Purchasing a home is often the largest financial decision that you will ever make. It is also a decision accompanied by a wide range of emotions and many moving parts. The one thing that we understand is that the decision to buy must be made carefully, and knowledge is strength. As your purchasing consultant, I promise to provide sound insights and genuine advice that will guarantee that you buy with confidence.
WHY DO YOU WANT TO BUY?
Tired of renting? Do you want a place to call your own? Have you outgrown your current home? Looking to downsize? Ready to retire? Are you looking to diversify your investment portfolio? Want a larger yard or a shorter commute to work? There are many reasons for purchasing real estate and they often revolve around life transitions. Understanding your unique reasons and motivation will help you find the perfect property.
REAL ESTATE AS AN INVESTMENT
Did you know that owning real estate is one of the least risky ways to invest your money? Many financial advisors and economist agree, that owning property is a great way to build equity and increase wealth.
PREPARING TO BUY
In order to effectively purchase a property in today’s competitive market it is important for buyers to be prepared. Sellers today are looking for ready, willing and able buyers and here are a few important steps to consider:
Your financial file should consist of any important financial documents that you have. Having these documents readily available will help the lender transition from the pre-qualification phase to full loan approval. Here are some examples of those documents.
• Tax returns for the previous two years
• Bank accounts
• Investments, Financial Statements (401K, Stocks, Bonds, mutual funds, etc.)
• Recent paystubs (Two months)
• Auto loans
• Investment property information
Credit Rating and Pre-Approval
Prior to house hunting, it is recommended that you speak with an experienced lending institution or loan officer to determine your ability to finance. Your credit score has a major impact on not only your ability to obtain a mortgage loan but the amount in which you can afford. The lender will evaluate your credit ratings using information provided through 3 credit reporting agencies: Equifax, Experian and Trans Union. Upon reviewing your credit history and financial documents, your lender will then discuss the best loan options available to meet your purchasing needs and provide you with a pre-approval letter.
Remain Financially Stable
It is critically important to remain cautious and financially responsible. It is not advisable to make any career changes or significant purchases whether with cash or credit. The lenders underwriter will be monitoring your financial situation throughout this process and any major changes will raise a red flag and potentially affect your ability to purchase.
Now is what most buyers consider the fun part…searching for homes and naming them!! The reality, however, is searching for homes can be a roller coaster ride. So how do we manage this.
Talk with your Agent
It is recommended that you meet with your agent to thoroughly discuss your wants, needs, and desires when it comes to your new property. A great way to gain this knowledge is to tour the neighborhoods, communities, schools and complexes that interest you. This will provide you an opportunity to get a feel for certain areas and what it may be like to live there. You may also consider using social networks and community pages to obtain information on community developments, HOA’s and local happenings.
The next step is to narrow your search. What are you looking for in your new property? This would include the following: Specific Areas, Style of Home, Floorplan, Number of Bedrooms and Bathrooms, Size of the Yard, Basement or No Basement, Square Footage, School Systems, Property Taxes, HOA Fee’s, Price Range and more. These items are often referred to as search parameters and your realtor will then set up a detailed search for you within their multiple listing service (MLS).
Schedule Home Tours
Now is the time to find the perfect property. As you begin to narrow your search and find homes of interest, ask your agent to schedule private tours. Make sure to ask your realtor about any property disclosures that go along with each specific property as well as the potential for future resale value.
LET'S MAKE A DEAL
Now that you have found the perfect property, your real estate agent will help you make an offer. A good agent will perform a market analysis and inform you of any potential costs and expenses associated with making the offer. This may include but is not limited to inspections, appraisals or any known repairs to the home. When you are comfortable and feel like an informed decision can be made, your realtor will then help you draft an offer that is appealing and will give you an advantage over competing buyers.
TITLE, INSPECTIONS, APPRAISAL & INSURANCE
After a purchase agreement has been executed by the potential buyer and the property’s seller there are a few items that need to be considered.
Time is of the essence. The real estate contract is filled with certain requirements that must be met in a timely manner. It is important for all parties involved to meet these requirements in order to ensure a smooth negotiation process and a successful closing. Failure to meet contract deadlines will result in a breach of the agreement and could potentially void the sale of the property. As your real estate agent, I will provide you with updates and reminders in order to keep this from happening.
It is also recommended that you keep and maintain written records of any and all correspondence throughout the home purchase process. This will ensure that nothing is missed, and all obligations are met. A real estate transaction involves many forms of communication both verbal and written. As your agent, we will assist you in drafting any documents pertaining to the purchase agreement including but not limited to addendums, counter offers, remedies and any other additional terms and conditions that may apply.
Upon the execution of the purchase agreement, either a title company or attorney will serve as the closing/escrow agent for the sale of the property. The closing agent will open a title order and the file begins to be processed. Tax information, loan payoffs, survey (if necessary), homeowner/maintenance fees, inspections/reports, and hazard and other insurances, as well as legal papers are ordered at this time.
The title search consists of public records such as deeds, mortgages, assessments, liens, wills, divorce settlements and any other documents that could affect title to the property. Once the records are compiled an examination will then occur. The title examination determines the legal owner and any debts that are owed against the property. Upon completion, a preliminary title commitment is prepared for all parties of interest.
There are a variety of ways to hold title in real estate. We recommend that you seek the advice of an accountant or attorney if you have questions regarding title. There are different legal, estate and tax implications for each method.
Now that your offer has been accepted, it is recommended that you obtain any and all inspections available to you by a licensed home inspector. Home inspections are, however, the buyer’s responsibility. Inspections must be completed within the allotted time frame agreed upon within the real estate purchase contract. You are not limited to a certain number of inspectors and may also seek recommendations or opinions from licensed trade professionals (HVAC, Roofing, Structural, etc.). As your agent, I can offer you a list of reputable inspectors to choose from.
Inspection results and how to proceed:
If you are 100% satisfied with the results of the inspection, you may release your contingencies and proceed towards closing.
If you are not satisfied with the results of the inspection, there are options available to you as the buyer. The most common option is to renegotiate the terms of the contract. Leveraging the experience and knowledge of your real estate agent is important in this case.
Appraisal and Lending
Communication is of great importance at this stage of the purchase process. You will want to continually be in communication with your lender as additional requests may be made in order to approve and fund your loan. If your purchase agreement is contingent upon financing, a successful appraisal of the property will be needed. An appraiser is a licensed 3rd party specialist who will evaluate the property to ensure the lender is making a good investment. As your trusted real estate advisor, we will also remain in communication with your lender to make sure the process is moving forward in a smooth and timely manner.
If you are obtaining a mortgage on your property, the lender will require you to purchase homeowners’ insurance. The value of the insurance depends upon certain factors including the purchase price of the home and any lenders requirements. Your insurance professional will also make necessary recommendations based upon your situation. Never be afraid to get multiple quotes when it comes to your homeowner’s insurance. Ask around! We would be happy to provide recommendations for experienced and knowledgeable insurance agents.
Closing and Possession
It is almost time for a celebratory photo with the handing over of the KEYS!! But first, let’s not forget to do our due diligence and cross our T’s and dot our I’s.
Prior to closing day, we will schedule a final walkthrough of the property. The walkthrough usually occurs anytime within 48 hours of the closing. Its purpose is to verify that the property is in the same condition as it was at the time of contract. This includes making sure everything is in good working order, all items that were included in the purchase are there, all remedy request have been completed and the home is in acceptable move in condition.
Set up the Utility Transfer
As we near the date of closing, we will provide you with a list of utility providers who service the home. These may include: Electric Company; Gas Provider; Water; Sewer; Refuse and Recycling, Internet and more. You will want to make sure that the utility providers have your accounts set up and scheduled to transfer the day of closing and possession.
The closing agent will oversee the execution of the purchase agreement. Each party involved in the transaction will be furnished with a settlement statement to review and sign. The settlement statement is a breakdown of the financial terms of the agreement. The seller(s) will sign the deed to the property at this time essentially transferring it to the buyer(s). If there is a mortgage loan involved, the buyer(s) at this time will sign and execute the lender packet which will include the mortgage. The mortgage will then be recorded with the deed. If funds are required for closing, you may either bring a certified check (if the amount is under $10,000) or have the funds wired to the title agency. The amount due will have been disclosed by the borrower’s lender prior to closing and will also be noted on the settlement statement. Once the settlement has been consummated, the exchange of keys and possession shall take place unless possession terms were negotiated to take place later.
Congratulations! You are officially the owner of property. Although this is the official end of the buying process our friendship carries on. Occasionally there are things that come up, questions arise, and we will always be a phone call, text message or email away. We will continue to be your trusted real estate advisor because we not only want help you buy, sell or build but we want to help you live!