ENJOY NEW HOME
You are one step closer If you’re reading this booklet, you are probably getting closer to one of life’s more exciting events: Home Ownership. If this isn’t your first home, than you may be preparing for a new adventure or simply a change of scenery. Where ever you are in your life we hope to provide you the tools to make the process more organized and guided.
CONTENTS STEP 1: Pre-Approval • The Wrong Next Step • The Right Next Step STEP 2: Your Home Search • The MLS • Your Search Criteria • Lets go see some homes STEP 3: Showings • Home Sale and Rental Showings • Investor Showings • Short Sale Showings • Bank Owned / Foreclosed STEP 4: Your Found Your Home • The Offer • “We Have a Deal!” • Earnest Money • 5 Day Attorney Review / Home Inspection STEP 5: Post Inspection to Closing • You’re Getting Closer • The Closing
Because Real Estate is unique and very individual people or home specific, please consult a professional for specifics pertaining to your situation. This is simply a guide.
Finding your new home Now that you are Pre-Approved and understand your buying power you can benefit from the tools and experience of a Realtor to design a custom home search based on your criteria.
The MLS Realtors use the MLS (Multiple Listing Service) which is a members only directory of all listed homes by all Realtors, usually covering the entire State or Metro Area. The MLS is a real-time database that will provide detailed information provided by selling agents and can be searched by buyer’s agents with very specific criteria. Ever been to Realtor.com or another agent website and viewed homes online? The information on these sites is fed from the MLS. However, the MLS is the only true real-time platform that is current and updated instantly.
Your Search Criteria What do you want to be close to? How many bedrooms? How many baths? Basement? School District? 1st floor or top floor? How much do you feel comfortable spending per month (based on preapproval) inclusive of loan, taxes, association payments and insurance? There are many options and ways to formulate the most effective search to find your new home. Describe your wants and hopes to your Realtor and he/she can set up an email search to try to match it. The MLS will also give you the ability to mark properties as “Interested” or “Not Interested” from the comfort of your computer. As you move forward your agent will begin to see the style and preferences you choose and use their experience to progress to the next step: See Homes.
Lets go see some homes! Based on your conversations with the agent, and MLS review, its time to go look inside the homes within your criteria. You may have picked out several homes that interested you, and your Realtor may have picked out some that he/she thought may also fit your description. Coordinate a time that works best for everyone and the fun part begins.
Guided Search! Your agent will schedule a number of home showings to maximize your exposure within a limited amount of time. Now that your search is focused within proper parameters, you can comfortably pick and choose from the homes selected. Voice your opinions to your agent so they can listen to what you like and dislike, and further make modifications to your search criteria. Showings are scheduled by appointment only, so it takes some time to prepare. Give your agent at least a day of notice so they can consider the best selections and get them scheduled.
Home Sale and Rental Showings Eat breakfast and dress comfortably – You’re Going Shopping! Your agent will serve as your guide, from home to home, pointing out pluses and concerns. As you move forward, you will begin to explore the physical and geographic options of your new home.
Investor Showings Because your search is focus on either income, future value, and profit: RUN YOUR NUMBERS! Your agent should be able to provide you a pro-forma to determine today’s potential and future gain. If you’re looking at rental properties, consider rental price, vacancy rate, and cost of maintenance.
Short Sale Showings Although the mortgage industry is getting better at improving this process, short sales typically take a longer time to negotiate and close. This will vary from 2 – 9 months depending on the situation. Often the seller may accept an offer but the bank may negotiate to request more money. This to be treated on a case by case basis. There are many varying circumstances around short sales.
Bank Owned / Foreclosed This type of seller has already evaluated their gains/losses and is often willing to respond quickly. This type of sale is often priced aggressively, has the largest amount of buyer attention which may lead to a multiple-offer scenario, and will not be considered with a home sale contingency. Seller is usually unwilling to provide credits or repairs, and homes are sold in As-Is condition, thus offered at an aggressive price. TIPS from Experience
Until you “feel it” in your mind, your heart, and your gut, its probably not the right one.
Should you do a Home Inspection on a home sold in AS-IS Condition? Yes. Property sold in AS-IS condition means the seller would like to transfer the responsibility of defects or repairs to the buyer. However, because many defects are not blatant, it may require the close eye of a home inspector to find issues that may exceed your comfort to buy the home. You can either take on the repairs found or take a step back. Often sellers will reconsider discussion on issues that would prevent every buyer from purchasing the home.
Found it? Make it yours At one point during your search you walked into a property that fit like a glove. So how do you buy it?
The Offer Upon your decision to purchase a property, the next step is to write an offer and revisit with your lender to get an updated Pre-Approval letter. You will want to make sure the home criteria matches your financial qualifications. The offer will provide information regarding your timing, real and personal property requested, and your financial capabilities. It will also provide your initial offer amount. Your Realtor will communicate back and forth with the Listing Agent, to negotiate your terms and conditions while informing you of seller responses. Each situation is different so to stipulate specifics is not productive, however negotiation tactics and approach rely on your Realtor’s experience to predict most probable outcome.
“We have a deal!” The most commonly used term in the industry translating “Congratulations, you and the seller have come to terms.” So do you get the house now? Not yet and there is much work ahead, but some of the hardest parts are behind you. After all the changes from the negotiations are reflected on the contract, they get initialed and sent to your attorney for review. At this point you will be asked to provide a check for Earnest Money.
Earnest Money This check represents your conditional desire to purchase a home subject to mortgage and inspection. The check is cashed (typically by the listing office) and held in your name until the closing at which point it comes back to you. Should your deal become jeopardized due to various circumstances your earnest money may or may not be protected. Consult an agent or real estate attorney for more detail.
5 Day Attorney Review / Home Inspection 1 day after the date the seller signed the offer the A/I Review begins. You have 5 Business Days (excluding weekends and holidays) to perform a home inspection and submit your concerns to your attorney, for them to voice your concerns to the seller’s attorney within this time frame. The home inspection will focus on physical deficiencies of the home. Some issues may be minor and not a big deal, but some may concern you beyond your comfort. Because scenario’s differ consult your agent or attorney. The Attorney Review will focus on the legal language, tax prorations, PITI and a large number of varying factors to be reviewed by your legal council. The 5 day review will allow for due diligence with the ability to withdraw your offer often protecting your earnest money.
You’re getting closer Once all the details around your 5 Day Attorney Review and Inspection are completed the next contingency is the mortgage. When you were pre-approved there was a number of questions and documents provided to the lender for you to get to next step in the process. Now, it’s time to validate it. Your lender will ask you for check stubs, W2’s, 1099’s, income statements, tax details and much more. They do this to organize a full file inclusive of your purchase contract and disclosures to be submitted in the most complete form to the underwriters. Underwriters review loan packages to protect the lender, validate your buying power and ensure that there is proper documentation supporting your financial capabilities. Why? Because you have asked them to lend you money and they want to make sure that you will pay it back. Once your lender receives a Loan Commitment he/she will also receive a Clear To Close. (That’s a good thing). Upon the receipt of these the attorneys pull Title and may order a Survey (if detached property, non corporate owned). The closing is getting scheduled next and there are only 2 things for you to do: final walk-through and closing. Home Owners Insurance You will want to start doing research on Home Owners Insurance. If single family home, you will required to show proof of insurance. On condominiums sometimes it isn’t required due to the exterior being insured by the association however this should be confirmed. Also, even if condo insurance, whenever you share walls with people you do not know, its smart to protect your investment from the interior. Final Walk Through This typically occurs the day of or the day before the closing. This gives you an opportunity to view the home before you pay for it, to make sure everything is just the way when you found it. The Closing You’re almost there! Your attorney or Realtor will let you know when/where the closing is. Bring your driver’s license, money to close per your attorney’s or lender’s direction, and a check book. A closing takes anywhere from 1 + hours. Some will take longer due to funds being transferred between locations via a wire. Upon the closing seller gets money left over from the closing or release from their mortgage, your bank gets a promise that you will pay for the loan, and you get the keys to your new home, Your Realtor will probably be teary eyed but he/she will have to get over it. From time to time your agent may reach out to you so you don’t forget him/her, in case you need anything once you move in.
Published on Apr 20, 2010