First-time buyers stroll into a maze

Education: The professionals often take the time to educate first-time homebuyers, so important are they to the housing market.

March 25, 2001|By Mary E. Medland | Mary E. Medland,SPECIAL TO THE SUN

In the real estate business, they say the market always moves from the bottom up. Simply, the first-time buyer makes the market go, and for the last several years of Baltimore's housing boom there have been many first-time buyers coming into the market.

But buying a home can be a very daunting experience for someone doing it for the very first time.

Where should I buy?

How much home can I afford?

How much cash do I need?

How do I get a mortgage?

Do I need a real estate agent?

"When buying a first home it can be a scary proposition," said David Desser, an associate broker with Prudential Carruthers Realtors in Pikesville. "Buyers are nervous to begin with. When they read all the stories about cash offers and buying without home inspections ... they come in and get freaked out by it.

"We spend more time slowing people down than anything else," Desser said.

For most people, buying a home will represent the greatest amount of money they will spend on a single item during their lifetime.

Therefore, most industry professionals agree that getting educated about the home-buying process is the most important aspect to embrace when jumping into the market.

And for most consumers, getting educated doesn't necessarily mean getting advice from friends and neighbors, it means getting the help of a real estate agent, visiting the library, gleaning information from the Internet and doing as much preliminary research as possible.

But, beware, said Judy Thomas, an agent in the Lutherville office of Long & Foster Real Estate Inc. Too much advice - and too often just out-and-out bad advice - from too many sources can make potential buyers confused and crazy.

"Look for someone who is knowledgeable and experienced," said Thomas. "You'll run into different problems and need someone smart enough to guide you properly through the [buying] process.

"There are a lot of ridiculous small things that can cause deals to fall through. While most problems are very resolvable, one needs considerable experience to know what the channels are that will get things straightened out."

Stefanie Narkiewicz found Thomas through the recommendation of a co-worker.

"We really hit it off well," said Narkiewicz, who moved from an apartment in Hampden to a single-family home in Bel Air.

"We started looking in June and probably saw 20 houses before we found the one we wanted in August," said Narkiewicz, an office manager whose fiance is a sprinkler fitter. "We pretty much did that and then showed up for closing."

In addition to personal compatibility, buyers must ascertain that a real estate agent is knowledgeable about a given area of the city or county.

For first-time buyer Heather Sachs, geography was important. She knew that she wanted to purchase a home that would allow her to walk to her job with the Army Corps of Engineers on South Howard Street.

"While I'm a young person, I'm not really hip and happening, and I didn't want to be in a part of the city that had a lot of bars and noise," Sachs said. "I knew I wanted a settled, stable neighborhood with people of many different ages and a neighborhood that was safe," she said, adding that she eventually found a home on Barre Circle in the city.

Others recommend finding an agent who represents the buyer, rather than the seller.

Until several years ago, true buyer agency didn't exist in Maryland. Agents, even if they were working with a buyer, were presumed by law to be working for the seller, who was paying the commission.

However, a revision in the law in 1999 changed the presumption so that an agent would be working in the buyer's best interest, meaning that there would be confidentiality and some degree of care. This happens only when the buyer and the agent meet face to face.

The buyer's agreement

Signing an exclusive buyer's agreement means that the agent will give the buyer information and knowledge about the house in question and then negotiate aggressively to get the best price and terms possible. In return, the buyer remains loyal to the agent. And, in most cases, real estate commissions are paid by the seller, even to buyer's agents.

"Buyers really need to be well informed before making an offer," said Bill Cassidy, manager of the Fells Point office of Long & Foster Real Estate Inc. "You can get a really good sense of things by looking at a lot of houses because, if you overbid and then there's an economic downturn, you are the one who is going to be really hurting."

The other side of that coin is that houses aren't languishing on the market. "Sometimes first-timers go in with too low an offer and end up losing the house," Thomas said.

Increasingly, the name of the game today is getting pre-approved by a lender.

But before getting pre-approved, buyers should know what their credit history looks like. Poor credit leads to a difficult time in getting approved for a loan, according to Neil Sweren, president of AllyMac Mortgage in Owings Mills.

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