Are you living in Austin or considering moving to Austin TX, and thinking about purchasing your first home? As with any area, the Austin real estate market has unique elements that should be considered, and because being a first time home buyer can be nerve-wracking in itself, we’ve put together this First Time Homebuyers Austin Real Estate Guide.
In terms of popularity, Austin is one of the hottest cities in the country to live. Over the last 10 years, the Austin real estate market has continued to boom, which has led to rising home prices and a shortage of houses on the market. Even with seasonal fluxes, Austin real estate prices remain steady and strong. Despite this rise and popularity, home prices in Austin still remain relatively moderate compared to other cities, such as New York City and San Francisco. If the real estate market continues to hold strong, which it’s expected to here, that also means that investing in Austin real estate is one of the best investments you can make as a home buyer.
So here is a guide to help you traverse the waters of being a first time home buyer of Austin real estate.
What type of Real Estate Should You Buy?
The first question you’ll find yourself contemplating is what type of property you should buy. As a prospective Austin home buyer, you shouldn’t just buy the first house you see. You want your home to work for you, to accommodate your needs and to be a great place to live. You’ll want to consider what will suit your tastes and lifestyle best – are you looking for an older home, new construction, a ranch, a duplex, a condo or a townhouse? Each have their positives and their negatives, and your Austin real estate agent will help you in your Austin home search and give you some guidance on these things.
When considering what type of property to buy, think about the square footage you’ll need, the number of bedrooms, bathrooms, number of stories, pool or not, garage or not and what type of property best suits you. As Austin is continuously expanding, you’ll want to investigate particulars, like your potential commute to and from work, as well as schools for your children.
Where in Austin Should You Buy Your First Home?
For those who aren’t from here, Austin has an average commute of over 20 minutes, even for those who reside in the city. Unlike some other cities, Austin’s public transportation system is less than stellar. With no subways, and a very limited train system, outside of a car or bike, the bus is the only real way to get around.
So pick an area where you’ll have a comfortable commute that’s close to your business or where you intend to do business. If you need some guidance on great areas to live, be sure to check out our article on the best places to live in Austin.
You’ll want to consider not only what you want, but what you can truly afford. Use a mortgage calculator to figure out approximately how much payments will be, and don’t forget to add on costs for property taxes, interest, homeowner’s insurance and HOA fees, if applicable. Depending on the type of property you buy or the type of loan you get, there may also be additional fees.
If you perceive yourself as not only buying a home, but also investing in Austin real estate, consider buying a home in an area of Austin that is growing but has yet to reach its full potential. This is another reason to have an experienced Austin real estate agent.
Finding a Great Austin Real Estate Agent
Once you start searching for Austin real estate, you should contact a few agents to find the best match for your house hunting endeavor. The home buying process can be fairly lengthy, so make sure that you and your agent connect and are on the same page. Check their references and meet with them – see what others’ experience has been.
You’ll also want to make sure that you find an agent who knows the neighborhood that you’re interested in. Some agents may not specialize in all of the neighborhoods in Austin; for example, if you’re interested in West Lake and Northwest Hills, your agent may only be familiar with neighborhoods closer to downtown, such as South Congress and Mueller.
It will be beneficial to you to have your own agent working for you as a buyer’s agent in the transaction. Remember, the listing agent is always working to get the seller the highest price possible, so having your own real estate agent on your side will be key. A buyer’s agent negotiates on your behalf, to get you the best deal possible, although they are paid by the seller.
Getting a Loan for Your New Home
The process of qualifying for a loan is one of the first things you’ll need to tackle, even prior to purchasing a home. Most Austin real estate agents will expect you to be preapproved for a loan and won’t show you listings until you have been, because listing agents and sellers won’t respond to offers that don’t come with a prequalification from a lender.
There are a variety of loans and programs available, when purchasing a home, including Conventional, FHA and VA loans, fixed rate mortgages, ARMs, etc. Search for a qualified lender who can walk you through the process and options. Your agent may have a reference list for you.
You’ll need to provide elements such as 2-3 years of tax returns, pay stubs, bank statements, and many other things. Prepare yourself for a credit check as well. If your credit is not so great, the lender may be able to guide you how to clean it up before you start looking for homes to purchase.
Austin Home Search Process
House hunting is time consuming. First-time home buyers tend to spend a bit more time on their Austin home search than experienced ones, when looking for their first home. They often want to ensure they’re making the right decision.
Be sure you’re working with an agent who listens to your needs and is good at targeting the type of home you’re looking for. Keep in mind that given the way properties fly off the market in Austin, you will want to be as flexible as possible with your schedule to see them asap.
When you know you’ve found a home you love, you’ll want to act quickly and make an offer.
Finding a Good Real Estate Attorney
At the time you make an offer, you have the right to have a real estate attorney on hand. A real estate attorney can help prepare documents and negotiate your contract on your behalf; this is another step where your real estate agent can help you with referrals. Habitat Hunters is actually one of the only Austin real estate agencies that has an on-staff Austin real estate attorney and CPA to help guide you through the process.
Making an Offer on a Home
The offer process can be excruciating. Often properties get multiple offers, and you’ll be competing with other buyers. As a first time home buyer, you’ll want to make sure your finances are as strong as they can be, as that will often dictate which buyer a seller chooses to accept an offer from. Remember, the seller wants the deal to go through. If something looks questionable, they’re risking taking their house off the market.
In a multiple offer situation in Austin, it’s not unusual for the property to go for list price or more, and often to cash buyers. If/when all parties agree, then the contract can be signed and a date for closing will be established.
The Inspection and Appraisal Process
If your offer is accepted, congratulations, you’re halfway there. But there are still some other steps you should be aware of.
Once your contract is underway, the lender will request an appraisal on the home in question. This involves a comparison between the home you’re buying and similar sales of homes in the area, which gives them an idea for the proper value of the mortgage.
It is highly advisable that you have a home inspection performed on the home, by a licensed Texas property inspector. This will provide a breakdown of specific issues with the property, such as maintenance, damage and repairs, as well as an analysis of the house in general.
If there are any issues that come up during the inspection, the buyer has the right to negotiate for the seller to repair some items or offer an allowance for them. In a hot market such as Austin, sellers often give little, if nothing in repairs or allowances, as they often have other buyers waiting “in the wings” for your deal to fall through.
Homeowner’s insurance is required if there is a loan, and advisable even if there isn’t a loan. You may be able to get a good rate, or a bundle, if you use your auto insurance provider. The lender will require proof of homeowner’s insurance before the loan can be signed. Be sure to ask your real estate agent for recommendations, as you shop around for rates.
Closing on Your New Home
You might find yourself both excited and nervous, because it’s your first time buying a house! The closing is the final step in a somewhat lengthy process of acquiring Austin real estate. You’ll have to sign lender’s and title company’s legal documents and agreements. The escrow officer at the title company, along with your real estate attorney, will go over each document before you sign.
If you’re considering becoming an Austin home buyer, welcome aboard. These are the basics, but, if you need further assistance, contact Habitat Hunters today – we have experienced agents and attorneys on staff that can help guide you through all stages of buying a house in Austin.