for an opinion on the most important criteria in your area. They might surprise you by mentioning the gallons-per-minute on a well or the mold in the garage, or other things you missed. First-time buyers are more likely to get stuck with a lemon, so ask for advice. What else should you be aware of?

Watch for Major Pitfalls

The real estate market can be cutthroat and disappointing. Sadly, many sellers and sellers’ agents behave dishonestly. First-time buyers need to be careful to read EVERYTHING, no matter how insignificant it seems. The buyers’ agent can help with due diligence, but ultimately the buyer is responsible to “beware.”

The website is an excellent place to start. Simply enter the U.S. zip code of the area you’re interested in. You’ll see a list of potential hazards, including polluters, Superfund cleanup sites, and likely natural disasters. The crime statistics and registered offenders listed per neighborhood are also revealing. This information can be overwhelming and even disturbing, perhaps prompting a buyer to move to a safer or cleaner place.

A beautiful neighborhood can disguise a Superfund site, an area seriously contaminated by hazardous waste. Classy condos can be built next door to a major active polluter. If a place seems too good to be true or the price is surprisingly low, look around and do some homework. If you’ve handled the purchase from a distance, make sure your contract includes a final walk-through so you can actually see the property in its context.

Once you’ve found an acceptable area, check the zoning codes. Illegal improvements like converted garages and extra bathrooms can make a house appear valuable but actually be unusable or uninsurable. Property lines and legal boundaries can be misrepresented, leading to frustration and lawsuits later. Remodels that are purely superficial can hide old wiring and faulty plumbing that will cost a fortune to bring up to code.

After all possible due diligence on paper, buyers will want to invest in a very good home inspection. Again, ask around and read online reviews when choosing an inspector. Acknowledge that this part of the process is also open to corruption. The paperwork you sign will leave the inspector legally in the clear, even if they do a poor job or you feel they’ve misled you. Protect yourself by hiring a knowledgeable inspector with a good local reputation.

Now you’re ready to make an offer on the property that will work for you and wait until the offer is accepted. Continue to do research, refine your criteria and pursue suitable housing for as long as it takes.

Having a good framework to build from will help an inexperienced buyer ask the right questions and find their own place. With a great agent, practical advice, and realistic expectations, anyone can have a good outcome when navigating the real estate market for the first time.