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Measures Taken By Successful First Homebuyers

UK First Home Buyers

First-time buyers are often working alone. Purchasing a home is a significant financial decision. First-time homebuyers who take the time to plan, research, and seek professional advice have a more successful homeownership experience.

This property blog looks at what first-home buyers can do to ensure they get on the property ladder.

Improving Financial Position

The quickest way into homeownership is by improving your financial position.

Down Payment (Home Deposit)

Accumulating a healthy deposit opens up more home-buying opportunities. When you have a sufficient down payment for an entry-level home, you compete with other first-time homebuyers. First-time buyers often aim for at least 20% of the home’s purchase price to avoid private mortgage insurance (PMI). However, with a better budget, more listed homes will be available.

Aim for a 25% down payment. This gives you a healthy buffer should you need to increase your price to secure the property. It is not all you can do, so read on.

Credit score

Maintaining a solid credit score is crucial for securing favourable mortgage terms. First-time buyers can improve their credit by paying off debts, addressing discrepancies in their credit reports, and being mindful of their credit utilisation. Avoid spending on luxury items whilst you’re applying for a mortgage preapproval. All lenders need to view your bank accounts to assess your ability to afford the repayments.

Income

Secure more income with a pay rise, a promotion, a new job or a side hustle. Lenders can lend more when your income well exceeds your expenses.

Preapproval

Obtaining a mortgage preapproval can help buyers determine their budget and demonstrate their financial capability to sellers, giving them an advantage in a competitive housing market. Knowing what you can borrow sets the price limit for first-home buyers.

Either increase your income to increase your loan amount or work hard on your negotiation skills and tweak your requirements. For example, you may accept a home further away from your ideal location or choose an apartment over a townhouse.

Education and Market Research

While saving for your down payment, invest your time in education and market research.

First-time homebuyers often invest time educating themselves on the real estate market, mortgage options, and the home-buying process. This helps them make informed decisions and avoid common pitfalls.

Learn everything you can about the property market in your desired locations. How much are 1-bed, 2-bed, and 3-bed homes going for? What’s the price difference between townhouses, standalone homes, and apartments?

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Join discussion forums and communicate with seasoned property investors who can guide you through the buying process and any pitfalls you may come across.

Consider the seasons, too; fewer homebuyers will be in the cooler months. There will be fewer listings, too, so you must remain vigilant and act quickly when an Estate Agent or property listing site alerts you to a new listing that fits your requirements well.  Also, ask real estate agents about being alerted to ‘off-market‘ properties.

Go to open home viewings as part of your market research. The properties do not need to be a perfect match for you to view them. Additionally, widen your house-hunting search to include areas peripheral to your desired areas.

Negotiating a better outcome

Negotiation skills can play a significant role in securing a home at a reasonable price. First-time buyers may work with their real estate agents to negotiate effectively and potentially save money. However, real estate agents work for the seller and are reimbursed for securing the best price.

Choose a mentor to work with – someone on your side who can help you navigate the negotiation process.

Understand Gazumping

Watch out for gazumping. Prospective homebuyers are taking desperate actions to get their offer in and hopefully accepted. However, gazumping is happening, and it’s frustrating for homebuyers who have verbally accepted their offer.

Gazumping is legal in England and Wales, where either party can pull out until the sales contract has been signed and exchanged between the two parties. This creates a lot of nervous waiting for homebuyers in a demand-driven market. The estate agent presents the offer to their client, the seller, but there’s no rushing to get it signed, which leaves the opening for another buyer to put forward a better offer and have that accepted, which does seem unfair, but it’s legal.

Estate agents work for the sellers and are paid a percentage of the sales price, so if a prospective buyer is gazumped by another buyer presented by the estate agent, the agent stands to get more commission.

Actions Taken To Avoid Missing Out

With so much demand, prospective homebuyers do all they can to secure a property.

Put Forward Best and Final Offer

Estate agents realise gazumping can result in a no-sale for them if the better offer is from a buyer they haven’t put forward to the seller. Therefore, a sale is better than no sale, so prospective buyers are encouraged to put forward one offer, which is their best and final.

Move Quickly, Be Flexible

While price is essential, the offer that seals the deal may include a faster turnaround time, where the contracts are exchanged within a few weeks. Some buyers do this to ensure they can move fast because they are renting or staying in their caravan!

Quick turnarounds are not always desirable, so prospective buyers must determine the seller’s position. The seller may not have anywhere to move, so your offering to settle within weeks may be a turn-off and a lost deal. On the other hand, some sellers want an extended settlement period to have time to remain in the property until they find another home.

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Ambulance Chasing Real Estate Agents

Desperate times require desperate measures, so the saying goes. Nevertheless, prospective buyers are not averse to following real estate agents to locate new properties for sale and get a look before their competition.

Buyer’s Agent

Engaging a buyer’s agent to locate a property is a popular move by busy homebuyers. The ideal buyer’s agent would be part of an Estate Agency to know when estate agents have new prospective property listings.

First-time homebuyers need to act smarter and often employ various strategies to purchase their first home.

 

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