Uncategorized April 22, 2020

First Time Home Buyers | You Need to Know This

We put out a new video on our YouTube Channel, H2HomesNW. It’s packed full of valuable info.

As real estate agents, we work with a lot of first time home buyers. One common thread among them are the questions they ask… and the ones they don’t. Some of those important questions include:


  1. How much of a down payment do I need?
  2. What are closing costs?
  3. How much does a real estate agent cost?
  4. BONUS TOPIC: What the heck is earnest money?


We’ll answer all of those questions in this blog post:

You did it! You’ve made the decision to buy a house. You want it to happen. You’re tired of renting, and you’re ready to own something of your own. It’s going to happen.

…now what?

Buying a home, whether it’s the first time or the third time, can be a daunting process, but it doesn’t have to be. Hiring the right real estate agent can make the difference between a relatively smooth transaction or one that leaves you frustrated and discouraged. As real estate agents, we meet a lot of people at open houses. This is usually where we meet the majority of our first-time home buyers. While we share our information with everyone interested in having a conversation, we also understand that not all of those conversations will turn into future client relationships. Some personalities will gravitate towards us, and some won’t – but that’s ok! In fact, that’s what makes our specific client relationships so unique to us. We’re not salespeople. We’re relationshippeople. And the clients we work with will connect with us in ways that are rooted in trust, knowledge and honesty. We invite Buyers to get to know us and ask questions in a Buyer’s meeting. Typically, our buyers meetings are more robust than what we can cover in a blog post, but for the sake of scratching the surface and hitting some really important key topics, let get started.

Let’s start by talking about Agency.

Why do I even need a real estate agent? Why can’t I just find a house on my own?

If you find a house on your favorite real estate website, chances are, the seller of that house is represented by a Listing Agent. If you contact that listing agent to purchase that home, they CAN legally represent you. BUT! They already work for the Seller, and their legal duty of loyalty and confidentiality ALSO already belong to the Seller.  Buying a home is a significant moment in your life that comes with significant financial and legal responsibilities, having an agent whose priority is your best interest and only your best interest is essential.

Ok, great, as a buyer, how much will it cost to work with an agent?

That’s an excellent question, usually, when the Listing Agent and the Seller discuss how to market that home, they also discuss agency fees. In WA State, most of the time, the Listing Agent will offer half of their agency fees to any Buyer’s agent who brings an offer. That is where we come in. That’s how we get paid.

So what you’re saying is, as a buyer, hiring an agent to represent me ensures that I have someone advocating for my best interests but it doesn’t cost me anything, right?

Correct. In fact, the opposite is true. It will likely cost you money as a Buyer if you choose to be represented by the Listing Agent, instead of hiring a Buyer’s Agent.

So, as an Agent, what would you say is an important aspect within our role that you bring to the table for your clients?

As a Buyer’s Agent, it’s our job to make sure that our clients are well educated in the process and the market, are well prepared to make an offer, and it’s important that our buyer’s feel confident to allow us to negotiate that offer on their behalf.  And once we are under contract it is then my job to help navigate the closing process.

Let’s say, for the sake of this situation, I’m a first time home buyer. I want to make an offer on a home. How much do I need for a down payment?

That’s actually a great question. We delve deeper into this during a Buyer’s meeting, and we always recommend that one of the first steps in searching for a home involves sitting down with a Mortgage Lender to better understand your budget. That being said, for most buyers, having a minimum of 3-5% for a down payment is required.

Ok, that makes sense. So a down payment that I’m comfortable with, plus the remainder amount that I owe for the total price. Is that all the financials I’m responsible for?

That is ALSO a great question, and one that is often missed from first time buyers. Yes, there are what is called Closing Costs. They are additional expenses that the Buyer is typically responsible for. Those can include Origination and Lending Fees, Title and Escrow Costs, and prepaids: Things like prepaid insurance, prepaid taxes, prepaid interest and even utilities.  Those costs are generally around 1-4% depending on if you take out a loan and what kind of loan you have taken, sometimes upwards of 5% if you are buying down an interest rate, but this conversation should really be had with a lender.

One last question to address. What the heck is Earnest Money?

In the simplest of terms, think of Earnest Money like a deposit that is applied to the cost of the home at closing. This can be part of your down payment. Having an Earnest Money deposit not only strengthens your competitive offer, but it displays the level of your commitment and interest in purchasing the home. It’s a lot harder to walk away from a transaction when you are already financially invested. On average, the amount for that Earnest Money in Seattle varies from 1-3% of the purchase price for the home you want.

As a buyer, if I want to walk away from the transaction, is that money refundable?

If the appropriate contingencies are in place in the contract to protect the buyer and their earnest money, then yes.  This is another huge reason to work with an agent who will work for your best interests.

We provide more information and a deeper understanding of these topics and more when Ashli and I host Buyer Meetings. We can send you our Buyer Presentation if you click the link shown here. We’ll have it down below in the description, in case you missed it. It doesn’t cost you anything to get this, and we promise not to flood your inbox with a bunch of unwanted emails. We offer this because buying a home is a really big decision, and it’s helpful to you, The Buyer, to have an informed starting point.

We’re always happy to chat! Until next time, stay healthy and happy.

-Joe and Ashli