Home Buying: Where To Begin?

Dear Phyllis,

My daughter and her husband are searching for a home on the Westside. They are overwhelmed with prices and down payment requirements. The absence of open houses has really impacted their journey and it’s been a struggle for them trying to get a feel for the real estate market and different areas. COVID has created a new wrinkle and now some listing agents are requiring preapproval letters and some prequalification letters. They really don’t know where to begin. Should they start with a Realtor or should they start with a lender?

Helpful mom

Dear Mom,
As your daughter and son-in-law aren’t tied to a particular area, I suggest they begin with a lender. Some financial institutions offer reduced interest rates for existing customers. Start there, but don’t phone the call center. Ask the manager for a recommendation of an experienced loan officer. If you have a Realtor you know, you can ask them. Mortgage professionals are different from Realtors in that they can expertly and efficiently cover a wide geographical territory.

Aim for a preapproval letter which indicates that your daughter is approved subject to just locating the property. And unfortunately, the pre-approval will need to be updated periodically; about every three months. A prequalification letter is simply that a lender has “talked” with your daughter and not verified all the information. It’s not as strong and may not get her in every listing. Also, if your daughter writes an offer, and is competing against other buyers it won’t be taken as seriously as the pre-approval letter.
Home buying during COVID is different. Your daughter and her husband aren’t allowed to get in the car with their Realtor. They will be meeting the Realtor at each home. As they aren’t certain which area they like and can afford, I think their best option is to start off by working with the listing agent. This is the person most familiar with the home. Have your daughter be careful when checking with online sites that she is dealing with the actual listing agent and not an agent simply purchasing “leads”. Your daughter does not want to “contact agent”. She wants to contact the listing agent or the agent presenting the listing. Tell her to look for that terminology.

Once your daughter has identified a neighborhood or city, she may have also identified a real estate agent she has built a relationship with. Best of luck to them on their home buying journey!