Buying a home can be one of the most
exciting and rewarding things you ever do, or it can be one of the
biggest nightmares you will ever go through. How you experience the
home buying process depends entirely on how well prepared you are
and how knowledgeable the people helping you are. The following report
should clear up a lot of confusion you might have.
1. Get a pre-approval In a hot real
estate market, pre-approved home buyers get preferential treatment
when negotiating home purchases. Why? Because pre-approved buyers
are financially qualified to purchase the home and are considered
more serious than buyers who are not. Nothing feels worse than finding
the ideal home in the perfect area, and then not being able to get
the financing to close the deal. A pre-approval will provide as a
reality check prior to mapping out your life in a home that you cannot
afford. Apply online for Allie Mae's
assistance in getting preapproved.
2. Selecting a Realtor This is one of
the most important steps in the process. You will, for all intents
and purposes, be in partnership with your agent/s. You will be confiding
in them on a business level and often on a personal level. They will
be the people dealing with any problems that crop up along the way.
They are the key to your finding what you want in the area you want
for the price you want. Be selective, look for someone you feel comfortable
with and with whom you're experienced and knowledgeable. Working with
a duo instead of an individual agent has its benefits, the most important
being that time off for the agent does not become a problem for you.
Don't be afraid to ask for references; most agents are used to this
and will not object. Once you select someone you feel good about working
with, sign them up as a buyers' agent. It is very important that the
person you're working with is representing you exclusively.
3. Meeting with your agent for a home
buyer's consultation Also a very important step in the process, this
is when you and your agent prepare each other for exactly what to
expect along the way. The following points should be covered and fully
understood during this meeting: Exactly what your needs are (number
of bedrooms, baths, etc.), in which areas you're looking, what price
range you are comfortable with, and what your time line is. It takes
generally takes 30 to 45 days from purchase to closing. How often
you are available to look and what you expect from your agent in terms
of availability and communication (e-mail, phone updates either daily
or weekly). Your agent should give you copies of all the paperwork
you will be expected to sign throughout the process and briefly explain
what each form is for. Your agent should explain buyer brokerage vs.
seller's representation, and you should sign a buyer broker agreement.
4. Look at homes This is the fun part.
It is important to limit the number of homes you're looking at in
a day. If you look at too many homes, they begin to run together,
and you can't remember one from another. It's a good idea to use a
checklist form to help you track the properties you have seen. It
is also helpful to actually begin to narrow down the properties after
each visit. For example, if house #3 was better than house #2, immediately
eliminate house #2. Remember, communication with your agent is crucial.
It's important to let your agent know which houses you like and why,
as well as which houses you don't like and why. Sometimes it takes
going out and looking one time before you and your agent really have
a good grip on exactly what you're looking for. Call your agent, and
have him/her do the research on any advertised properties that look
interesting to you. That's what agents get paid for. If you should
become interested in a for-sale-by- owner, ask your agent to contact
the seller before you do, to see if he/she will cooperate (pay a commission)
with a buyers' agent.
5. Select a home Once you've narrowed
your search down to one or two homes that you really like, your agent
will do whatever research necessary to help you make your decision,
but the decision will ultimately be yours. And surprisingly enough,
it's going to be a pretty easy decision to make. Buyers are welcome
to call the local chambers of commerce for any statistics in which
they might be interested. Local zoning and planning offices are a
good source for future road plans, etc. Once you've selected one home
to focus on, your agents will do a comparative market analysis on
that property. This involves determining "fair market value" by looking
at what other buyers were willing to pay for properties similar to
yours in the same neighborhood or area.
6. Making an offer & negotiation When
making an offer on a property, it is important to decide ahead of
time how much you are willing to pay at what terms for the house.
You already know what fair market value is. Now you have to decide
what price you will offer; how much deposit you will offer; what personal
property you wish to have convey (everything is negotiable); when
you plan to close; and what inspections you plan to have conducted.
When negotiating with any seller, it's best to remember not to take
anything personally. Also, try to put yourself in the seller's shoes.
Figure out what's not negotiable to you, and be willing to give a
little on the things that are negotiable. A good agent should be able
to give you tons of advice about how to structure your offer. Once
your offer has been presented, the seller will either accept your
offer outright, reject your offer outright, or counter your offer.
The counter process can go back and forth many times. It's important
for all parties to keep their cool and focus on the goal.
7. Get inspections & remove conditions
If, as part of your offer, you asked for time to be allowed to have
inspections conducted on the property, you should have written what
is called a conditional offer. Offers can be conditional upon financing,
inspections, the receipt of acceptable condo estoppels certificates,
the sale of property, and many other conditions. It is important that
all deadlines be met and that all conditions are removed exactly the
way the contract describes. Your agents are responsible for making
sure this is done correctly.
8. Walk-through Most sales agreements
will give the buyer the right to one pre-closing inspection. This
is your last chance to find any problems and have the seller correct
them. Read the contract carefully, but most contracts read that all
electrical systems, plumbing, appliances, heating, and air conditioning
need to be in working order at the time of closing. These are the
items you checking for at walk-through. You are also checking for
any other items the seller previously agreed to fix or replace. If
anything is found to be defective or missing, you have several options:
The seller can remedy the problem prior to closing; the seller can
credit you the amount of money it would take to hire someone to remedy
the problem; or the seller can promise to correct the problem and
place into escrow with the attorney the amount of money you will need
to pay someone else if the seller does not perform as promised. On
new-home purchases, the process is a little different. The builder
will generally do a walk-through with you approximately one to two
weeks prior to closing, resulting in a "punch-out list." Hopefully,
they will get everything on the punch-out list completed prior to
settlement. If not, most new-home contracts allow the builder to complete
whatever minor items have been noted in a "reasonable" period of time.
9. Closing on your home This is the
day you "sign your life away," as most clients say. Not really. You
will be signing all of the mortgage documentation, which can seem
never-ending. The lawyer conducting the settlement should be able
to explain every document to you in a satisfactory manner. Do not
ever feel intimidated. If you don't understand, don't sign. Your lawyer
will help your understand everything. If you like, you can request
blank copies of the documents you will be signing in advance so that
you can carefully review them. You will have to present whatever down
payment and closing-cost funds you were expected to pay. This check
must be certified; personal cheques usually are not accepted.
10. Moving day This is the last and
probably the hardest step in the home-buying process. A little bit
of planning and forethought, though, will make for a much smoother
move. You will want to make arrangements with a moving company as
soon as you can. Call at least two in order to get competitive quotes.
They will usually ask to come to your home to get an idea of how much
they will be moving and the distance they will need to travel. Be
sure to change your address with the post office, your banks, and
any creditors at least 30 days in advance. To avoid late payments,
it's a good idea to actually call and verify receipt of the address
change whenever possible. Call to order your utility hook-ups approximately
10 days prior to your move. Be aware that some utility companies will
keep you on the phone for a long time.