Congratulations on your decision
to purchase a new home! Your first step toward buying your new
home will be to analyze your needs. Your real estate agent can
assist in analyzing your needs so that you will be able to get a
clear picture of exactly what you want your new home to look
like and how it should function for you and your family.
First, you should write down why
you are looking for a new home. For example, are you currently
renting and would like to have a home where you can begin
building equity? Maybe you recently married and have outgrown
your current residence. Or, maybe you have just gotten a
promotion, which requires you to move to a new city. These
factors will all have a bearing on how you approach your home
search.
Second, establish a time frame
that you would like to stay within for buying your home.
Depending on your reasons for wanting a new home and the current
state of the market in the area you are looking to buy, you
should be able to come up with a rough guideline, which you can
finalize at a later time.
Last, you most likely have a
mental picture of what you would like your house to look like
and what features it should have. It's very important to write
these ideas down to avoid any ambiguity later in your home
search. You should make at least two lists: one should be a list
describing your dream home and the other should list the
features of the home that are an absolute must have in order to
buy it. In a perfect world, your new home would fulfill both
lists 100 percent. It is more likely that you will end up
blending the two lists into a schedule of prioritized items as
you progress through the buying process. This is a natural and
evolutionary process as you get clearer about what you want and
what is available.
Now that you have your list of
features you want in your new home, you are ready to start
looking! Well, not just yet. You are going to need to know in
what price range to look. There are two ways to go about this.
You can get pre-qualified or pre-approved for a mortgage.
Either way, you will need to contact a
mortgage company. There are some key differences between
pre-qualification and pre-approval for a loan that you need to be aware of. Loan pre-qualification is a
simple process. It takes into account very basic information
regarding your financial status and gives you an amount for
which you may qualify. This can be done strictly on a verbal
level or electronically over the Internet. The pre-qualified
amount is based solely on the information you provide. In most
markets, pre-qualified buyers usually hold little clout
compared to pre-approved buyers due to the fact that the information given during the pre-qualification
process is not thoroughly investigated and therefore may be
unreliable. Where a pre-approved buyer is actually approved
for a loan of a certain amount, a pre-qualified buyer is only
told that they might be approved for a certain amount.
Pre-approval is a much more involved
process. The lender will take all pertinent information
regarding your finances and perform an extensive check on your
current financial status. This will ultimately give you the
exact amount that you will be eligible for (depending on what
type of loan you decide to go with). Being pre-approved lets
the seller know that you have gone through an extensive
financial background check and there should be no unexpected
obstacles to buying the home. You can see how being
pre-approved would be more attractive to a seller than just
being pre-qualified.
Now that you have your list of
needs and wants and you know how much you can afford to spend,
it's time to look at some houses! Not just yet. Step
back for a moment and consider the larger picture. People
don't just buy a house; they buy the neighborhood the house is
in. Think about that...if you found the perfect house but it
was in a neighborhood that wasn't to your liking, would you
make an offer on it? Most likely the answer would be,
"No."
So, you will need to make
another list of what type of neighborhood you want to live in.
You will most likely want to consider things like how living
in the neighborhood will affect your drive time to and from
work, what amenities are offered (swimming pool, tennis
courts, park, etc.), and, if you have children who are
attending school or soon will be, what school district you
will be in and how close the schools are. You may even want to
make two lists just as you did with your home criteria.
Your real estate agent can help
you consolidate the information from your list of needs and
wants for your home, your pre-approval, and your list of needs
and wants for the neighborhood. From this, you can incorporate
this information into a broad search profile, which will then
be narrowed down to specific areas dictated by the market in
which you will be looking. Your agent's experience in local
markets will be an invaluable resource during this step.
At this point you will have a
good idea of what you can afford and what type of neighborhood
you will want to live in. Taking that information into
consideration you are ready to embark on your actual home
search. If you don't know much about the city that you are
moving to you will most likely want to start your search by
finding neighborhoods that meet your criteria and then
narrowing your search to particular homes in the area.
There are a few ways to go
about this. Possibly the most efficient way to find homes is
to allow your real estate agent to keep you up-to-date on
available properties that may meet your criteria, then and
allow your agent to screen these properties for you. When your
agent presents you with a property that interests you, he or
she can arrange for you to tour the property when it is
convenient for you.
You can also access local
publications highlighting available real estate in the area,
contact local Neighborhood Associations, visit the local
Chamber of Commerce, look on the Internet, and even drive
through neighborhoods that you feel would meet your needs.
Driving around a particular area looking for a home that is
for sale is good because you can actually see the house, but
it can be very time consuming and very "hit or
miss."
Now that you and your real estate
agent have found the home you would like to purchase, it's time
to make an offer. Taking into account the recent sales of homes
in that neighborhood which are similar in size, quality,
conveniences, and amenities, what are you willing to pay for the
home? Your real estate agent will consult with you and advise
you on how to create an offer that will have the best chance of
being accepted.
Your agent will ensure that you
have everything down in written form... no verbal agreements.
After consulting with your agent to put your offer in a written
contract that meets all the legal requirements according to
local and national guidelines, your agent will present the
seller with a written document detailing what needs to be done
by both parties to execute the transaction. The contract should
protect the best interests of all parties involved and should be
comprehensive in nature. Your agent will also ensure your
financial position as the buyer by including any necessary
contingencies, which would protect you if a particular
requirement were not met. Once the seller accepts it, it may be
too late to make any changes.
The contract, though not limited to
this list, should include the following:
- A legal description of the
property
� The offering price
� The down payment
� Financing arrangements
� A list of fees and who will
pay them
� Amount of the deposit
� Inspection rights and
possible repair allowances
� The method of conveying the
title and who will handle the closing
� A list of appliances and
furnishings which will stay with the home
Once your offer is made, you and
your real estate agent may need to enter some negotiation in
order to reach an agreement. Keep in mind that almost everything
is negotiable when you are buying a house. This can give you a
great deal of leverage in the buying process -- that is, if you
have adequate information and you use it in an appropriate
manner. Your agent will have the market knowledge and
negotiating expertise necessary to make sure that your offer is
accepted at the best price and terms possible for you.
Some of the things that you may
have to negotiate are:
The price
Financing
Closing costs
Repairs that need to be done
Appliances and fixtures
Landscaping
Painting
Occupancy time frame
The key to successful negotiating
is keeping in mind that the end result must make both you, the
buyer, and the seller happy. Otherwise, negative feelings will
persist throughout the remainder of the process and someone may
walk away feeling that they were not treated fairly.
After your offer has been
accepted, I will supervise the coordination of all
necessary vendors and serving as your advocate when working with
each vendor. Your agent will make sure that the vendors have
access to the property at the appropriate times to perform their
procedures and oversee the execution of those procedures on your
behalf.
For instance, the property will
need a thorough examination. Working with your lender, you may
need to have a formal appraisal and a survey done for the
property designated in the contract. A property inspection, a
foundation inspection, and an environmental inspection may also
need to be completed to make sure that the property is up to the
standards set forth in your written agreement. If there are
issues or inconsistencies brought to light during this time, it
may delay or even nullify the contract depending on the
contingencies set forth in the contract.
Homeowner insurance is another
very important item that will need to be taken care of at this
point. Insurance experts recommend that you obtain insurance
equal to the full replacement value of the home. Unless you have
insurance coverage on the home, the closing can not proceed.
Having these procedures done in a timely and professional manner
is a must. Investigate each vendor to make sure that they are
reputable and have a clean operational history.
For an outline of all of the steps in
escrow, see my web page, here.
As the closing date draws near,
your real estate agent will contact the escrow company or
closing attorney and your lender to make sure that all the
necessary documents are being prepared, and that they are
complete, accurate, and delivered in a timely manner. Your agent
will also need to confirm that the documents will be delivered
to the correct location so they can be reviewed and that they
will be ready for the appropriate closing date.
At this point, you and your agent
should find out what form of payment you will need to bring to
the closing for any unpaid fees. Make sure that your payment is
made out to the appropriate party.
Ensuring that each closing
document is ready and available will enable you to have a quick,
easy closing.
"Closing" refers to the
meeting where ownership of the property is legally transferred
to the buyer. It is a formal meeting in which most parties
involved in the buying/selling process will attend. Closing
procedures are usually held at the title company's office or
lawyer's office. Your closing officer coordinates the document
signing and the collection and disbursement of funds. Your agent
will generally be present at your closing to read the documents
on your behalf, answer any questions, or help to resolve any
last minute or unexpected details that may come up.
In order for the closing to go
smoothly, each party involved should bring the necessary
documentation and be prepared to pay any related fees (closing
costs). There may be more than one form of acceptable payment
for your closing costs so ask the closing officer which form of
payment will be required and to whom it should be made out.
Closing costs will generally total an amount equal to 2 to 3
percent of the total loan value not including down payment and
the buyer's escrow account.
Sellers sometimes pay for a
portion or all of the closing costs, depending on local market
conditions, terms of the purchase contract, and the seller's
cash and timing considerations. Any such concessions should be
acknowledged in writing. Most lenders will allow a credit from
the seller to the buyer for the non-recurring closing costs.
However, they usually won't allow a credit that reduces the
amount of the buyer's down payment or any of the buyer's
recurring costs, such as expenses for fire insurance premiums,
PMI, or property taxes.
Congratulations on
the purchase of your new home! Now that you have taken ownership
of the property you will need to have your local services such
as all of the utilities, phone, etc. I can help you coordinate the set-up of these local services.
Also, you should already be aware of the
expenses that are typically associated with owning a home.
Neighborhood Association fees, landscaping costs, and annual
taxes should be budgeted for throughout the year.
