This interview has been edited for length and clarity.
What’s the first step a first-time homebuyer should take before looking at homes?
Consult with a trusted Realtor and connect with a lender to discuss options and a timeline. These will be great team members for you in buying a home. Any experienced Realtor should have several lenders that they work with and can recommend. Nothing happens without a plan, and the earlier you can get with a trusted Realtor to make a plan, the smoother things will go.
What are common misconceptions first-time buyers have about the buying process?
I think a lot of first-time buyers underestimate the costs and get surprised by things. It’s important to talk through the process of buying a home and get a good idea of the costs so that surprises are limited.
How much should buyers budget for things beyond the down payment, like inspections or closing costs?
Twenty percent down is always amazing as a down payment, but difficult to do. If a first-time homebuyer can save a minimum of 3.5% of purchase price and closing costs, that’s a great starting place. Sometimes money can be negotiated from a seller to help cover things like closing costs, repairs or a mortgage rate buy-down.
What’s a realistic expectation for how much a buyer can afford versus how much they’re approved to borrow?
A lot of financial advisers say don’t exceed 20-25% of your take home pay for monthly mortgage. For a $300,000 home, the payment could be between $2,500-$3,000 a month. That’s tough to do. I would say that you need to work to make that payment comfortable for you in your budget. Don’t become house poor. There are things you can do to help make that payment work by putting more money down.
How competitive is the Austin-area market for entry-level homes?
The current market is fairly competitive for entry level homes, but there are currently lots of options. Austin has a tremendous inventory, and buyers have almost too many choices. There are a lot of sellers willing to make deals to sell their home right now.
What trends are you seeing in pricing, inventory or interest rates that could impact new buyers?
Prices have trickled down a bit since 2021, however interest rates have not moved a lot in the last two years.
What should first-time buyers prioritize in a home search?
Priorities in a homes search should include location, schools and development because they all affect resale value. You want the home to fit where you want to live, but these factors definitely affect resale as well. Condition is a factor but can always be mitigated, meaning you can always fix broken things and do "add value" projects to a home to increase its value or resale appeal. Proximity to groceries, restaurants, development and schools are all great factors in choosing a home. Watch out for things like railroad tracks, flight paths and being too close to undesirable commercial development like a tire shop, waste facility or nightclubs.
How do inspections and appraisals typically impact a first-time buyer’s offer or timeline?
Inspections are quick and can be used as leverage to get repairs or seller concessions. These are typically completed within the first few days of being under contract on a home. Appraisals have not become a huge issue recently because the market shown prices trickling downward a bit but can be a hurdle when buying a home if the home is over priced. If that happens then the seller must come down on price, or buyer must come up with the difference or some combination of the two.
What role does a real estate agent play in supporting a first-time buyer?
A Realtor who knows what they’re doing is a huge support to a buyer. Most Realtors don’t really understand the process well until they’ve got eight to 10 transactions under their belt. Agents who are doing a fair amount of business throughout the year generally have some great systems and processes in place.
How long does the average first-time home purchase take from search to close in this market?
When I work with first-time buyer, we start with their approximate desired move-in date and reverse engineer from there to include searching, viewing homes, constructing an offer, contract period and closing so that we have a good idea of how long the process will take. Typically, from the time we start actively searching with a buyer, we can identify a home, make an offer, get under contract, do inspections, get approved for the loan and close in under two months. This isn’t a blanket timeline as each buyer will have different needs that might change that timeline. Normally, from the time you make and offer on a home and that offer get’s excepted, you can generally close and get the keys in approximately 30 days.
