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PERSPECTIVES
INTO HOME BUYING
Buying
a home can be a very scary process whether it's your first time
or your tenth time. As all Realtors know, each transaction has
the same components, but is extremely different. No sale happens
exactly like another in a predictable manner. If you understand
the basic process, it is
easy
to manipulate the stages within the frame to achieve the same
result - a comfortable, easy transaction which puts you in
your new home!
Basic
Steps To Follow:
1.
Find a good Realtor. Some people don't see the need for Realtors,
but unless you have a lot of time to spend on this procedure,
it is well worth the effort to bring a professional into the
picture. I can't tell you the number of times we (as Realtors)
are asked to come in and fix a situation that Buyer Public
and Seller Public have gotten into. This is not to say that
the public is not smart enough or sophisticated enough to
figure out buying and selling on there own. I'm not saying
that by any means. The point is, Realtors help people buy
and sell property regularly. We
know how to smooth out the bumps and prevent
many problems. Someone who doesn't handle property transactions
regularly, can miss some of the early bumps that may turn
into large problems later in the transaction.
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Things
to Think About When Choosing A Realtor
A.
Ask friends for referrals. The best way to find a Realtor
who you will be compatible with is to ask people you
are compatible with. Most likely you will have the same
good feelings about someone your friend worked well
with.
B.
It is important that the agent you choose is active, but
setting a high expectation for what their production should
be is not always the way to find the best agents. The
one's who produce upwards of $10 million in sales per
year are often so busy that you rarely work with that
agent one on one. More likely you will work with one of
their assistants. It is good however, to set $2 million
as a minimum. That's a basic number for someone who is
working full time. Then find a personality you like. You
will be spending quite a bit of time together.
C. How can you lose? The Seller
is paying for you to have representation. Why not take
advantage of that?
D. It is a myth that Sellers
will cut you a deal if there is only one Realtor involved.
Keep in mind, your Realtor represents you! |
2. Determine what you can pay. A competent Realtor can pre-qualify
you, or the best way is to actually start your loan process
and get fully approved for a loan. When you do find the home
you want, it is much easier to get your offer accepted if
you are already approved. Then the Seller has no concerns
as to whether you can get financing or not.
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Financing
Considerations
A.
Shop mortgage companies. Banks are usually hard to
deal with unless they have a well organized mortgage
department.
B
Ask what they charge in "junk fees". These fees are
the way they make money generating the loan and include:
-
•Loan
document prep fee
- •Underwriting
review fee
- •Various
express mail fees, etc.
C.
Ask the loan officer if he or she returns phone calls.
Say you will pull the loan if your or your Realtor's
calls are not returned.
D.
Take recommendations from your Realtor, Title Officer,
or friends who have had good experiences with certain
people.
E. How smoothly your deal goes really does depend on the
loan officer you choose. I can't stress enough how important
this person will be to keeping things on the timeline
you eventually set forth in your purchase agreement. |
3. Decide where you want your home to be. Sometimes in a big
city, it will take quite a while just to determine this. Location
is extremely important to your investment. Consider very carefully
the ups and downs of each area and the types of homes in each.
What is the potential for re-sale? Are there factors that
draw or repel?
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Search
Ideas
A.
Give your Realtor parameters to search by. The search
parameters are the features that you
want in a home. They allow your Realtor to help you
use your search time more effectively.
B.
Make notes on the print-outs as you search. Just throw
away information on homes you know you don't want. You
will find yourself buried under print-outs if you don't.
It can be overwhelming and very frustrating.
C. Set up a simple 3 ring binder with information on homes
you really like. It is easy to keep organized and can
be pulled out quickly for reference.
D. Unless you are an investment shopper only, wait for
the house that really makes you say "wow!" out loud. Wait
for the one which captures you emotionally. It will come
along. If you have a Realtor who is impatient with you
after only a few weeks of looking, he or she is not an
agent who is looking out for your
interests. He or she is looking for a commission check.
Find a new agent. |
4. Once you have found the "wow" house, make an offer.
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Offer
Concepts
A.
Your Buyer Broker should do a market analysis for you
to determine how well the Seller has priced the home.
B.
Base your offer on the comps, but be realistic. Sellers
in today's market are touchy. Just because his home has
been on the market over three months does not mean he
has to lose his shirt to sell it.
C. Remember, you not only negotiate price in your offer,
but terms and conditions as well. These include but are
not limited to:
- •Inspections
- •Closing
and possession dates
- •Potential
repair
- •Closing
costs
D.
Don't be surprised by a "counter offer." Most often,
the Seller will make a "counter offer" to your original
offer. This should not come
verbally. It should be delivered in writing
with a signature and initials from the Seller indicating
what changes he wants on the offer.
E.
You don't have to accept the counter. You can counter
back and forth until you have what we call a "meeting
of the minds."
F. Once both parties agree to all terms and conditions,
you have bought a home! There are contingencies attached
to this agreement, however, to protect both the Buyer
and the Seller. Contingencies include:
- •The
Buyer obtaining financing by the closing date
- •The
Buyer's acceptance of whatever inspections have been
performed
- •The
appraisal "coming in" at sales price or better
- •The
Buyer's acceptance of the surve
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5. Congratulations you have bought a home! But, for your Realtor,
the work is just beginning. Your Realtor orders the inspections
you have agreed to pay for. They should be scheduled at times
which are convenient for you to be there. You will learn so
much about the house!
6.
Behind the scenes, there's a lot of work going on that Buyers
are typically not even aware of. This a time when "bumps"
can turn into large problems down the road.
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Behind
The Scenes
A.
A title company, customarily chosen by the Listing Agent,
is preparing a Title Binder which involves a Title Search
which determines whether the Seller can convey the property
to you free of liens and claims of ownership.
B.
The same title company is also preparing a Title Insurance
policy for you which is customarily paid for by the
Seller.
C.
The title company orders and schedules a survey. This
document determines where your new home sits on the
lot, whether the fence sits on the property line, whether
there are any encroachments such as a shed in a utility
easement, and where the easements are.
D.
The mortgage company uses a copy of your purchase agreement
to approve you loan for the exact amount indicated in
your offer.
E.
The underwriting department of the mortgage company
will prepare instructions based on your purchase agreement
and their own particular policies for the title company
to use to prepare your closing statement and have you
correctly sign your mortgage documents or "close" your
loan.
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7.
Your Realtor will monitor all the proceedings and keep them
on track in order to close the transaction on the date indicated
on your purchase agreement.
8.
Your Realtor will make the appointment for the closing for
you and attend the closing with you. It is part of his or
her job to review your closing statement to make sure it agrees
with the purchase agreement.
9.
Once you and the Seller have closed, depending on when the
possession date set forth in the purchase agreement is, you
get to move in! Some Sellers will agree to give possession
immediately after closing, others prefer to wait until "funding."
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Funding the loan generally takes place 2 to 3 days after closing.
The title officer sends the closing documents back to the
mortgage company for review. Once all is approved, the lender
funds the loan. The title company then has to record the Deed.
Then they release the funds.
As
you can see, the process of buying a home is quite involved.
And this is just a brief summary! Buying a home is truly one
of the most gratifying things you will ever do in your life.
There is great peace in owning your own spot of ground. Making
payments is even less painful when you know the money is going
towards a true investment in your future.
Join
me and take the plunge! I created Vista Encantada.com Realtors
as a company with a soul. Let me
show you what I mean.
This
summary is intended as a general preview of the home buying
process only. It does not constitute representation of parties
known or unknown.
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