Purchasing a property can be a simplified process if you know the requirements and employ a knowledgeable realtor with your best interest at heart. Recently 21Ninety caught up with Nicole Handy of the Braden Real Estate Group to get the ins and outs of purchasing a home. Nicole is a chemical engineering graduate of the illustrious Prairie View A&M University. She left her corporate job to pursue her passion in real estate. With nearly a decade under her belt, this is more than a job for her; it is Nicole's calling. Because her family name is intertwined into the business, Nicole is implored by self-motivation and family legacy.
"One of our guiding principles is treating our clients like family because we are a very family-oriented business," she said. Nicole talks, nontraditional loans that entrepreneurs are taking advantage of, credit score requirements (a 580 in some cases), how to find your perfect home in today's market, and what to expect during the home buying process. The real-estate mogul also encourages you to find a niche realtor with a clear understanding of what you want in a home.
21 Ninety: As a realtor, what would you say is the most challenging aspect for a client looking to purchase a home?
Nicole Handy: Because of how the market has vastly changed since COVID-19, setting the realistic expectations of the available inventory and how it compares to the client's financial situation, essentially what they qualify for. Due to the pandemic and the fears of an economic crash, the government substantially lowered the interest rates for mortgages. If you keep the housing market strong, you keep the economy strong. When the rates declined, then that created a demand. But also, what happened is that the home builders and people in the housing industry got scared and didn't think the market would take off the way it has. Many builders slowed everything down while the demand for homes went up at a very rapid pace.
The most significant factor is helping people have a realistic understanding of the inventories they can afford today. And honestly, a lot of it's sad, and it's unfortunate. I've heard this several times that people feel like they're just settling for a home just to be a homeowner.
21Ninety: How would you encourage first-time buyers in this market? What would be strategies or tips for them to get as close to possible the house they want in this market?
NH: I encourage my clients, especially first-time home buyers, to look at their home purchase as an investment. Many people don't realize this, but owning property is just another form of a bank account. You don't have the liquid cash but what you do have is what I call "house rich." You have equity in your home. Don't look at it as "I'm settling for a home right now." Look at it as "I'm purchasing an investment that's going to grow in value."
I tell my clients to focus on areas where the home values are appreciating more rapidly than other areas. Focus on the areas where there is development; there's constant change. When you see new development and growth, you see home prices grow as well. Just because you're not getting your dream home today, this is your first home to set you up for your dream home. When you purchase a home today, and it appreciates at a rapid rate, the price that you paid today would not be the price that you sell it for tomorrow. By allowing your home to grow in value, increasing equity gives you options.
21Ninety: As an investment, it comes with a lot of upkeep. How much should a person who's purchasing a home put to the side, or have to the side for the upkeep, like plumbing, electrical, roofing - anything to keep the house in pristine condition so when they're ready to sell it, they can do so?
NH: It varies depending on the size of the home and the components of the home. On average, you should be saving anywhere from five to ten percent of your mortgage payment every month for those maintenance items. The best thing that you can do for yourself is to keep up with your maintenance schedule.
21 Ninety: Another thing I have observed that surprises first-time homebuyers are property taxes. Can you explain how property taxes work?
Every area is going to have its own property tax rate. The rate is going to be depending on what we call jurisdictions. We're going to take their rate for that area multiplied by the value that the county appraisal has assessed for that home. That's how you get your yearly property tax. Now your mortgage company is going to take your yearly estimated tax amounts, then divide it by 12, and they're going to charge it to you monthly in your mortgage payment.
21Ninety: So in addition to your mortgage, the company will add your taxes?
NH: Yes. The mortgage lender will charge it [your taxes] monthly. It's included in your mortgage payment. It is going to put it in an escrow account, a holding account for you. The account holds your taxes (and insurance until the end of the year). At the end of the year, they will pay the bill for you.
For example, there are no down payments for veterans in Virginia who are 100% disabled-they don't have to pay property taxes. So that substantially increases their buying power. I recently had a client here that got approved for a VA loan with their purchase price of $300,000. Because they were a hundred percent disabled, their mortgage payment was adjusted from $2,400 a month to roughly $1,600 a month.
21Ninety: Let's look at what a potential client should look for in a realtor?
NH: You want to look for a realtor that is knowledgeable and competent. The realtor should be educated on the various aspects of the market regarding how it relates to you. And that includes the different loan products that will be advantageous to you and the different homes and home products. You also want to ask for referrals. It's okay to interview realtors. You don't have to go with the first realtor that you see. You want to make sure the realtor is an advocate for you.
21 Ninety: Is there anything else you would like to add?
I want people to know that their representation matters. Many people tend to have the notion that they get a better deal when they don't have a realtor. But unfortunately, a lot of times, the deal is worse off because you don't have a realtor advocating for you to get the best deal. Any sales professional that is trying to sell you a home works for the seller. They're going to have the seller's best interests in mind at all times; no matter how good the deal sounds to you, their priority is to sell it.