First-time Home Buyers: How to build an awesome home-buying team
How to Pick a Real Estate Agent (Among Other Things)
There are 4 crucial steps to building your house-buying team. It’s actually a lot like dating:
- Get recommendations
- Set up interviews
- Take a breather, do a gut check
- Pretend they’re your ex’s new girlfriend and snoop on them hard
The members of your home-buying team may vary from state-to-state. But you’re going to want to select a real estate agent, of course. You’ll also need a lender or mortgage broker (learn the difference here) and in some states, you’ll also need a closing facilitator. In my state, the closing facilitator is a real estate attorney but talk to one of your prospective realtors to determine your needs.
You’re also going to want to identify a few people to act as your support team during this process. You want people who will keep you focused on your goals, can handle the occasional emotional breakdown, and have maybe, probably done this before. For me, that was my parents, my fiance, a coworker, and this one awesome lender guy who I didn’t move forward with (interest rates were too high) but really valued his opinion.
Getting Recommendations
I can’t imagine going through this process without getting recommendations from people who live where you want to buy. It’s going to make the initial process of narrowing down the candidates a lot faster if you have a solid pool to start with. This is going to be a little different than a Google search or Yelp query. We need to meet real people who can vouch for these guys up front.
Places to Look for Recos:
- Start with friends, family, coworkers, gym buddies— anyone you know in the area who wouldn’t lead you wrong
- Check your company’s intranet for employee recommendation boards or email lists you can send a note to
- Ask if your HR department has any recommendations — sometimes they help with relocation and might have a few trusted resources
- Be open — I met my real estate agent while walking my dog in a local park. We started chatting dogs, then the city, then houses. One thing lead to another, y’know? Keep your ears open. People are typically happy to talk about themselves; if you meet an interesting person, ask them if they know anything about buying homes in the area.
- Of course, social media doesn’t suck for this. Maybe even swipe right a few times on Tinder and see if there’s a hot, errr… smart, realtor nearby. You find house love in the strangest places, guys. (If you try the Tinder thing, message me. We might have a follow up post to write together.)
The Interview Process
I’d narrow your list of recommendations down to three people to start with in each category. This interview process is a bit of a time-suck so let’s hope the first three folks you talk to are awesome. If not, it’s worth the effort to keep calling. Do. Not. Settle.
Once you have your candidates, reach out to set up a fifteen minute phone call. Pro Tip: Get comfortable talking to strangers on the phone. In my experience, they’re all going to want to call you instead of email. Most of my peeps are comfortable texting (lots of emojis when my first offer went through) but you’ll do a lot of this on the phone. I actually called most of my candidates to set up a phone meeting but, if you’re reaching out to a lot of these guys at once, email is totally cool. Just include all your contact info in your note and a few dates and times that would work for you to sync.
Realtors and lenders will probably want you to come meet them in person rather than do the phone screen. If you have time for that, cool. But don’t you have hobbies? Or Netflix to binge? The truth is: if they get you in person, you’ve now invested significant time into the meeting and you’re less likely to look any further. #psychology Tricky, right?
Pro Tip: From this point forward, everyone is trying to sell you something. The sooner you realize this, the better. I don’t want to say trust no one. But. Don’t trust anyone — too much.
Do you want to meet your realtor and lender in person? Yes, of course. But talk to them on the phone first.
In the phone interview, here’s what your looking for:
The Real Estate Agent: Boy, is this person important. Do not pick a bad one. They are doing a lot of negotiations on your behalf so you guys need to be in lock step. You should be really comfortable with this person and they should be wicked smart.
Things to know about your realtor (besides the basics like, “Are you a real person” and “You’re like, licensed and stuff, right?”):
- Do they focus on the area you’re interested in buying in? How long have they been working that area? You want your agent to have a good idea of the market you’re interested in so they can advise you on good neighborhoods, what standard comps look like, and if it’s a good deal in general.
- Do they work with a lot of people in your price range? Agents get paid on commission. Expensive houses make them more money. You don’t want to work with somebody who specializes in $500K houses when you have a $200K budget because you’re just not going to be their top priority if a bigger buyer wants their services.
- How many clients do they have right now? When an awesome house comes on the market, it’s great to have a realtor who can meet you out there within 24 hours for a viewing. An agent with tons of clients has to juggle everyone’s needs. I recommend looking for someone with no more than three other active buyers.
- What is their availability like? An agent’s job is really difficult. It must pay well because these guys are likely available, within reason, 24/7. Meetings, viewings, and negotiations happen a lot in the off-hours. At first I was really uncomfortable scheduling viewings or follow up calls after 7pm but, remember, these guys work for you. You want them to be available when you need them. I mean, be reasonable, but find someone who will work with your schedule.
The Lender: When you’ve just begun the house hunt, finding the lender isn’t that important but you should find two or three good ones you’d be happy to work with once you put in an offer on a house. This part is the most confusing, so I’ll spend a little time on it.
First, you need to know what the process looks like so you can be prepared at every stage.
Step One is to get pre-qualified or pre-approved. Learn about the difference between the two here. I recommend getting pre-approved because it makes you look like a stronger buyer. With most lenders, pre-approval means you’ve submitted all of the actual paperwork you’d submit when applying for the official loan (once you’re under contract) so they have a really good idea of your financial stability. Pro Tip: You only need to go through the official pre-approval process with one lender. Pick a reputable lender (I used Wells Fargo) and you should feel comfortable knowing you won’t have a problem getting approved with any other banks or brokers you choose to move forward with once you actually have an offer in on the house.
When you set up the phone screens, ask them about the pre-approval process. Pick the most legit institution with the most painless process. (Although it’s kinda painful in general because you’re going to have to pull together a shit ton of paperwork to get pre-approved.) It might take awhile to find it all. I had to have my freaking step-mom mail me an old W2. It’s rough. But when you find everything, I recommend scanning all the docs and saving them in a Google Drive folder specifically for mortgage stuff. Save everything with document name and date for quick reference (ex: W2_Acme Inc_2014; Statement_Bank of Your Mom_March 2016). Naming conventions #FTW
While you’re getting pre-approved with Lender A, I’d be talking to all of the lenders about qualification and what not so you can get an idea of the types of loans they offer, what typical interest rates look like, and get an idea of the different fees for their services. ConsumerFinance.gov’s section on exploring loan options was clutch for me during this process. Do not miss out on it.
Once you get pre-qualified, go shopping! But only for a house. Big purchases after pre-qual are big no-no. Once you pick a house and put in an offer, you’ll want to reach back out to the lenders with your offer details so they can start updating loan estimates and such. It’s during this period that you’ll actually pick your guy (or girl). And we’ll talk about that in Part 3 of this series.
Unlike your real estate agent, these guys don’t really work for you. They want to sell you into signing a contract and then they delegate most tasks to their assistants (common practice, don’t be offended). You want to make sure everyone at the lending office is nice, helpful, and available (they work off hours too, and they text). It would be smart to ask if you could meet the whole team just so you get an idea of who you might be working with. I didn’t do this but I wish I had.
The Closing Service Provider: In North Carolina, where I live, the closing provider is a real estate attorney who handles all of the closing services. Check with your agent as to what your state requires but this isn’t a step I’d sweat over. All agents and lenders will have a list of people they like to use so call them up and make sure they aren’t jerks. At this point, I mostly cared about price. You’ll pay for this person’s services as part of the closing costs. I was able to save a good chunk of change by shopping around. And you don’t really need this person’s services until you’ve put in an offer but, like a boy scout, I look good in khaki. And am always prepared.
The Gut Check
House buying in general should be 90% head and 10% heart but that small heart bit is important. You need to have a good feeling about all of the people you bring on board. It’s really good to like them because you’re going to go through some intense stuff together. Your lender is going to know more about your financial situation than anyone in the world. Your realtor is going to be on speed dial during negotiations and you don’t want to dread seeing their name on caller ID. Once your crew passes an initial, factual inspection; you need to sit back and think about how they make you feel. Your realtor really seems like hustler, but are they too hustle-y? Does it feel like they’re hustling you? Did your lender take time to really explain things to you, present you with options you hadn’t considered? Do they seem like someone you could always call with a random question? If you have a bad feeling about someone, trust it and move on. #RelationshipAdvice
If you have a bad feeling about someone, trust it and move on. #RelationshipAdvice
The Background Check
This is where you online research comes into play. You picked your peeps based on recommendations and a quick meeting. Now you need to check out their online fingerprint and references. Of course, you have to Google them. You Google your Match.com dates, right? This is no different. Check them out on Yelp, Angie’s list and don’t forget the Better Business Bureau. If any red flags pop up, give the guys a chance and ask them about it. Maybe there used to be an issue with an unorganized assistant who lost paperwork a lot and now they’re no longer with the company but the bad reviews linger on. Asking them about these things shows them you’re smart, fair and that they are still in the running for your business.
I’d also ask all of these people for customer references. They might not legally be able to share names with you but it’s worth a shot. I want to know why the person chose to work with the provider, what the experience was like, and if they would work with them again.
You have the most control during this part of the process. Remember, all of these guys want your business. They are selling you a service and they only get paid if you decide to buy. Never forget that. Let me repeat: they only get paid if you decide to buy (and they really want you to buy). So choose wisely. Arm yourself with as much information as possible about each person and use your gut to narrow down the field in this stage.
In the next installment of How to Buy a House When You Know Nothing About Buying Houses, we’ll talk about shopping! #Yaaasss Spoiler alert: it’s not as fun as you think.
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Part 1 of the Series: Deciding to Buy ← Previous
Next →Part 3: “How close can you get me to Chipotle?” and Other Questions to Ask When House Hunting
