It is important to realize that you are about to make a very serious and important choice. Make sure to ask plenty of questions! No one ever purchases a home wishing that they had asked fewer questions once the transaction has been completed. The key to a successful home buying experience is a good team of professionals.
Below is a guide to the process with links to definitions or useful information in green underlined text.
1. Use a Buyer Agent
When purchasing a home it is a good idea to be represented by a REALTOR® It is even better to have a Buyer’s Agent who will represent you and your needs throughout the transaction. I studied and earned the designation – Accredited Buyer Representative.
Since purchasing a home is one of the biggest financial decisions that you can make, it is important to have an expert on your side who will not only help you find a home to make an offer on, but guide you through the often tricky and emotional process of purchasing a home. In almost every case it costs you nothing to use a Buyer’s Agent to purchase a home. My services are free to you because the Seller pays the commission in a transaction.
2. How much can you afford?---Get Pre-Approved and/or Pre-Qualified for a Mortgage
Now that you know have an idea of what you want in your new home, you need to find out how much you can afford. There are two ways to approach this step. You can either get pre-qualified or pre-approved for a mortgage. If you do not know of a mortgage lender I can help by giving you the names of mortgage professionals I have worked with who have taken good care of my clients.
The pre-qualification process is the simpler of the two approaches. This step involves having a general talk with a lender about how much money you make, your debt load, and how much money you have available for a down payment. The mortgage lender will not ask for any verification for the numbers at this point. With this general information the mortgage lender can give you a rough estimate of how much of a loan you might qualify for. Be aware that the mortgage industry is changing daily and so this is merely a guideline.
Getting pre-approved is a much more involved process as you are actually applying for and qualifying for a loan for a specific amount. The lender will take all pertinent information regarding your finances perform an extensive check on your current financial status. With this more extensive approach a mortgage lender can better come up with a figure as to how much of a loan you can afford.
Since the pre-approval process is the more in depth approach it shows Sellers you are more serious about buying a home because you have taken the extra step. Either process that you choose is a good idea because it gives you a better idea as to how much you can afford.
3. What are you looking for?
There are many things to consider that will affect your search once you decide to buy a home…Why is it that you have decided to purchase a home? When do you plan to move into your new home and how long do you plan on living in this home? Where is it that you would like to live (close to work, in a certain community, schools etc..)?
An important exercise to create is the “Wants and Needs” list. This involves creating two lists, what you want in your new home and what you need in your new home. Most likely you have a mental picture of what your new home will look like. Start off by jotting down the image you have in your mind. This is your “wants” list. The second list that you will create is your “needs” list. This list should include all the things that you must have in your home. It is important to write these answers down so that you can reference them once we start your home search.
Examples of things you might have on these lists are:
• Convenient to work
• Convenient to transportation
• Convenient to schools
• Convenient to shopping
• Near parks or other recreation facilities
• Preferred style (2 story/ranch/split entry/etc.)
• Number of bedrooms
• Numbers of bathrooms
• Family room
• Home office
• Kitchen amenities
• Garage (number of cars)
• Central air conditioning
• Lot size
• Fenced yard
In a perfect world, your new home would have all your wants and needs. In the real world, you will end up blending these lists together and prioritizing them once you have seen what is on the market.
4. Find a Home
Armed with your “Needs/Wants” list and the information from the mortgage professional, you should have a good idea of what you can afford, what type of area you want to live in, and what you want inside your home. Now we begin the search for your new house. The most efficient way to find a property tends to be the Multiple Listing Service (commonly known as the MLS). I have access to all of the area the MLS systems and can keep you up-to-date on the available properties that meet your criteria in the areas that you have specified. Once you have found properties that intrigue you, I arrange for a tour of the property.
5. Make an Offer
Once we have found the home you would like to purchase, it is time to make the offer. An offer is a legally binding statement of your interest in buying a property. Together we will review the information I gather to help you will come up with an amount of money you are willing to pay and a time frame as to when you are going to purchase the home. I recommend that your offer be contingent on completing a satisfactory inspection of the property. Of course the most important factor is your lender approving the loan. With your offer you will also need to provide a deposit—or earnest money to show the Seller that you are seriously interested in purchasing their home. If the contract is accepted will be applied to the purchase price, otherwise, it will be returned to you.
6. Negotiating the Offer
Negotiating an offer to purchase a home is a very emotional process. I have experience negotiating, and have a vast knowledge of the local Real Estate market and am ready to handle the negotiating process. There are many variable besides price that may need to be negotiated. They may include, closing date, financing, closing costs, repairs that need to be made prior to closing, appliances and fixtures, landscaping, and painting.
It is important to know that the negotiating period can involve a number of counter offers which can be very draining on home Buyers and the Sellers. A successful negotiation cannot happen when there is an adversarial relationship between the buying and selling side which can create a winner take all attitudes.
This is a business transaction which requires a give and take approach to make both parties comfortable and lead to a successful close. It is easier to close on a home when both sides feel good and not cheated.
7. Contact a Real Estate Attorney
I am not an attorney and thus can not give legal advice. Purchasing a home is a huge financial and legal transaction so it is a good idea to have a real estate attorney or professional settlement agent working for you. I work with numerous qualified professionals I happily recommend.
8. Conduct a Home Inspection
Once your offer has been accepted. You should have the home inspected, even if you are purchasing a newly constructed home. This cost is paid by you, but I feel is very much worth it as it is a great way to get to know about your new home from a professional. A good inspector will find problems or issues with the home which you and or I may not be able to see. The inspector will be able to explain the problems and solutions so that you have a complete understanding of the problem and the remediation necessary. No home is perfect–even a newly constructed home, so a home inspection will alert you to potential or existing problems with the home and you will know how serious it is and how costly it is to remedy before you proceed with your purchase. Make sure to hire a licensed professional to inspect the home. After the inspection is complete, there are four approaches we can take—(most likely there will be a mix of the first three options):
1) Have the Seller take care of all or some of the issues raised before the closing,
2) Have the Seller give you a credit for the repairs which will be made after you take possession of the home.
3) You agree to take care of the issues after closing — at your expense,
4) You cannot agree on repairs and choose to walk away from the deal (you must give the required notice to the Seller).
9. Purchase adequate Home Insurance
Homeowners insurance is another item that will need to be taken care of prior to the closing. It is important to purchase adequate insurance so that in the event of a disaster you will not be left without a home. The mortgage lender will also require you to purchase Homeowners Insurance prior to the closing to protect their investment. You may wish to use someone or a company you already have a relationship with, but I recommend getting a few quotes as the best coverage can vary in price by company.
10. Pre-Close Preparation
As the closing date draws near we want to make sure that everything will go smoothly. One thing that needs to be addressed is utilities. It is time to call your local service providers and make sure that you have your local services turned on and billed to you (electricity, cable, phone etc) effective on the estimated closing date.
We will also keep in contact with your attorney/settlement agent and lender to make sure that all the necessary materials have been completed so that you can close on your new home. In most cases the Buyer will need to bring some money to the closing. Just prior to closing, you will be told how much. The money you will bring at closing is the down payment and any unpaid fees minus the earnest money deposit. We will find out what form of payment is accepted (most often a personal check is not acceptable).
The day before or the day of the closing it is a good idea to conduct a “walk-through” of the property. A walk-through is necessary so that when you take possession of the home after the closing you are assured that the Seller(s) completed any repairs that they were suppose to prior to closing, did not leave the house extremely messy, or take anything that was suppose to stay with the home.
The terms “closing” or “settlement” refer to the meeting where ownership of your new home will be legally transferred to you. Usually, you and I will meet at the closing location and the closing officer (the attorney of settlement agent) will coordinate the signing of all the documents, and collect and distribute all the funds. Once completed, the deed is recorded and the home is YOURS!
12. After Closing
Congratulations on the purchase of your new home! At the end of the closing you should receive the keys to your new home. You might wish to either change or re-key the locks.