THE HOME BUYING PROCESS

Congratulation on your decision to buy a new home! This will mark a significant and positive change to your life style and to your financial future. For some of you this information may seem repetitive; be patient. This process has been laid out for the first time homebuyer, as if you had no knowledge of real estate.

 We start from the beginning and touch on every aspect of the process so you will not encounter too many surprises. Remember, I represent you and your best interests as your Buyer’s specialist (PLEASE SEE THE BUYER’S AGENCY DISCLOSURE).

Financing – A lender will need to look at your situation to determine how much you can spend. They look closely at:

• Credit History

• Debt to Income Ratio – You may want to hold off on other purchases until after you close on your new home. Also, you may want to work to get your credit card bills down.

• Funds for Down Payment –There are so many loan programs available now, you will want discuss with your lender, which is best for you.

• Work History – You must prove you have worked in a related field for 2 years.

(NOTE: Remember, you do not have to be strong in all of these areas, but one area should compensate for another. Your lender will help you sort through the details of your financial picture. The details are kept confidential between you and the lender.  In today’s market, it is important that after your lender has examined your financial situation, that I receive a Letter of Pre-approval (this is different from a prequalification).

The lender will provide you with a breakdown of estimated closing costs for whatever amount you are able to spend. This will avoid surprises and allow you to feel good about your financial position and your Offer on the new home.  

Market Evaluation/Education – At this point we will discuss your Home Search Criteria in detail. Where you want to live, what features you want in a home and which aspects of the property are most important.

(NOTE: You may wish to purchase and use a Thomas Guide, which is a book of detailed maps of the Metro area; RMLS property profiles use TG coordinates. This will enable you to easily locate the neighborhoods and homes currently available for sale.

 Search – During the search, we work as a team, or as a committee. Once we have an outline of what/where you want to buy. I’ll do a comprehensive search for you, providing you with computer printouts & emails of all the properties on the market that meet your criteria. Please review, drive by if you wish, and let me know what you think. This will help us to narrow down the choices.

You may wish to clip newspaper ads, read the brochures at grocery stores, or go searching neighborhoods on your own. Then, if you would like additional information and/or like to see the property, give me a call. I can get additional property details and arrange tours the properties together. (Note: Our search should include all properties, including ‘For Sale By Owner’).

Previewing Homes – This is when your Thomas Guide will come in handy. It easily directs you to the active listings. As I email profiles that meet your criteria you may want to do a preliminary drive by to check out the exterior, neighborhood, etc. Through this process we can exclude homes that are not acceptable and plan to thoroughly view anything that looks interesting.

(NOTE: I am available for an opinion on value…but not to tell you what or where you should buy. It will be your property; I will give you the tools to make a strong decision).

Viewing Homes – Anything that looks interesting, I’ll arrange a time to show you the inside. Please try to give me a 24 hour notice. It works best if we see 3-4 houses at a time.

Making An Offer – When you find the right home, I write up an Earnest Money and Sales Agreement. It’s a 8 page document by which you will tell the seller the price you are willing to pay, what type of financing you’re using, how much your down payment will be, what closing date you want, when the offer will expire, etc. You also sign a promissory note or write a check for the earnest money (i.e. $1000-4000 or more). A promissory note states that within so many business days of mutual acceptance you will provide the money to me to be deposited into an escrow account. Your money stays there until closing where it’s credited towards your down payment and closing costs. This earnest money makes you a serious buyer in the seller’s eyes. Once the forms are filled out, I present them to the seller and begin the process of “selling” you and your offer.  This is when it is imperative for me to have the Letter of Pre-approval to accompany your offer.

Acceptance/Counter Offer/Rejection (Negotiation process) – These are the options available to the seller. If your offer is accepted we move into the inspection period. If the seller counters, you can accept/counter back/or reject. Keep in mind there has to be a “meeting of the minds” somewhere. You must weigh how much you want the home.

Inspection Period – After you have a signed sales agreement you have a period (I suggest 7 days) when you have the option to have the home professionally inspected. I strongly encourage that you do so. I can recommend a good inspector or you may choose your own. I schedule the inspection for you and attend it with you. A simple inspection will cost between $270 and $370 or more) based on the square footage of the home. You will have a lengthy report on everything from pest to plumbing and any potential problems. If there are problems, you can either fix them yourself after you take possession or negotiate with the seller to fix them, or walk away from the contract. Your earnest money will be refunded to you and you will have no further obligation.        NOTE: Once we pass the inspection period, your earnest money becomes non-refundable if you should later choose to walk away from the transaction.

Appraisal – Your Mortgage Broker will discuss the consequences of the appraisal with you. The lender must decide that the home is worth the amount of the loan requested. Sometimes the lender will ask for “Lender Required repairs”. These are usually major items like a new roof – items that will have come up in the inspection. These are negotiable items between the Buyer and the Seller. NOTE: The Buyer is responsible for the appraisal cost.

Escrow/Title – An escrow account is opened in the name of your transaction. The Title Company is a neutral clearing house, but the Sellers normally choose the Title Company and escrow officer. Escrow handles the Title search, funding process, and official recording. You will receive a Preliminary Title report, Covenants, Conditions & Restrictions (CC&R’s) on the property. This process traces the ownership of the property and establishes your right to take Title to the property, i.e. to legally own it. Careful review and any prudent questions need to be addressed with the Title Company at this point. All funding and official documents are gathered in the escrow process and prepared for the Sellers to sign off and you to sign on.

“Closing”– Once the funding & documents are in order; you and the Seller will be called in to the Title Company to sign final papers. At this time you will need to bring in a cashiers check for the balance of your down payment and closing costs. Signing will take place before the official “Closing Date”. The signing can take from one –two hours; there are a lot of papers to sign.

Possession– If the Sales Agreement states that you take possession at closing then once the Title Company informs us that the transaction is recorded; you get the keys and have access to your new Home. (If you had agreed to an alternate possession date then you will receive the Keys as you had agreed to).

Congratulations!!! You are a new Homeowner!!!