Expert Tips for First-time Buyers in D.C.

From beautiful homes on the Potomac River's shores to the National Mall's scenic views, the District of Columbia has plenty for first-time homebuyers to get excited about. 

Chances are you will want to get out immediately to start attending open house tours to find your dream home in Georgetown. Yet newcomers to the market that jump in without preparing can miss out on learning about D.C., getting a great deal, and even getting money back at closing. 

That is why we've put together a few expert tips for first-time home buyers in Washington, D.C. 

Tips for first-time buyers in D.C.

• Start with a wide search
• Budget early and often
• Get pre-approved for a mortgage
• Hire a great local agent
• Ask your agent for a commission rebate
• Prepare for competition

Start with a wide search 

Starting with a general search gives you an idea of what home styles you can expect to find and sale prices across the Washington, D.C., Maryland, and Virginia region. 

While you may want to find a home on the shores of the Potomac, consider factors like your career and commute. A condo in Adams Morgan or a Federal rowhouse in Capitol Hill might be better options to avoid a long commute to work. If you only need to be within the Beltway a day or two a week, a larger home in Bethesda or Alexandria may fit your goals. 

No matter where you end up moving, starting your homebuying journey with a search shows you how much you need to budget to buy a home. 

Budget early and often

D.C. is an expensive city when buying your first home, and you want to make sure you're putting money aside as soon as possible. 

While many people start saving and budgeting for a down payment, they may not consider extra cash for other costs. Starting sooner rather than later is essential as you will have to face down a down payment, totaling up to 20% or more of the home's purchase price. From there, you have to prepare for closing costs. 

Depending on the house, closing costs for loan origination, appraisal fees, and title searches can run you 3% to 6% of the home's purchase price. While the seller technically pays the broker fees, they factor that cost into their sale price, which can total up to 6% of the cost of the house. While you can purchase a home without a broker, buyers who work with the right agent transform their homebuying experience. 

But before you start making calls to brokers, contact a lender to get started on the pre-approval process.

Get pre-approved for a mortgage 

Unless you are making an all-cash offer, you will need a home loan to purchase a house. But you will want to make sure you understand how much you are likely to be approved for.

Many sellers in Washington, D.C., will only consider an offer if you have a pre-approval letter from a lender. As such, you should prepare a list of lenders in order to learn about their loan programs.

As you set up introductory calls, organize your W-2s, a list of assets owned, and check up on your credit score. Mortgage lenders will request a credit report if you need a conventional loan, VA loan, or FHA loan, so you want to be ready ahead of time with your information. Shopping around for lenders is good, as you can leverage their terms against each other to find the lowest interest rate and optimize for your monthly payment and closing costs.

Plus, this process educates you on loan products and which ones will match your homeownership goals. If you relocate to Washington, D.C., for only a few years, an adjustable-rate mortgage might be your best bet. A fixed-rate mortgage is great if you plan to set down roots in The District. If you need payment assistance, you can also explore that with your lender. 

Hire a great local agent 

Local real estate agents can fill you in on the nuances of the real estate market in The District, helping you figure out what property taxes and neighborhoods best match your life needs and budget. 

Essentially, your buyer's agent guides you through the purchasing process, helping to refine your search and connecting you to experts for home inspections, third-party appraisers, and lawyers. When crafting offers and negotiating, you want an expert in your corner who has closed many deals in the D.C. area. 

Your agent should know the market conditions well enough to suggest what concessions you should and should not ask for. But most importantly, your agent should be able to provide you with a commission rebate.  

Ask your agent for a commission rebate 

As you interview brokers, ask them about their experience selling and buying across the city and if they can provide you with a commission rebate.  Sometimes called a commission refund, this tool allows your broker to provide you with a portion of the buyer broker's fee at closing. 

Prevu offers the largest commission rebate in the DMV area, totaling up to 1% of the purchase price of a home. These funds can go a long way for first-time buyers, helping them remodel a storied Federal home in Georgetown or rebuild savings after hefty closing costs. 

Prepare for competition in any market

Whether you are in a buyer's market with plenty of homes to choose from or a seller's market where you face bidding wars, you must prepare for the competition that comes with buying in D.C., especially well-priced homes that list for sale.

The best way to get ready is to move fast and have all your paperwork and funds in order. Moving fast can make the difference between getting the home of your dreams at a reasonable price or being told by the listing agent that the seller is only taking the best and final offers. 

If you find your dream home in Woodley Park, make an offer that reflects your home value. Lowballing a seller sometimes works, but the best way to woo them is with a substantial offer reflecting your interest in the property. 

Interested in buying a house in Washington DC? Browse listings and see how much you can save with Prevu’s Smart Buyer Rebate.