Plain Talk for First-Time Homebuyers

The Motley Fool is out in Seattle and today we stopped by Redfin to learn more about its unique position in the real estate industry. Vice President of Analytics and New Business Adam Wiener met with us to discuss how Redfin leverages technology to bring more value to the real estate transaction.

Adam's advice for first-time homebuyers? Be prepared. He explains some of the things new buyers need to know about the real estate market before taking the plunge.

To view the full interview, click here.

Austin Smith: Given that you are super advocates for buyers and really customer-facing, what advice would you give to people looking to buy homes today in this market, all things considered, based on the trends you're seeing?

Adam Wiener: I think that the best thing to do right now is to really educate yourself about the market ahead of time. Make sure that... it's very difficult to make an opportunistic purchase right now unless you do happen to have the cash to do that, so you want to understand what neighborhoods, what schools, really where you want to be and what you can afford.

The more prepared that you can be, actually going into a transactional phase... so go and talk to a lender. Figure out how much you can afford to get a loan for, what programs might be available to you. Talk to an agent ahead of time. Make sure that you understand the process.

I think what a lot of people need to do on the buying side right now is get emotionally prepared that it is competitive out there. I've seen some people shy away from a particular property just because there's going to be competition and they don't want to go through that bidding process. It's an uncomfortable feeling.

But that's the reality right now, that in some markets we're seeing 50% of the homes being competitive, and in some markets we're seeing up to 90% of the sales being competitive, so some of it really is just emotional preparation -- knowing that, as a buyer, it's a pitched battle out there right now.

Austin: I assume you guys have a lot of resources online to identify what you can afford and put schools on the map and see where you sit?

Adam: Yeah, that's absolutely true. I think one of the first things is -- once you do get serious about a transaction -- those instant alerts that I talked about, where you know before anybody else what's actually for sale, is one of the key things that Redfin can help you with. It gives you an unfair advantage against the market, as well as that prep phase of being able to do the research.

You can search now by school district, so if there's a particular high school or middle school that you want to be within that boundary, you can just type that right into the search box, the same way that you could type a zip code, and it'll show you the homes that are for sale within that boundary.

Now, that's something that the buyer should always verify before they actually write an offer, but it's a tool to help them start to make a shortlist of the homes that they're potentially interested in.