First-time homebuying in a hostile market: Savannah agents and buyers give helpful tips

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Being a first-time homebuyer can feel intimidating in a normal cycle. Throw in soaring prices and disappearing inventory, and it can feel nearly impossible.

That's what first-time homebuyers Madison McCabe and Logan Mamer experienced in their five-month search for the perfect house in the Savannah area.

"How in the world are we going to be able to buy a house in a destination place like Savannah?" said Mamer, recalling that time period.

The couple described rushing to a house two hours after it hit the market.

"When we showed up, there was already somebody in the house looking at it," McCabe said.

"...we were like the fourth people in line already," said Mamer.

McCabe and Mamer's hunt for a home is what one would typically expect in a market like this. However, each homebuyer's experience is unique depending on the type of home they are looking for and their financial situation. There are, however, a few basic guides that one should follow when looking to purchase a new home.

Get mortgage preapproved

From speaking with local Realtors and buyers, almost all said mortgage preapproval is the first crucial step to buying a first home. Getting preapproved from a lender will tell a buyer how much they are able to borrow and how much they can afford.

"It just makes it easier when you know everything up front," said Brent Palmer of Waterline Real Estate, an agency located on Tybee Island. "And in this market you want to have everything in line."

In this step, the lender will review your financials and credit. Having that preapproval letter is almost a prerequisite in today's market, said Palmer.

Once you have that letter that says you are good to go, he said, that makes you a much more competitive candidate when you make an offer on a property.

Be prepared for due diligence

Once your offer is accepted, the property goes under contract and the would-be buyer enters what is called a contingency period, also referred to as the due diligence period, where an appraisal on the house is ordered and inspections conducted. Various documents can be ordered and reviewed by your lender before you are able to close on the property.

In short, it is a period of review to make sure the property is what the buyer wants and that the buyer is legitimate.

"The main thing is providing information that your lender wants as soon as possible. That always speeds up the process," said Palmer.

For first-time homeowners Alex and Janelle Lowry in Ardsley Park, that process was hectic.

"The mortgage bank that we used...they called one day and they're like 'We need this piece of information in like an hour or else this could fall through,'" said Alex Lowry.

The bank wanted to see Janelle Lowry's grad school transcript to prove she had completed her degree.

"Because of everything that happened in 2008 you basically have to give them your DNA," said Alex Lowry, referencing the housing market crash, the main cause of which was lax lending standards.

"You're never fully prepared for everything," Alex Lowry said.

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JoAnn Hodnett, a resident in Halcyon Bluff, said the best way through that period for her was to keep in constant contact with her lender and seller.

Hodnett advises other first-time homebuyers to "make all those contract amendments to make sure that you're satisfied; do not be afraid to ask for what you think you need or what you should get out of the deal."

Hodnett bought the property she was renting without a Realtor involved, but her advice still stands even with an agent to mediate the process. Because she had a close relationship with the seller already, she said the process was simpler, but "it was 100% a lot."

"It was incredibly overwhelming," she said, "so I give major props to people who have Realtors."

Know what you want in a house

For 43% of recent buyers, the first step that they took in the homebuying process was to search online for properties for sale, according to data from the National Association of Realtors (NAR). Another 18% contacted a real estate agent first.

Lori Riley, a single mother of two, has been thinking of buying a home for years. Before even contacting a Realtor, she signed herself up for a homebuying program class. She had also gotten preapproved for a first-time homebuyers' program through her employer, St. Joseph's/Candler Hospital.

"I had already taken all those steps before I contacted a Realtor and started looking," said Riley. "I know I had to bring up my credit and pay on a couple of things and try to take care of things."

Riley said she knows she wants to find a home with four bedrooms, but will settle for a 3-bedroom, 2-bath residence considering how difficult the market is for buyers right now.

Although not everyone has to be as proactive as Riley, it may help to do the preliminary research and know the kind of home you want.

"I would recommend go ahead and start doing your research, see what's out there, see what things have sold for, see what's available," said Palmer.

Lana Sanders, Savannah-area Realtor for Engel & Volkers, recommends the same.

"They have to take into consideration their lifestyle," said Sanders. "Some people, they want everything new, so new construction is really attractive to them. And then there are people who think old construction is better built."

She adds that if the buyer is looking for a home to appreciate, "they should pioneer in town," referring to arena closer to the downtown area.

On the contrary, still-developing suburban areas such as Pooler, Richmond Hill and Georgetown may experience limited appreciation in the next few years, said Sanders.

"As long as there is land available to develop out there, your property's not going to appreciate that much. As long as they're building, you're going to be competing with new construction," said Sanders.

Work with an experienced realtor

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Before deciding to work with a Realtor, Mamer and McCabe scoped out the market themselves.

"For a long time, we were trying to hunt stuff on our own," said Mamer, "There's houses that just popped up on the market, and they're gone immediately. Then there's other ones ... and you get into the house and realize why it hasn't gone like the others."

He and McCabe eventually decided to work with a real estate agency and found a house in the Thomas Square district. "We wouldn't have known about half the houses if it weren't for a Realtor," he said.

According to survey data from the NAR, 88% of buyers recently purchased their home through a real estate agent or broker, and 6% purchased directly from a builder or builder’s agent.

Mamer and McCabe's Realtor, Chelsea Phillips from Six Bricks Realty, said she had to get creative in the homebuying process. She looked in neighborhood groups for sellers, asking if anyone was thinking of putting their property on the market.

"It didn't even go in MLS (multiple listing service) until after they were past due diligence period," said Phillips of the couple's first home.

After nearly half a year of searching, the couple made a successful offer on a house before it even went to market.

Sanders recounts the same methods.

"I kind of turn over rocks and find some that aren't on the market or aren't on the radar at all and get it under contract before it's even coming," she said, "I would say to definitely work with an experienced agent."

Expect to compromise

"Of your whole list of 'haves and wants,' be prepared to compromise on at least 30% to 40% of them," said Sanders.

She said many first-time homebuyers have a vision of their perfect house, but they have to manage their expectations.

"They want three bedrooms and two baths and a fenced in backyard, but they might have to sacrifice on the garage," Sanders said as an example. "Or sometimes they have to compromise on how many bathrooms."

Part of the process is figuring out what really matters to the buyer, Sander said. However, she warns one shouldn't compromise on key things like age of the roof, age of the mechanical systems and the overall structural integrity of the home.

"The condition of the house is paramount to all the other stuff that is more easily changed," Sanders says referring to cosmetic and design aspects of the home.

In the end, Realtors said to make sure there are no big-ticket items within the first few years of purchasing.

Be patient with the current market

Lastly, buyers should expect to spend ample time searching, especially in this market.

"We were in a position where we can be patient and didn't have to force ourselves into a home we didn’t love," said Mamer.

Phillips said the couple "lost out again and again," but, in the end, the wait was worth it. Even then, their final home wasn't the picture perfect place they had in mind, but the couple was also able to be patient in terms of compromise, she said.

"They got more and more comfortable being willing to do projects and add their own sweat equity," said Phillips.

One last piece of advice McCabe and Mamer had for other first-time home buyers is to be prepared for the plunge.

"The scary part is when you're ready to make that offer, you have to be ready to go all in. You're going to have to act very quickly and be very confident in what you're doing," said Mamer.

Nancy Guan is the general assignment reporter covering Chatham County municipalities. Reach her at nguan@gannett.com or on Twitter @nancyguann.

This article originally appeared on Savannah Morning News: First-time homebuying in a hostile market: Savannah agents and buyers give helpful tips