Your Guide to Home Buying
The prospect of buying a new home can be confusing and intimidating. Hopefully, this section will make you more comfortable with the idea of buying a home. After all, knowledge is empowering. If you are reading this, you’re on the right track. You’ve found a Realtor that can help you through the process and make the experience fun and exciting while educating you on the process and the market.
Step 1 – Hire me, a trusted agent, to work for you as a Buyers’ Agent.
As a Realtor, I can work for the seller, for the buyer, or be a disclosed dual agent. There is a contract involved with hiring a buyer’s agent to represent you, but it may not cost you anything in the way of an extra fee. I typically work for buyers and get paid out of the transaction. It does limit you to work with that Realtor and no other Realtors during the period of the contract.
When a homeowner decides to sell their property, they hire a Real Estate Company to sell their property and agree to pay that Company a fee, called a commission, upon a successful sale. The Real Estate Company then decides how much they will offer to other Real Estate Companies (called a “co-operating broker”) to bring a buyer for that property. This is how I get paid; at closing, from the amount being offered to the “co-operating broker”.
Step 2 – Get a pre-qualification letter from a lender.
Before you look at any properties, you need to contact a mortgage lender and ask them to pre-qualify you for a home loan (mortgage). A pre-qualification means the lender has reviewed your credit and based on the information you provided them on your income and debts, they feel you should be able to qualify for a loan. I encourage you to take it one step further and start the actual loan process before you find your home. If you can obtain a “pre-approval”, it will make your offer more appealing to home sellers and speed up the amount of time it will take before you are moving in to your new home. This means the lender has not only approved your credit, but they have verified your income and employment and had an underwriter review and approve the loan. I will be happy to refer you to several reputable local lenders who will be happy to pre-qualify you over the phone or on-line.
Why is the pre-qualification step so important?
- A lender will pull your credit and ask questions about your income and debts and tell you how much they will allow you to borrow. They can also explain all the costs associated with buying a home and the different types of loans available so that you can together decide on the best loan for your situation.
- You can decide how much you feel comfortable spending and can look for a home in your price range confident that you can afford the monthly payment.
- Once you find a home you want to purchase and make an offer, the seller will require that you show a “pre-qualification letter” showing that you are capable of getting financing. In this market, a seller is not willing to take their home off the market for a buyer that may not be qualified for a loan.Your offer won’t even be considered without at least a pre-qualification letter from a lender.
Step 3 – Sit down and make a list of what you want in your new home.
Do you want a single family home or would you prefer a condo or townhouse with no yard maintenance? Where would you like your kids to attend school? Would you like to be close to work? Do you want amenities such as a neighborhood pool or golf course? How do you feel about Homeowner Association Restrictions and Homeowner Association Fees?
List what you absolutely must have in a home. Not what you’d like, but what you MUST have – things you won’t compromise on. This would be things such as number of bedrooms, baths, garage, etc.
Step 4 – Schedule an appointment to view properties.
Share your pre-qualification and your lists with me. I can then review your list with you and search for properties that will meet your needs. I’ll select those that closest meet your needs and we will schedule a time to view them. Plan to see no more than 5 per day. If you have done your homework, that may be all we have to see. It is possible that we may find your new home the very first day! If not, don’t become discouraged. We’ll pick out a few more and schedule another day to look.
Step 5 – Make an offer to purchase and negotiate contract.
Once you have decided on a property and are ready to make an offer, I will help you by educating you on what other homes have sold for in the area. You decide what you want to offer and we put it in writing on a contract and present it to the seller’s agent. You will need to be prepared to write a check to accompany the offer called an “earnest money” check.
The offer is delivered to the listing agent who presents it to the seller. The seller can accept your offer, reject your offer, or make a counter-offer and ask for different terms. If they have accepted the offer – congratulations, you are well on your way to owning your new home. If they reject the offer, we can make another offer or move on to your 2nd choice. If they make a counter-offer, you can accept their offer, reject their offer, or come back with a counter-offer of your own. We go back and forth this way until both sides have agreed to all terms or until we reach a stale mate and cannot come to terms. If this happens, we simply move on to another property. If we do come to terms – congratulations, you are well on your way to owning your new home! Once the contract is ratified (signed and agreed to by both buyer and seller), your earnest money is deposited into an escrow account and it’s time for inspections.
Step 6 – Have the home inspected.
Although a home inspection is not required, I highly recommend you have the home inspected for hidden defects. I will be happy to refer you to a licensed home inspector and schedule the inspection for you. You need to be prepared to pay for the home inspection upfront. Typically this fee will be $250-$300. A home inspector will check the house from top to bottom checking out electrical, plumbing, appliances, heat and air, roof, under the house and in the attic and report any problems or issues they find along with recommendations on what is a major problem and what are minor maintenance issues. Once the inspection is complete, we will sit down together to discuss any discrepancies and can ask the seller to make repairs if needed. We then negotiate those repairs in the same way we negotiated terms of the purchase contract. If the seller is not willing to make any repairs and you wish to terminate the contract, you may do so at this time and get a refund of your earnest money. You will be out of the cost of the inspection, but at least you won’t be buying a home that is in far worse condition than you had anticipated.
Step 7 – Make formal loan application.
Once you are satisfied with the condition of the home, you need to make a formal loan application. This requires another check…. Sorry… this time the check is for the credit report and appraisal. Typically you can expect to pay $450-$500 depending on the lender and the type of loan. If you cannot pay this, discuss it ahead of time with your lender to see what options you may have.
Step 8 – Obtain homeowners insurance for your new home, arrange for movers and utilities to be cut on.
Call around and decide on a home owner’s insurance policy. No, you don’t’ have to pay for this upfront. Once you decide who you want to use, they will send a binder to the closing attorney. You will also need to call all utility companies: power/water/gas/sewer/cable/phone, etc and arrange for service to be cut on as of the day of closing or whenever the seller has scheduled them to be cut off. There may be a fee associated with cutting on utilities.
Step 9 –Attend Closing.
This is when you will sign all documents, pay your down payment and closing costs and receive the keys to your new home. I will attend closing with you and help answer any questions that come up and ensure all is as it should be. After closing, you can move in and enjoy your new home!
Buyer Interest Form
Complete this Buyer Interest Form if you are interested in purchasing a new home and want to see what is currently on the market.