Choosing Your Realtor
When considering buying a new home it is important to work with a realtor who is knowledgeable about the listings in the area so they can negotiate the best possible price on your behalf. You will be making many decisions in the home buying process and choosing the right realtor to represent you will be the most important. The reason I have so many referrals from past clients is because I truly listen and identify with my buyers. There are many listings on the market and I will be helping to match your needs, desires and affordability with the perfect home, saving you time and helping to educate you about the current market. I will act as your advocate at every step of the transaction.
It is my job to support you in finding the right home with the best possible terms, and to aid you through the entire process. I will explain the process of buying a home, help you with pre approval and financing, while familiarizing you with the various activities, documents and procedures that will be addressed throughout the transaction.
Things to Consider in Buying a Home
Buying a home can be an emotional process as you look at various properties and imagine yourself living there. You may fall in love with a property and it will be my job to ensure that you move forward with the best possible offer, while remaining objective. The mortgage approval process requires stability in your career and a good credit rating. You should consider your commitment to living in the same community for three to five years. During the first few years of homeownership, you will be paying interest only and will generally not build equity, so finding the right neighborhood is important. One of the greatest benefits in homeownership is that you can do what you like with the property without a landlord’s permission. There are also many tax benefits to owning a home.
Purchasing a home is a lifestyle decision that requires that you think about how you like to spend your time. Each community is different and you may want something more rural or something in the center of activity. I will introduce you to the various neighborhoods and help you find a perfect fit for your lifestyle choices, recreational desires and desired ambiance.
Understanding your priorities and objectives is important in helping me guide you to your perfect home.
Are your Finances Ready for Homeownership?
The reality of homeownership is that while you own the property, you are also bringing a partner into the transaction: the lender. In order to qualify for a mortgage, you will need good credit, a pattern of paying your bills on time while still saving money and a maximum debt-to-income ratio (your gross monthly income compared to the minimum payments on all recurring debts of 43% or less.) Some lenders have stricter guidelines, so the lower your debt-to-income ratio, the better are your chances of a loan approval.
While loan programs are sometimes available with low down payments of 3.5% to 5%—and a few programs offer no down payment at all—you’ll still need some savings to pay for closing costs, moving expenses and an earnest money deposit when the offers is presented. It is important to ensure that your credit is good and it is wise not to make any large purchases prior to buying a home. You will need to show that your income and debt make you a credit worthy homebuyer. It is important to have a consultation with a mortgage lender prior to looking at properties. This consultation will prepare us with an accurate estimate of the price range of houses you can afford. If you do not already have a lender, I can recommend a few candidates for you. You will need a pre-approval submitted with the offer so you should have this consultation as soon as possible.
Finding the Right Property
You probably already have an idea of the homes and pricing in our area. I encourage you to use my website which will allow you to see all available homes on the market by every broker. I also recommend that you sign up for automatic listing notification (Listing Watch) on my site so that you are the first to know when properties meeting your criteria come on the market. I will also be viewing this updated information and will contact you to follow up on whether we should set an appointment to view a property. Educating yourself on our local market can help you narrow your priorities and make an informed decision about which homes to see.
Making an Offer
Determining the value of a home is not necessarily revealed by its sale price. We will look at comparable property sales and also the competing homes in the area to come up with an offer. Many people think that an offer is considered solely on the offered purchase price, yet the terms can be important in convincing a seller that you are the right buyer for their property. Terms include escrow time, deposit, inspections and loan approval, among other things. A lower offer can sometimes get accepted purely on terms, so it is important that we carefully review all possibilities.
Determining the Offering Price
There is no magic formula for arriving at an offer price and in a strong seller’s market you may lose the home if you believe that you should always offer a percentage less than asking price. Market conditions, competition and short supply can all be factors in considering your offer. The truth is that the offer depends on the basic laws of supply and demand: If many buyers are competing for homes, then sellers will likely get full-price offers and sometimes more. If demand is weak, then offers below the asking price may be in order. This is another aspect that we will consider in presenting your offer.
How Do You Make an Offer?
The offer will be drawn up on the most current contract approved by the state board of realtors. These contracts make it easier for agents to read through terms and negotiate the sale. The owner, in turn, may accept the offer, reject it or make a counter-offer. The offer will be accompanied by a good faith deposit and will be held in escrow and applied toward the purchase price at closing. The deposit is subject to the terms of the contract and specific dates where contingencies will be removed. Communication and abiding by timelines is important during the escrow phase so we will be working closely together throughout the transaction to ensure you abide by the scheduled contingency timelines.
During the negotiating phase, other offers may be presented and counter offers may come back from the seller. It is extremely important that we stay in close contact to ensure that you have the best chance of buying the home.
A number of inspections are common in residential realty transactions. They include sewer, checks for termites, surveys to determine boundaries, appraisals to determine value for lenders, title reviews and structural inspections. There are also local requirements such as BMPs and woodstove emissions, so it is important to work with an agent who understands the local ordinances.
Structural inspections are particularly important. During these examinations, an inspector comes to the property to determine if there are material physical defects and whether expensive repairs and replacements are likely to be required in the next few years. Such inspections for a single-family home often require two or three hours, and you should attend. This is an opportunity to examine the property’s mechanics and structure, ask questions and learn far more about the property than is possible with an informal walk-through. If you are unable to attend, I will present all reports to you.
You will be notified of acceptance with a sellers signature on the agreed upon contract. A copy of the contract and earnest money deposit will be forwarded to escrow. In escrow all terms of the contract will be itemized in seller and buyer responsibilities. Once inspections are done and contingencies are removed, the contract will specify the closing date.
The closing process, which is sometimes called settlement or escrow, has become automated and documents can now be processed online with an electronic signature. During closing, all parties to the transaction are brought together under the guidance of an unbiased intermediary, called the escrow officer. The escrow officer ensures that the contract items are performed and executed. After the loan documents have been signed, they are returned to the lender. If all forms are properly executed and once all conditions are met, the loan is funded by a wire transfer.
Before the escrow can close, all of the contingencies outlined in the Purchase Agreement must be met. I will help guide you through the disclosures and contingency removals so that you abide by the terms of the contract.
Contingencies can include:
- Approval of the seller’s transfer disclosure statement which highlights any known defects and the condition of the property and, in the case of a sale, must be given to a prospective buyer as soon as practicable and before transfer of title.
- Approval of the preliminary title report
- Loan approval, including an appraisal of the property, which will be required by the lender.
- Physical inspections of the property, including local ordinance inspections.
- Pest inspection and certification.
- Acquisition of homeowner’s insurance.
Once all of the conditions of the purchase agreement have been met, you will sign the loan documents and closing papers. At that time the balance of your down payment and closing costs will need to be deposited in escrow, and your lender will wire transfer the balance of the purchase price. The deed will then be recorded at the County Recorder’s office and you will take ownership of your home.
When all of the conditions of the purchase agreement have been met, you will sign your loan documents and closing papers. You will deposit the balance of your down payment and closing costs to escrow, and your lender will deposit the balance of the purchase price. The deed will then be recorded at the County Recorder's office and you will take ownership of your home.
I will walk you through every aspect of the transaction and guide you along the way.