While the internet is a great first step to identifying prospective homes, working with an agent that represents your specific interests as a Buyer is invaluable to navigating the complex process of buying a home. A home purchase is one of the most significant investments in life. So the more prepared you are at the outset, the less overwhelming and chaotic the buying process will be and the better the outcome.
I assist my buyer clients by….
- Identifying a qualified lender that helps determine your buying power — that is, your financial reserves plus your borrowing capacity—and financing options. A lender approval letter is a requirement with all contracts.
- Leveraging relationships with other agents to identify properties that may not be actively listed.
- Providing local community information on neighborhood nuances, zoning, schools, etc.
- Negotiating an offer – which includes a myriad of factors such as price, financing, inspections, settlement dates, etc.
- Providing due diligence during the evaluation of the property – recommending qualified professionals to conduct needed inspections and provide a written report.
- Guidance through the closing process so there are no surprises at the closing table and the transaction flows smoothly for all involved.
6 IMPORTANT STEPS IN THE HOME BUYING PROCESS
STEP 1 – PRELIMINARY CONSULTATION
We should meet face-to-face to review your overall objectives in searching for a new home (i.e. time frame, desired features, etc.) and discuss the process. I will have you complete a questionnaire and we will begin to narrow down types of properties and neighborhoods so we have an efficient search.
STEP 2 – OBTAIN A LOAN PRE-APPROVAL
You must have a lender Approval letter to write a contract. Therefore, it makes sense to start this process BEFORE looking at properties. I will recommend a few reputable lenders or you can select your own. A lender will review your salary, credit and source of funds for the purchase to determine a comfortable loan amount before providing a pre-approval letter, which shows your borrowing power. You can talk with as many lenders as you like to determine the best financing option for your situation within a 30 day period. Fortunately, the rules have changed so that you can shop lenders and have them pull multiple credit reports within a 30 day period, without the inquiries negatively affecting your credit score.
STEP 3 – ESTABLISH YOUR HOME SEARCH CRITERIA
In addition to the basics (i.e. # of bedrooms and bathrooms), we will discuss your “wish list” (i.e. the desire for a yard, open floor plan for entertaining, big kitchen, man cave, etc.). There will definitely be trade-offs – but our goal is to find a home that meets the majority of your requirements within a comfortable price range. Once the criteria is established, I will set up an account that emails you weekly with listings so you can review tours and property details to determine if they are worth touring.
STEP 4 – LOOK AT HOMES
This is the fun part. Once we’ve completed a search and narrowed down the options, we will schedule time to tour homes. Many properties will be on “lockbox” so we have flexibility to visit —whereas others may require an appointment. I will also identify Open Houses for you to visit on the weekends.
STEP 5 – CHOOSE A HOME & MAKE AN OFFER
No aspect of the home buying process is more complex or personal than bargaining between buyers and sellers. This is the point where my experience is most valuable because I know the market, likely know the seller’s agent and have negotiated hundreds of real estate transactions.An Offer is comprised of the following key terms:
- Contingencies (Home Inspection and Appraisal)
- Offer Price
- Earnest Money Deposit (typically 2-3% of sales price)
- Down payment
- Settlement Date
- Financing Letter Contingencies
- Title Company
A Seller has the option of:
- accepting the offer,
- rejecting the offer, or
- making a counter offer.
STEP 6 – OFFER ACCEPTANCE
The EARNEST MONEY DEPOSIT check should be deposited to an escrow account with the title company within 24 hours
The HOME INSPECTION
is typically conducted within 3-7 days of contract ratification.
- Buyer selects inspection company and pays them directly (costs range from $350 – $1000 depending on the size of the property)
- If there is an Inspection contingency that allows for repairs, the Buyer sends seller a written request outlining issues that need to beaddressed. Inspections are to identify “non-working” items not cosmeticissues.
- The Seller must respond within 3 days
OBTAIN ANY ADDITIONAL DOCUMENTS/INFORMATION
- Condominium documents & budgets
- Within a few days of accepted offer you should contact your mortgage lender and begin the full application process
OBTAIN HOME INSURANCE (Required to finalize financing)
ARRANGE TO CONNECT UTILITIES (Electric, gas, cable)
- The title company transfers water
REVIEW HUD-1 PRIOR TO CLOSING
- The HUD-1 outlines all expenses associated with purchasing the property. It includes lender fees, property taxes, reconciliation of seller paid expenses, etc. Most of the fees should look familiar—and be very close to the numbers provided on your Good Faith Estimate provided by your lender.