Dear Monty: We are first-time home buyers. We didn’t plan on buying a home for several years. We recently learned that we will soon receive a substantial gift. Our benefactor conditioned the present on a home purchase. We both have satisfying careers and secure positions but need more knowledge or experience in buying a home. We would appreciate your help in getting started. What are the steps we should take to buy a home?

Monty’s Answer: First, it is essential to confirm the gift details. You will need a letter from the person who will release the funds and under what conditions. Depending on the size of the gift, you may need a mortgage. Different types of lenders make mortgages; banks, mortgage brokers, and credit unions. Shop each type to learn their differences, as you will also determine the price range you can comfortably manage. You may not hear two crucial points: the ongoing maintenance costs of home ownership and the five-year rule. When using an agent, this rule is a factor but not an issue with a for-sale-by-owner (FSBO).

Six steps to making an offer

1. Consider the future now. Will you ever relocate? Are children present now or in the future? Is the location of family members to be considered? Do you want an urban or rural setting? Here is a Dear Monty column that will be helpful as you think of the future.
   
2.  Know your city well. Understand the traffic patterns, recreation, entertainment, hospitals, airports, tax rates in suburbs, schools, and distance to work unless you have remote work. There are differences in neighborhoods; age, pride of ownership, crime, industry, and more. You can learn what you need with two or three hours of research and a pre-planned city and neighborhood tour.
   
3.  Gather unbiased website information. Local government planning departments, USPS, county and state governments, real estate websites, crime reports, sex offenders, and local municipal GIS sites are excellent sources. As you explore these avenues, you can make informed choices on neighborhoods. Only choose three areas.
   
4.  Now collect real estate data. Focus on current listing and sold comparable sales in the past year or two. Gathering neighborhood sales information helps build your experience bank on evaluating a home—practice pricing by touring an open house without a data sheet. Then make a guess. 
   
5.  Enlist scouts in your neighborhoods. Locate a co-worker, family member, or friend living in the area. Make them aware you are looking. National Association of Realtors (NAR) research states that about fifty percent of FSBOs knew the buyer. So a friend on social media may know of a home coming up. Treat leads urgently.
   
6.  Use time-saving tools. Is there a video when a home pops up? Use Google Street View and Google Earth Flyover. You can save time if you don’t like the floor plan or if there is a nuisance next door. Sellers that furnish a virtual home tour are saving you time, and saving themselves time by preparing for a showing and the buyer walks in and immediately knows it won’t work.

Many first-time home buyers need to prepare better for the experience of buying a home. They are in a hurry. Buying a home is likely the most expensive purchase they will ever make. With our busy lives, it can be challenging to find the time. You are prepared to make an offer by following the steps listed above. Anecdotally, homebuyers that invest the time have more confidence and better results. Please take your time and remember the Five-Year rule.