Millennial Cheat Sheet to Home-Buying

This week, ATG answered seven (7) questions that came from Millennials, the market’s future home-buyers. This is our insight into the most common questions you might run into as an agent working with this age group.

How much does it cost to hire a Realtor and title company?

This is always the most popular question, and our answer is this: There’s no set cost. In general, 5-6% of the sale price goes to the Realtors, which is split between the listing and selling agent. Typically, the seller pays the commission payment on the back-end. So in most cases for your Millennial home-buyers, there’s no upfront cost, and the seller pays after closing.

Why should I want to get a house? More people are living in apartments and it’s cheaper to live there, right?

This is a big assumption. When most people look at buying a home, it’s an investment. Ideally, you buy it now at an affordable price that will appreciate over time. While living in an apartment, your money is going into someone else’s pocket. Unless you’re moving a lot, living in a house will create greater value than paying someone else’s mortgage.

What are some common mistakes/pitfalls that I should avoid?

One of the most common mistakes we see is picking just any Realtor. There are over 10,000 Realtors in Arkansas. Just like buying a car, make sure you’re dealing with someone who’s reputable. Do the research and deal with someone who carries a good track record, with a reputable real estate company. Do your homework beforehand: know what you’re looking for in a home and where you want to be. This will save time as you move through house showings.

***A note for Realtors: As agents and title companies we must start finding Millennials online. We know 50% of homes are found online and 50% of buyers are Millennials, who will be 50% of the workforce by 2020.

How do I get started buying a house? The process seems intimidating.

Outside of your home and agent research, your first step will be to talk to a reputable lender and repair credit if necessary. Your lender can be your bank, car loaner, or some other financial loaner you trust and have a good history with. Let them talk you through the process and ensure sure you have the means and credit to purchase. Work out any issues with your credit beforehand with that lender. Be sure to look into programs for first-time home-buyers. There are plenty of these that are great for helping you get started!

How long does it take?

The time that it takes to purchase a house varies case by case depending on the range you’re looking to spend, where you’re looking to buy, and what the market is. You can set your own timeline, so it’s predicated on how quickly you want to proceed. The steps follow as:

  • Find a home
  • Make an offer
  • Get a contract
  • Set a closing date for 30-60 days out (usually 30, but all depends on the title company, the lender, and the seller).

Theoretically, you could do it in under 60 days. Title companies will do all the research in the meantime. Any issues found will slow the process down.

Any tips on payments?

We recommend making an extra full payment every year. This will help you knock your debt down by as much as 3-7 years, since most of the payments the first 10 years go straight into interest.

Can I opt out of HOA/POA neighborhoods or do I have to join if I buy?

Typically, you’re going to have to join neighborhood associations. If it’s part of that neighborhood, it’s part of the closing process. If you don’t have those HOA/POA contracts in place at close and the buyer doesn’t pay, the association can put a lien on the property. Be sure to direct questions to your agent.