The Buying Process
Selecting a Realtor®
When selecting a REALTOR you should choose someone who is going to represent your best interest in the home buying process. A REALTOR will help you select a lender who can place you in the best loan program to providing detailed information on any home listing. Your REALTOR represents you as a Buyers Agent.
If at any time during this process you are not sure about any phase of this process ask your Realtor. Your REALTOR is your source of expertise and knowledge throughout this whole process. A Realtor’s number one goal is to make you feel as comfortable as possible as you progress through what should be a wonderful experience.
Your agent should be:
- A full time Real Estate Agent.
- Able to accurately explain what costs are involved in purchasing a home.
- Able to provide you a Step by Step outline so you can follow the buying process of purchasing a home.
- Able to educate you on the varying types of mortgages as well as provide you with qualified lenders. Discuss down payments and earnest money that may be required for the different types of loan programs.
This is by far the most important step in the home buying process. Without a lenders approval to finance a home, there is no loan to purchase unless you plan to pay cash for a home. The lender will provide you with a good faith estimate of closing cost as well as the maximum amount of money that you can borrow. The lender will explain the different loan programs and which one will best suite your needs. The lender will require financial documentation from you in order to establish your credit worthiness. And finally the lender will discuss the amount of funds that you will need for closing.
Selecting a Buying Team
As a buyer, there are many people who will be involved in the purchase of your home. It is important to have qualified people in place to assure a smooth transaction. Your team of professionals should include:* Your Lender
* Home Inspector
* Title Company
* Termite Inspector
* Home Warranty Company
Finding Your New Home
This may sound simple but there is no such thing as the perfect home. Every home has quality’s that will vary from one buyer to the next. You should set a list of goals for what you are looking for in a home. Prioritize the list from most important to least important. If you are clear on your goals for a new home, it will help both you and your REALTOR narrow the search of homes to the top picks. You will want to consider commute times, school systems, nearest hospitals, shopping and entertainment to name a few. Your buyer’s agent will be able to provide you with detailed information about each listing and set up appointments to view the inside of each home.
Place an Offer
At this point the home buyer and their Buyer’s agent discuss a game plan on how to structure the offer. You first need to decide if you can afford the purchase of this home. This is where financing options come into play.
You should also discuss the different types of inspections that will need to be done. Most inspections are for the benefit of the buyer but your lender may require roof and termite inspections as conditions for loan approval.
The Buyers agent can also provide an estimate of the closing cost for the buyer to determine what funds will be required for closing.Your REALTOR should also suggest types of contingencies (financing, settlement date, selling your current home, home warranties, seller pays closing cost, home inspections). All of these can be added into the offer for negotiation.
An offer for purchase is then drafted and reviewed by the buyer and signed. At this point the REALTOR will advise you about earnest monies. The earnest money usually in the range of 1% of sale price. Your Realtor can advise you on what is an acceptable amount.
Your REALTOR will deliver the Offer to Purchase to the Seller’s agent for consideration on behalf of you.
Three things can happen at this time:
1. The offer is accepted
2. The offer is changed (counter-offer)
3. The offer is rejected.
Allow your REALTOR to negotiate for you. If you are not skilled in negotiating you might give away money or concessions that you might not have had if you had let your REALTOR do the negotiations for you. If you get a counter-offer, review the offer and decide if you want to accept it or counter back to the seller. You can also reject the offer and look for another home.
When both the Buyer and the Seller have signed the contract, it becomes fully executed. A copy of the contract is sent to the Buyers lender and the title company where the closing will take place.
The Buyer then must then apply for a loan application with their selected lender. Keep in mind that time is of the essence. Most contracts are dated for 30 days to close so you want to give your lender all the information they require to complete the loan process and to avoid delays.
Once the loan is in process, the lender will order an appraisal on the home to make sure the sale price meets the assessed value. Appraisers are independent from the lender and buyer so they can render a non-partisan opinion to the homes value. The appraisal will need to be paid at the time of service as well as any inspection’s that you have prior to closing.
It is best for the REALTOR to be present during these inspections to assure the quality of work is performed and to spot any potential problems.The Buyer must also coordinate with a selected insurance agent to obtain a home owners policy. This needs to be completed 10 days prior to closing to assure proper coverage has been obtained.
A final walk through of the property will be conducted before closing on your new home. This is to ensure that any repairs have been made and that it is in the same condition as when originally contracted. Damage or missing appliances can become an issue and require further negotiations with the Sellers agent and will need to be rectified before the closing takes place.
For the closing you will be required to obtain a Cashiers Check or Certified Funds for any balance that is required to close. Do not bring a personal check as this will delay the closing until certified funds are obtained.
The Title Company will provide you with all the documents that will need to be signed. The settlement sheet (HUD-1) calculates all the fees from the different vendors and lender. Everything at this point will need your signature to be fully executed. Any outstanding balance will then be collected by the Buyer. Any amount that you over pay will be refunded back to you by the title company.
Now you’re a home owner!
After closing you will want to store your closing documents in a safe place. You may need them in the future for tax credits, refinancing, homestead exemptions or resale.