Buyer’s Guide
Buying Process
Buying Process
1
Choose a Realtor
Purchasing a home is one of the biggest decisions of you and your family’s lives. Let Douglas Elliman Real Estate help. All of our Realtors are experienced, full-time, agents licensed by the state of Texas, who specialize in making the buying process as easy and stressfree as possible. No rm knows the Austin area be er than we do
2
Qualify for a Loan
Your Douglas Elliman Realtor will guide you through this process. Frequently, the seller will request a pre-approved le er when an o er is presented.
3
Decide on Location
Issues to consider include the price of properties, the school district, travel distances to work and school, property taxes, and area amenities. Your Douglas Elliman Realtor will provide you with detailed information about the neighborhoods you are interested in, and coordinate the showings of appropriate properties.
4
Decide on Your Wants and Needs
Make a wish list of what you want in a home before you start looking. Include what you want and what you need, which items you are willing to give up and which are most important. This will help you decide which type of home will be the best t: new construction or an older home; single family, townhome or condominium.
5
Submit an O!er
All copies, forms and documents required for signature, will be provided to you by your Douglas Elliman Realtor. You will come to appreciate the seasoned negotiation skills of your sales associate during this stage. He or she will take care of every detail, such as helping you choose a quali ed home inspector.
6
Close the Transaction
Your Douglas Elliman Realtor will continue to represent your best interests all the way to closing. Our two buyer’s checklists (1) Prior to Closing and (2) Required at Closing will help you know what to expect.
Why Hire a Realtor®
There are four ways in which you can be represented by a real estate agent during the process of buying a home. Buyers are sometimes not aware that an agent can represent their interests exclusively and negotiate on their behalf.
1
Unrepresented Buyer
When you work without a buyer’s agent representing you, the seller’s agent’s !duciary duty is exclusively to the seller. In this scenario, a buyer should not mention anything they do not want the seller to know because the seller’s agent must disclose to the seller any important information that a ects the home sale. This is important to remember when meeting listing agents at open houses or inquiring about listings.
2
Buyer Representation
When you hire an agent to represent you, their !duciary duty is solely to you. The agent must put your interests as a buyer !rst and must provide you with any important information that a ects your home purchase. This allows both parties to be represented equally.
3
Intermediary Representation
An Intermediary Relationship occurs when one Broker/Company represents both parties in a transaction and assigns agents to represent each party exclusively. Each party of the transaction will agree to the relationship in writing. If the home you buy is listed with another Douglas Elliman agent, then I will be assigned to you in an intermediary capacity. The other Douglas Elliman agent will represent the seller. I will still have exclusive !duciary duty to you and cannot disclose any of your information to the seller or the seller’s agent.
4
Subagent-No Buyer Representation Agreement
If an agent shows you homes without having you sign a Buyer Representation Agreement, they are, by law, acting as a subagent to the seller and have !duciary duties to the seller, not the buyer. In this case, the buyer should not reveal any con!dential information as the subagent must disclose to the seller any material information they may know.
Getting Started
1
Clean Up Your Credit
Banks use credit scores to evaluate the risk of lending to individuals. If you know you’ll need to borrow money from a bank to !nance your home, learn your credit score as soon as possible and work to boost it as needed. Reputable credit score websites will provide your credit details without damaging your score.
2
Prepare Your Savings
You typically could be asked to put down as much as 20% of the sale price upfront, plus additional closing costs. Your real estate agent will be able to provide you with a complete breakdown of these associated costs.
3
Get a Pre-Quali cation Estimate
This can easily be done over the phone with your bank or mortgage professional. A loan o$cer will ask you about your income, assets, debts and projected down payment. They will then determine the amount you’ll most likely qualify for based on the information you’ve provided.
4
Complete Loan Pre-Approval
A%er pre-quali cation, you’ll want to work with a lending institution to receive a wri en “good-faith” estimate of the amount you’ll be able to borrow. This step requires an in-person appointment and a possible fee. You’ll be expected to submit more information, such as pay stubs, bank statements, tax returns and other nancial documents. Once you receive your pre-approved loan statement, it is normally valid 60 days.
Financing Overview
Apply For a Loan
Working with a lender is an important early step in the home buying process. Applying for a loan is time consuming and so it is important to begin the paperwork as soon as possible.
What You Need
• Pay Stubs
• W-2 Forms
• Bank Statements
• Information about other loans
Once you submit your application, your lender will provide a Loan Estimate, which will state the terms of your loan and total estimated costs.
What Your Lender Handles
• Home Appraisal
• Underwriting
• Credit Report
Once you submit your application, your lender will provide a Loan Estimate, which will state the terms of your loan and total estimated costs.
Lock in Your Rate
Once you receive a loan with a favorable interest rate, proceed with that. Most lenders will lock in your chosen interest rate for 30-60 days to give you enough time for approval and closing on your home.
Starting Your Home Search
It is important to understand and evaluate your home buying needs in your rst meeting. This will be er prepare your agent to help you locate your dream home.
New Construction vs. Resale Homes
New construction homes are typically lower maintenance, easily customizable, and come with warranties from the builder. If you are looking for a home that will be a great canvas for renovations or models, then resale would be a great option.
For Sale by Owner
Sellers occasionally choose to list their homes themselves rather than with an agent. We will work together to help you locate and work with these sellers.
Foreclosures and Short Sales
The process for buying foreclosed and short sale homes is incredibly di erent from a regular home purchase. Due to the complications, you will need an experienced agent to guide you through the process.
MLS Search
The Douglas Elliman website syncs with the MLS to ensure you have access to the latest listings.
New Construction House Hunting
When purchasing a new construction, there are two main options for you to consider:
1 2
To-Be-Built
• Buyer chooses the oor plan, lot, and makes selections
• Price consists of:
o Base Price
o Lot Premium
o Design Upgrades
o Structural Upgrades
• The time from contract to close is
between 7-10 months.
Spec/Inventory
• Builder chooses the oor plan, lot, and makes selections
• Builder sets a price which includes base price, lot premium, and upgrades
• Builder sets an estimated completion date and buyer can purchase prior to completion
PRO TIPS:
Partner with a Trusted DE Agent
Your agent will serve as your advocate throughout the process of negotiating a new, !nished home as well as through the building phase of a “to-be-built” home. This includes helping you arrange pricing and terms, navigate builder contracts, and more.
Set a Budget for Upgrades
It is important to set a budget for upgrades and prioritize what is best to have the builder incorporate now versus what might need to wait for later.
Bring Us To Your First Appointment
Some builders might suggest or require that an agent a$end the !rst meeting at a model home in order to represent you.
Make Timely Decisions
“To-be-built” homes o%en have decision deadlines for oor, paint, cabinet, and hardware selections. Stick to the builder’s schedule to avoid closing delays.
Prepare for a Change of Closing Date
Construction delays are common. Thus it is best to have a place lined up for 60-90 days a%er your tentative closing date.
Get an Inspection
While most new homes come with a warranty, to prevent headaches it is best to hire a home inspector to inspect your new priority to spot punch list items and issues prior to move-in.
Prepare for “Preferred Builder Lenders”
Builders o%en partner with mortgage companies to o er incentives in exchange for using their lender of choice. To ensure you get the best deal, it is best to compare all of your options before you decide.
House Hunting/ Touring Process
The Process:
• Make a list of your top 4-6 homes
• We will schedule the showings with the listing agent/seller/Builder (24 hr notice is preferred)
• “Decision makers” should be present at the showings
• A%er we view all of the homes, we will rank them.
• Our typical buyer views between 5-10 homes to nd their match.
Pro Tips
• Make sure you take a look at the neighborhood during di erent times of the day.
• Determine what is included in the HOA and what the ultimate fees are.
• Evaluate the potential utility costs.
• Talk to neighbors.
• If you pull up to a house and you are not interested, please let us know.
• It’s okay to fall in love with the rst home.
Make An O!er
• Sales Price: We’ll discuss a competitive o er based on the speci c home you are interested in purchasing
• Earnest Money Deposit: Typically 1-2% of the purchase price. This is your “Good Faith Deposit” held by the Title Company due within 3 days of execution (wired or personal check)
• Option Period: Due diligence period where buyer has the “unrestricted right” to back out.
• Option Fee: $500-$1500 - Due within 3 days of execution (wired or personal check)
• Owner’s Title Policy: (Title Insurance) Based on the sales price ($300k - $2k | $500k - $3k | $750k - $4,500 | $IM - $6k).
• Survey: Shows the footprint of the property, including boundaries, easements, encroachments, etc. ($500-$700).
• Home Warranty: Covers appliances for the rst year of the home ($500-600).
• Closing Date: Typically -30 days from an accepted o er
Multiple O!ers
Your “Walk Away” Price
Know when you have reached your a ordability or comfort limit. Talk to your real estate agent about the maximum price you are truly willing to pay during this process.
Timeline of events:
Small Changes That Make a Big Di!erence
Between exible closing dates to increased earnest money and option fees, there are many avenues to increasing the odds of a seller accepting your o er. It is important to discuss with your agent in advance to determine which items might be of importance to the seller of your desired home.
Best and Highest
In a multiple o er situation, many agents will ask for each party to submit their “best and highest” o er. Usually, there are no revisions to this once submi$ed. In order to maximize your chance of ge$ing the property, speak with your agent about your o er as soon as possible.
Please - Don’t Take it Personally!
We know that emotions can o%en run high during this stressful time. Both parties are simply trying to negotiate for the best solution for their needs and !nances.
Inspections & Repairs
• While it is not mandatory to hire an inspector, we highly recommend doing so (even when purchasing a new construction).
• Inspectors are licensed through TREC and their job is to identify any de!ciencies in the home.
• The home inspection is scheduled during the Option Period and typically costs between $350 - $550.
o Please note there are additional costs for pools, septic systems, pier and beam foundations, etc
• The inspection report is typically sent directly to the buyer within 24 hours of the inspection.
When negotiating, it is important to see what a!ects to functionality of the home. There are ve things we will focus on during this process:
• HVAC
• Plumbing
• Electrical/Safety Hazards
• Foundation
• Roof
There are 3 common ways that repairs are negotiated:
• Ask the seller to make repairs
• Ask the seller for money towards your closing costs
• Ask for a reduction of the sales price
Getting An Appraisal
• What is an appraisal? It is a subjective third party opinion of the home’s value.
• The bank will send an appraiser to justify the value of the “asset” they are lending on.
• Ideally, the appraiser will appraise the home at or above the sales price.
• Sometimes, an appraisal comes in lower than we would like. If this happens, your real estate agent will help guide you through the next steps.
Final Walkthrough & Closing Day
The Walk-through
Why
The walk-through is an important part of the due diligence process. We must ensure that negotiated repairs have been completed, that the seller has truly vacated the home, and that no damage was done during the move-out process. You can also check that any non-realty items negotiated remain in the home.
When
Walk-th roughs generally occur the day before or the morning of the closing. This timing is exible.
How Long
Generally speaking a !nal walk through takes about 30 minutes
Closing Day
Identi cation
Please bring your driver’s license or passport for identi!cation. The title company cannot close your property sale without these IDs.
Cashier’s Check or Wire Transfer Con rmation
Please bring a cashier’s check (no personal checks) or your wiring instructions and con!rmation number for your down payment funds to provide to your title company closer.
Check for Last Minute Adjustments
In case of small last-minute adjustments, a personal check is nice to have on hand.
Funding
Please note you will not receive keys until the Title Company authorizes funding.
Buyer Representation Documents
In order to receive the highest level of representation and service, the next step is for you to sign the required documents. Below you will nd a description of the documents you’ll need to sign to move to the next step of the home buying process:
• Information About Brokerage Services: An informational document required by the Texas Real Estate Commission (TREC) which explains a broker’s minimum duties to their clients. It also de!nes the di erent types of agency.
• Buyer Representation Agreement: An agreement that o cially allows me to represent you while we search for a home. Without a Buyer Rep. in place, I can assist you but do not represent you and must place the interests of the owner !rst (see “Subagent” on the LABS document).
• General Information & Notice to Buyer: An informational document that acts as a glossary of terms you may encounter throughout your home buying experience.
• Wire Fraud Warning: An informational document that warns you about the dangers of wiring funds without con!rming wiring instructions with the Title Company.
Common Out-of-Pocket Expenses
To Expect as a Buyer
• Buyer Agent Fee: 3% of Purchase Price (Can be paid by the Seller, but in some cases, may be a Buyer expense)
• Earnest Money Deposit: Typically 1-2% of Purchase Price (refundable at closing)
• Option Fee: ~$500-1500 (refundable at closing, non-refundable if you terminate the contract)
• General Home Inspection: $400-700
- Additional Vendors/Contractors (HVAC, Foundation, Plumber, Electrician): Amounts vary
• Termite Inspection: $100-200
• Appraisal: $500-800
• HOA Transfer Fees: $250-$1000
• Lender Closing Costs & Prepaids: Varies by lender, so we recommend requesting a Fee Sheet/Loan Estimate