Yet another year has come and gone in the blink of an eye! Santa helped me wrap up 2023 with my 12 Days of KRISmas again – lots of tips and tricks for buying & selling homes. Santa did tell me that I was definitely on his “Nice” List again this year as well! 🙂
The overall “theme” in the housing market this past year was mostly dedicated to the mortgage rates continually increasing each month. Thankfully those interest rates are starting to come down now here in 2024 and we’re all hoping they will continue to do so throughout the rest of the year as well! With less sellers putting their homes on the market, the inventory was also diminished somewhat over the course of the year too. With these two factors impacting the housing market, some buyers were realizing they may need to look at other options to purchase a home these days to make it more economically feasible. Here’s a few ideas that were relevant over the past year and will more than likely continue to be as we move forward this year. (These tips are great for First-Time Homebuyers, but they would all definitely work even if you’ve owned a home before!)
How to Become a Homeowner on a First-Time Buyer’s Budget
It’s not easy being a first-time homebuyer right now. At the end of last year, housing affordability hit an all-time low.1 Additionally, mortgage rates have risen significantly since 2021, while inventory remains tight for many property categories, but especially for starter homes. Even lower-priced condos are harder to snag these days, as investors and downsizers muscle out first-timers by offering stronger, often cash-heavy bids.2
In fact, according to the National Association of Realtors, only 26% of last year’s homebuyers were first-timers—the lowest share on record and down from 34% a year prior. This underscores just how steep a hill new buyers are facing.3 As a result, many first-time homebuyers are finding that they need to get creative or risk renting for longer than they planned.
If you, too, are struggling to afford homeownership, here are some workarounds to consider as you plot your first home purchase.
1. Try House Hacking
“House hacking” is a real estate investment strategy in which participants use their homes to generate income in order to offset their expenditures.
For example, renting out a basement apartment or accessory dwelling unit (ADU)—such as a detached garage that’s been outfitted with a bathroom and small kitchen—counts as house hacking. So does splitting housing costs with a roommate or converting a part of your home into an Airbnb.
House hacking isn’t new. But, it’s grown in popularity as a new crop of digital platforms has entered the market and made it easier than ever for homeowners to generate income from their property.
In some cases, house hacking may make it possible for you to qualify for and afford your first home. A lender, for example, may approve you for a larger mortgage if you purchase a home with immediate income potential, such as a legal duplex or a property with a secondary suite that has a kitchen and full bathroom.4
In addition, house hacking could help you pay your mortgage once you move in. Here are just a few of the ways you could use your home to earn some extra cash:
- Offer paid parking in your driveway on a site like Spacer or SpotHero.
- Rent out your swimming pool for a few hours on Swimply.
- Make your home available for photoshoots or events on Giggster or Peerspace.
- Turn your backyard into a pay-by-the-hour dog park on Sniffspot.
- List your garage space on an app like Neighbor Storage.
But before you make plans to house hack, make sure you fully understand an area’s laws and HOA rules. We can help you find a home with income potential in a neighborhood with less restrictive zoning and regulations.
2. Team Up With Friends or Family
If you aren’t wild about the idea of welcoming strangers to your home, you may want to consider co-purchasing with a friend or family member instead. This unconventional housing arrangement is also growing more popular as friends and family members cope with higher living costs by pooling resources.
According to the National Association of Realtors’ 2022 Profile of Home Buyers and Sellers, the share of first-time homebuyers living with people other than children or a romantic partner is currently at an all-time high.3 Meanwhile, research from Pew found that multigenerational living has accelerated especially quickly, with a quarter of U.S. adults aged 25 to 34 now living in a multigenerational home.5
Arrangements can be customized to fit your circumstances. For example, you could purchase a home and then rent a portion of it to a loved one. Or you might consider co-buying a home with friends or family members so that you can step onto the property ladder and start building equity together.
Co-ownership could work out especially well for you long-term if it helps you to buy a home that’s bigger, has more investment potential, or is located in a high-demand area and so appreciates at a faster rate. Plus, you’ll get to see your loved ones more often and enjoy the coziness of shared living with people you like having around.
On the other hand, sharing a big financial responsibility, like a mortgage, with friends or family could get messy—especially if you don’t create a clear-cut co-ownership agreement beforehand that outlines your mutual expectations. So plan carefully before you proceed.
In addition, you may need to rethink the type of home you pursue. For example, a smaller home might be cheaper, but do you really want that much togetherness all the time? We can help you set priorities and search for a suitable property.
3. Tap Your Network for Help With Funding
Another established method for affording a first home is to lean on family or friends for financial help. Getting assistance with the down payment or other borrowing costs can go a long way toward making your homeownership dreams come true.
As long as you don’t mind asking for help, a free-and-clear gift that’s intended for your down payment is an ideal arrangement, since it will allow you to borrow less overall. Or, if that’s too big an ask, your loved ones could pitch in toward closing or moving costs.
Alternatively, your loved ones could help by co-signing your loan. For example, if their credit score is a lot higher than yours, it could enable you to secure a lower interest rate so that your monthly payment is more affordable.
According to a recent YouGov poll, more than a third of homeowners (and a whopping 79% of those under 30) received financial help from their parents when buying their first home.6 So you wouldn’t be the only one leaning on family to help afford a home at today’s prices.
Just be sure your parents or other generous loved ones are aware they’re giving a gift, not a loan, and are willing to put that in writing. A lender will want proof that this money isn’t adding to your debt burden and may require documentation from your benefactors.
Another way to tap your network for help is to crowdfund part of your down payment or ask for monetary gifts instead of tangible ones. For example, if you’re getting married soon, you could skip the wedding gift registry and ask guests to contribute funds to your hoped-for home purchase instead.
4. Look for Special Programs and Assistance
You could also cut some of your upfront mortgage costs by applying for special grants and funding opportunities.
For example, consider using a grant to help you fund your down payment. There are a number of public and private grants and down payment assistance programs that are expressly intended to help first-time buyers.
Just like a gift, you don’t have to pay a grant back. But, depending on your personal situation, you may find some grants difficult to qualify for—especially if you make a relatively high income.
Many grants are reserved for lower-income buyers only.7
Check out grant programs, such as the HomePath Ready Buyer Program, National Homebuyers Fund, the Good Neighbor Next Door Program, and specialized grants from banks. Also look to state and local sources for potential grants and down payment assistance programs, including forgivable and deferred payment loans, Individual Development Accounts, and DPA Second Mortgages.7
Similarly, if you have enough income to support a house payment but can’t spare much cash for your down payment, you may qualify for a government-sponsored loan, such as an FHA loan that allows you to put down as little as 3.5% to 10%.8
We can connect you with a lender or mortgage broker who can educate you about your options and help shepherd you through the process. Some financial assistance programs require you to work with specific lenders, while others require you to apply directly and fill out a separate application.
In addition, you may look to even less conventional options, such as seller financing. But be aware these kinds of arrangements are rare and hard to find. Depending on the market, you will likely get more help from a seller if you ask them to pay closing costs or contribute to your mortgage rate buydown. In many cases, we can help you negotiate seller concessions that make your home purchase more affordable.
5. Expand Your Home Search
If you’re having trouble finding a home within your budget, consider broadening your search criteria. You may be surprised by the kinds of deals that are available when you’re willing to compromise.
For example, if you’re struggling to find an affordable home in your target neighborhood, expand your search area and consider homes that are further out of town or that are located in up-and-coming areas with lower starting prices. We would be happy to introduce you to some great but lesser-known neighborhoods that we consider hidden gems.
You could also save money on your home purchase simply by dropping or revising some of your must-haves and settling for OK-to-haves instead.
For example, do you really need two bathrooms and a large backyard? Or could you settle for a single bathroom with space to add a second one in the future? And would a small garden, cozy balcony, or rooftop terrace still give you the outdoor time you crave? These types of compromises can sometimes shave tens of thousands off your purchase price.
Similarly, if you don’t mind rolling up your sleeves or working with a contractor on minor jobs, you can look for homes that need a little TLC. Just because a house looks dated doesn’t mean it’s destined to stay that way or that it will take a ton of money to spruce up. In fact, a home with good bones but cosmetic flaws could be a perfect match: With less competition, you’ll have a better chance of purchasing the home at an affordable price. You can then take your time to save more and fix it up to your taste.
Keep in mind, starter homes are rarely forever homes, but merely a first step onto the property ladder. By gaining a foothold in the real estate market now, you can set yourself up to afford a more expensive property in the future.
According to the National Association of Realtors, in 2021, the net worth of a typical homeowner was $300,000, while that of a renter was only $8,000.9 We can help you find an affordable first home so you can start building equity to reach your long-term financial and real estate goals.
YOU CAN DO IT—AND WE CAN HELP
Buying a first home is challenging, but it’s not impossible—especially when you have a savvy real estate professional in your corner. We will work with you to devise a plan to overcome your financial constraints. Then, we’ll help you find a home that not only excites you but also fits your budget and lifestyle. Give us a call to get started with a free exploratory consultation.
The above references an opinion and is for informational purposes only. It is not intended to be financial, legal, or tax advice. Consult the appropriate professionals for advice regarding your individual needs.
- Housing Wire –
- Realtor.com – https://www.realtor.com/news/trends/death-of-the-starter-home-where-have-all-the-small-houses-gone/
- National Association of Realtors – https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers
- ValuePenguin –
- Pew – https://www.pewresearch.org/fact-tank/2022/07/20/young-adults-in-u-s-are-much-more-likely-than-50-years-ago-to-be-living-in-a-multigenerational-household/
- YouGov – https://today.yougov.com/topics/economy/articles-reports/2022/05/25/american-homebuyers-finanancial-help-parents
- Bankrate –
- Investopedia –
- National Association of Realtors – https://www.nar.realtor/sites/default/files/documents/2022-snapshot-of-race-and-home-buying-in-the-us-04-26-2022.pdf
The other “Big” Thing in the news this past year with housing was the “lawsuits” filed in several states from buyers and sellers complaining about things involved with the legalities administrated by the agencies from state to state for REALTORS® – which boils down to commissions and how REALTORS® are paid. As a REALTOR® myself, I am held to the highest level of accountability as a member of the Williamson County Association of Realtors and I am also a member of NAR (National Association of Realtors). Our industry is like any other profession. We all do our jobs and get paid when you have completed the objectives of your job. For us, we do not have the typical 9-5 job. We are basically “on call” at all times. Most of our clients do not even realize many of the numerous things that we do “on the daily” behind the scenes.
#REALTOR®LIFE2024 – Please keep me in mind as your scroll through all of these options… 😉 This has been circulating for several months now. I absolutely love my job (well – most days lol) and don’t want to diminish that at all by posting this….
SO…YOU WANT TO BE A REALTOR – There is a lot of talk in the news about real estate agent commissions. They LOVE what they do and they do it because they LOVE helping people but there is almost always a huge misconception on what they do and how they get paid. It’s not a secret so here ya go…
The average FULL TIME REALTOR’s earnings last year was $31,900 @ 40+ hours a week. (Notice I wrote full time 40+ hours not 0-20 hours a week) which is well below the living wage. As a REALTOR® they do not get paid an hourly wage or salary and they only get paid if they sell a home and it closes. They can only get paid by broker to broker. As an agent you could work with someone days, weeks, months, or years with no guarantee of a sale ever.
*Essentially we wake up each day unemployed going on Job Interviews and they deal with constant rejection. They dedicate time away from family, use our time, gas, pay for babysitters, miss dinner and weekends and rarely take vacations. They are on 24/7! You constantly need to be on, or you could miss an opportunity. Once they do close a home, half goes to the other person’s agent from the remaining half. They have lots of upfront expenses that must be paid out before they even get paid:
Broker Splits and Fees
Office rent and utilities
Local Association Fees
E&O Business Insurance
Extended Auto Insurance
State Licensing Fees
Showing Service Fees
Continued RE Education
*Income taxes are not taken out so they have to put that aside around 25-30%.
*Don’t forget health insurance if you don’t have a spouse who provides it.
*As a listing agent they have lots of tasks far more than just selling a home.
1. Prepare Listing Presentation for Sellers
2. Research Sellers Property Tax Info
3. Research Comparable Sold Properties for Sellers
4. Determine Average Days on Market
5. Gather Info From Sellers About Their Home
6. Meet With Sellers at Their Home
7. Get To Know Their Home
8. Present Listing Presentation
9. Advise on Repairs and/or Upgrades
10. Provide Home Seller To-Do Checklist
11. Explain Current Market Conditions
12. Discuss Seller’s Goals
13. Share Your Value Proposition
14. Explain Benefits of Your Brokerage
15. Present Your Marketing Options
16. Explain Video Marketing Strategies
17. Demonstrate 3D Tour Marketing
18. Explain Buyer & Seller Agency Relationships
19. Describe the Buyer Pre-Screening Process
20. Create Internal File for Transaction
21. Get Listing Agreement & Disclosures Signed
22. Provide Sellers Disclosure Form to Sellers
23. Verify Interior Room Sizes
24. Obtain Current Mortgage Loan Info
25. Confirm Lot Size from County Tax Records
26. Investigate Any Unrecorded Property Easements
27. Establish Showing Instructions for Buyers
28. Agree on Showing Times with Sellers
29. Discuss Different Types of Buyer Financing
30. Explain Appraisal Process and Pitfalls
31. Verify Home Owners Association Fees
32. Obtain a Copy of HOA Bylaws
33. Gather Transferable Warranties
34. Determine Need for Lead-Based Paint Disclosure
35. Verify Security System Ownership
36. Discuss Video Recording Devices & Showings
37. Determine Property Inclusions & Exclusions
38. Agree on Repairs to Made Before Listing
39. Schedule Staging Consultation
40. Schedule House Cleaners
41. Install Electronic Lockbox & Yard Sign
42. Set-Up Photo/Video Shoot
43. Meet Photographer at Property
44. Prepare Home For Photographer
45. Schedule Drone & 3D Tour Shoot
46. Get Seller’s Approval of All Marketing Materials
47. Input Property Listing Into The MLS
48. Create Virtual Tour Page
49. Verify Listing Data on 3rd Party Websites
50. Have Listing Proofread
51. Create Property Flyer
52. Have Extra Keys Made for Lockbox
53. Set-Up Showing Services
54. Help Owners Coordinate Showings
55. Gather Feedback After Each Showing
56. Keep track of Showing Activity
57. Update MLS Listing as Needed
58. Schedule Weekly Update Calls with Seller
59. Prepare “Net Sheet” For All Offers
60. Present All Offers to Seller
61. Obtain Pre-Approval Letter from Buyer’s Agent
62. Examine & Verify Buyer’s Qualifications
63. Examine & Verify Buyer’s Lender
64. Negotiate All Offers
65. Once Under Contract, Send to Title Company
66. Check Buyer’s Agent Has Received Copies
67. Change Property Status in MLS
68. Deliver Copies of Contact/Addendum to Seller
69. Keep Track of Copies for Office File
70. Coordinate Inspections with Sellers
71. Explain Buyer’s Inspection Objections to Sellers
72. Determine Seller’s Inspection Resolution
73. Get All Repair Agreements in Writing
74. Refer Trustworthy Contractors to Sellers
75. Meet Appraiser at the Property
76. Negotiate Any Unsatisfactory Appraisals
77. Confirm Clear-to-Close
78. Coordinate Closing Times & Location
79. Verify Title Company Has All Docs
80. Remind Sellers to Transfer Utilities
81. Make Sure All Parties Are Notified of Closing Time
82. Resolve Any Title Issues Before Closing
83. Receive and Carefully Review Closing Docs
84. Review Closing Figures With Seller
85. Confirm Repairs Have Been Made
86. Resolve Any Last Minute Issues
87. Attend Seller’s Closing
88. Pick Up Sign & Lock Box
89. Change Status in MLS to “Sold.”
90. Close Out Seller’s File With Brokerage
*As a Buyer’s Agent they also have many tasks:
1. Schedule Time To Meet Buyers
2. Prepare Buyers Guide & Presentation
3. Meet Buyers and Discuss Their Goals
4. Explain Buyer & Seller Agency Relationships
5. Discuss Different Types of Financing Options
6. Help Buyers Find a Mortgage Lender
7. Obtain Pre-Approval Letter from Their Lender
8. Explain What You Do For Buyers As A Realtor
9. Provide Overview of Current Market Conditions
10. Explain Your Company’s Value to Buyers
11. Discuss Earnest Money Deposits
12. Explain Home Inspection Process
13. Educate Buyers About Local Neighborhoods
14. Discuss Foreclosures & Short Sales
15. Gather Needs & Wants Of Their Next Home
16. Explain School Districts Effect on Home Values
17. Explain Recording Devices During Showings
18. Learn All Buyer Goals & Make A Plan
19. Create Internal File for Buyers Records
20. Send Buyers Homes Within Their Criteria
21. Start Showing Buyers Home That They Request
22. Schedule & Organize All Showings
23. Gather Showing Instructions for Each Listing
24. Send Showing Schedule to Buyers
25. Show Up Early and Prepare First Showing
26. Look For Possible Repair Issues While Showing
27. Gather Buyer Feedback After Each Showing
28. Update Buyers When New Homes Hit the Market
29. Share Knowledge & Insight About Homes
30. Guide Buyers Through Their Emotional Journey
31. Listen & Learn From Buyers At Each Showing
32. Keep Records of All Showings
33. Update Listing Agents with Buyer’s Feedback
34. Discuss Home Owner’s Associations
35. Estimate Expected Utility Usage Costs
36. Confirm Water Source and Status
37. Discuss Transferable Warranties
38. Explain Property Appraisal Process
39. Discuss Multiple Offer Situations
40. Create Practice Offer To Help Buyers Prepare
41. Provide Updated Housing Market Data to Buyers
42. Inform Buyers of Their Showing Activity Weekly
43. Update Buyers On Any Price Drops
44. Discuss MLS Data With Buyers At Showings
45. Find the Right Home for Buyers
46. Determine Property Inclusions & Exclusions
47. Prepare Sales Contract When Buyers are Ready
48. Educate Buyer’s On Sales Contract Options
49. Determine Need for Lead-Based Paint Disclosure
50. Explain Home Warranty Options
51. Update Buyer’s Pre-Approval Letter
52. Discuss Loan Objection Deadlines
53. Choose a Closing Date
54. Verify Listing Data Is Correct
55. Review Comps With Buyers To Determine Value
56. Prepare & Submit Buyer’s Offer to Listing Agent
57. Negotiate Buyers Offer With Listing Agent
58. Execute A Sales Contract & Disclosures
59. Once Under Contract, Send to Title Company
60. Coordinate Earnest Money Drop Off
61. Deliver Copies to Mortgage Lender
62. Obtain Copy of Sellers Disclosure for Buyers
63. Deliver Copies of Contract/Addendum to Buyers
64. Obtain A Copy of HOA Bylaws
65. Keep Track of Copies for Office File
66. Coordinate Inspections with Buyers
67. Meet Inspector At The Property
68. Review Home Inspection with Buyers
69. Negotiate Inspection Objections
70. Get All Agreed Upon Repair Items in Writing
71. Verify any Existing Lease Agreements
72. Check In With Lender To Verify Loan Status
73. Check on the Appraisal Date
74. Negotiate Any Unsatisfactory Appraisals
75. Coordinate Closing Times & Location
76. Make Sure All Documents Are Fully Signed
77. Verify Title Company Has Everything Needed
78. Remind Buyers to Schedule Utilities
79. Make Sure All Parties Are Notified of Closing Time
80. Solve Any Title Problems Before Closing
81. Receive and Review Closing Documents
82. Review Closing Figures With Buyers
83. Confirm Repairs Have Been Made By Sellers
84. Perform Final Walk-Through with Buyers
85. Resolve Any Last Minute Issues
86. Get CDA Signed By Brokerage
87. Attend Closing with Buyers
88. Provide Home Warranty Paperwork
89. Give Keys and Accessories to Buyers
90. Close Out Buyer’s File Brokerage
…and the list goes on I’m sure…
Whew…exhausting isn’t it!?!
You don’t need to buy or sell a home to support your agent’s real estate business – here are just a few simple ways to show your support:
*By sharing one of their listings, sending a friend or family member their way
*Letting them connect you with agents outside their area for a broker to broker referral
*Leaving them a positive comment or review this helps them feel seen and supported – (thanks to you)!
I hope the reader is enjoying 2024 so far! As we all know, the year has just begun! I’m always up for anything new and exciting – and that goes for entering into a new year as well! As we embark on the fresh new year and not knowing what the journey ahead may look like, I hope you know that I’m only a phone call away to answer any questions that you may have when it comes to “Moving to Tennessee”!