SUPERIOR SERVICE IN ATTAINING YOUR REAL ESTATE GOALS
HOME BUYER'S GUIDE PREPARING FOR A SUCCESSFUL PURCHASE
THE HOME BUYING PROCESS Overvi ew & bri ef expl anati on of the step-bystep process & what to expect
HOW A REAL ESTATE TRANSACTION WORKS I l l ustrati on of the transacti on process from start to fi ni sh. Use thi s to track your progress & understand the next steps so there are no surpri ses!
NEGOTIATING FOR SUCCESS Creati ve i deas on negoti ati ng your purchase to make the home yours
WALKTHROUGH WITH CONFIDENCE I nsi ght on bi g ti cket i tems to l ook out for to avoi d l arge out of pocket costs
HOME BUYERS GLOSSARY I mportant key concepts & terms that wi l l hel p you throughout the purchase process.
THE HOME BUYING PROCESS EXPECTATIONS & EXPLANATIONS Whether your a f i rst ti me homebuyer or have bought mul ti pl e homes i n the past, many ti mes purchasi ng a home represents your si ngl e bi ggest i nvestment & the process can be an exci ti ng but al so a stressf ul one. There are many f actors to consi der when purchasi ng & i t’ s i mportant to have al l the avai l abl e resources necessary to make a wel l -i nf ormed deci si on. Wi th the i ntegrati on of technol ogy i nto our dai l y l i ves i n thi s day & age, buyers have many tool s at thei r f i ngerti ps whi ch al l ow them to become more educated when purchasi ng a home, but wi th the over saturati on of i nf ormati on avai l abl e many f i nd themsel ves mi sgui ded on whi ch opti ons are the best f or them. Bel ow are some hel pf ul poi nts to consi der when pl anni ng f or a successf ul purchase:
DEFINE YOUR GOALS & RESEARCH YOUR OPTIONS Cl earl y det ermi ne why you’ re buyi ng & creat e a l i st of want s vs. needs whi ch shoul d be a maj or f act or i n your deci si on, because buyi ng & f i nanci ng are so cl osel y rel at ed, i t means exami ni ng your current f i nanci al si t uat i on & proj ect i ng how much you can af f ord t hat wi l l sui t your l i f est yl e & put you i n t he best f i nanci al si t uat i on t o be abl e t o pay t he mort gage & associ at ed cost s as wel l as t o bui l d equi t y over t i me.
GET PRE-APPROVED FOR A LOAN General l y, i t i s recommended t hat you get preapproved f or a l oan bef ore you st art vi ewi ng any homes wi t h t he seri ous i nt ent i on of buyi ng. The pre- approval process i nvol ves meet i ng wi t h a l ender & aut hori zi ng t hem t o exami ne your current f i nanci al si t uat i on as wel l as credi t hi st ory. On t he basi s of t hi s exami nat i on, t he l ender wi l l provi de you wi t h a document t hat det ai l s how much you can borrow al ong wi t h t he rel at ed mont hl y/ annual f ees. You may want t o consi der shoppi ng around t o see what di f f erent l enders of f er or cont act i ng your l ocal bank or credi t uni on t o see who wi l l provi de you t he most val ue & i nf ormat i on t o pl an accordi ngl y. As a qual i f i ed buyer you’ l l be t aken more seri ousl y when you make an of f er on a home. Sel l ers wi l l not consi der any of f ers wi t hout a pre- approval & some wi l l not even aut hori ze a showi ng. Lenders wi l l al so i nf orm you whet her you qual i f y f or any speci al programs t hat wi l l enabl e you t o get a bet t er ret urn on your i nvest ment .
FROM OFFER... Af ter narrowi ng down your search & f i ndi ng a home you want to move f orward wi th, the next steps are presenti ng the paperwork whi ch wi l l hopef ul l y l ead to negoti ati ons & cl osi ng. Unti l then there are many i ntri cate steps & due di l i gence that needs to occur to make f or a smooth transacti on. Bel ow i s a bri ef expl anati on of the each step & expectati ons f or each phase:
Having found the home you’d like to buy, it’s time to make
With the property in Under Contract status, you
an offer! Your local real estate association, working with legal
are now ready to move forward & conduct
counsel, has developed the contracts that are used for
inspections. During this period you are free to do
transactions in your state/area. These contracts enable you to
any lender required & personal due diligence on
specify a sale price & include many clauses for specifying
the property. Should there be any issues, pending
various terms of purchase, such as the closing & possession
on the contract terms agreed on in Attorney
dates, your deposit amount, along with other conditions. You
Review, you are still allowed to negotiate repairs,
should carefully review these clauses with your REALTOR® to
ask for credits or back out of the transaction
ensure that they express your desired offer. Once you’ve
should you find anything damaging which restricts
written the offer, your REALTOR® will present it to the seller
you to move forward.
and/or the seller’s representative. Generally, the seller can accept your offer, reject it, or counter it to initiate the negotiation process. Successive counter-offers, with deadlines
for responding & meeting conditions, will be exchanged
Once you have a pending agreement, it’s time to go
between you & the seller until a mutually-satisfactory pending agreement is reached or the negotiations breakdown.
back to your chosen lender to finalize your mortgage details so the deal can be closed. This means finalizing your down payment, interest rate,
regular payment schedule & any other financial
After your offer is accepted & all the details are ironed out,
conditions associated with the closing. If you’ve
the seller(s) sign the paperwork to create a fully executed
already been qualified with a lender for a certain
contract. At this point, the transaction goes to an Attorney
loan & home purchase, this phase of buying your
Review period, where the fully executed contract is reviewed
new home should be a relatively straightforward
by both the seller's & buyer's attorneys as well as any further
matter that centers around finalizing the loan
changes/requests are made. During this period, which
details & signing the mortgage papers. As the old
usually takes from 3-7 days in the state of New Jersey, you
saying goes, ‘let the buyer beware’. Particularly in
are still legally able to search & view other homes that may
these times, when so many buyers are suffering the
become available & back out of any current negotiations
consequences of having not fully understood their
should you find something better. However, once both
financing decisions, it’s crucial for you to work with
parties are satisfied with the changes/requests the process
people you trust & provide you transparency. Ask as
concludes & the transaction moves to an Under Contract
many questions as you/d like if anything is unclear.
phase – during this time all parties are bound to a contract & need to follow it's terms & conditions.
...TO CLOSING 05.
If you’ve efficiently taken care of everything connected with purchasing your new home, the experience of taking ownership will be a positive one with no surprises. Key steps to the closing, also referred to as the “escrow” or “settlement”, which include: • Getting a Title Search – a historical review of all legal documents relating to ownership of the property to ensure that there are no claims against the title of the property. It is also a lender requirement to purchase Title Insurance in case the records contain errors or there are mistakes in the review process. This will usually be handled by your legal counsel who you have appointed to represent you in the transaction. They usually refer a title agency or have one they consistently use for these type of matters, however you are allowed to pick your own title agency if you wish to carry out these tasks for you. • The Final Walkthrough – you, along with your REALTOR® present, will be given the chance to look at the home usually a few hours before on the day of closing to make sure it’s in the same condition as when you signed the sale agreement & to insure that any requests made during negotiations have been fully carried out. Should you not be satisfied, your agent will address these issues at the closing table & the seller will be withheld a portion of agreed upon funds for the sale until those requests are complete. • The Settlement – typically, on the Closing Date you’ll go your attorneys office to verify & sign all the paperwork required to complete the transaction. The settlement will include paying your closing costs, legal fees, property adjustments and transfer taxes. At that point, you’ll receive the property title & copies of all documentation pertaining to the purchase.
TO GIVE REAL SERVICE YOU MUST ADD SOMETHING WHICH CANNOT BE BOUGHT OR MEASURED WITH MONEY, AND THAT IS SINCERITY AND INTEGRITY
HOW A REAL ESTATE TRANSACTION WORKS
SUCCESSFULLY NEGOTIATION TIPS Negotiating the transaction is usually the most complex aspect of buying a home. At the same time, it’s the one that can involve the most creativity. That’s why it’s important to have an experienced and savvy REALTOR® who has successfully worked through many different transaction scenarios. That said, what follows are a few strategies for negotiating a good deal in a today's market, all of which involve: presenting yourself as a serious buyer while keeping your emotions in check; trying to understand & respect the priorities of the seller; being creative & where necessary, willing to compromise to get the home you desire.
STRIKE A BALANCE As a buyer it all starts before you even make an offer, the first time you see that home you think might be "THE ONE". It’s important that you not give yourself away to the listing agent by getting too excited about your “find”. If anything, ask a few questions, maybe take a few notes, and let your REALTOR® do most of the talking. Ideally you’re trying to strike a balance by appearing to be a qualified, motivated buyer while not appearing to be too eager. You’ll demonstrate that you’re a serious buyer at the time you make the offer, particularly if you: Have already sold your present home (if you have one); or in any case, make it clear that you’re not dependent upon selling Make an all-cash offer, if possible, or show that you're a pre-approved, willing & able buyer. Provide an attractive earnest deposit with the initial offer Always make an offer that still gives you room to negotiate your price but keeping in mind the percentage (%) of purchase price that sellers are getting in that particular area – ask you agent for details on this. Not only will this approach show that you’re qualified & motivated, it will place you in a stronger negotiating position overall. The sellers won’t want to lose a buyer so they will be more inclined to work with you and/or make some concessions with respect to terms.
IT'S MORE THAN JUST THE PRICE While a home’s sale price is generally the focus of negotiations, often the terms of purchase can significantly influence the final deal which can represent thousands of dollars in value & where you can get most creative when it comes to resolving any obstacles. Below are some creative ideas that you might want to consider when negotiating: An all-cash offer by you, if possible, or more than 20% down payment. Time of essence on closing & possession dates; the quicker the better. Inclusion of furniture, fixtures, etc., not considered part of the property. Payment on repairs required by your lender. Forgoing seller concessions. Payment of seller's attorney’s fees Flexible closing if seller's need more time to find a new place etc.
IF SO, MAKE IT SO Is It Really "The One"? – If so, you should be willing to make some compromises to make the deal happen. Below are a few basic principles to consider if you’re committed to completing your purchase: Remember your priorities & respect the seller’s – don’t let small things get in the way of your better judgment. If necessary, defer until later. Focus on and consolidate your agreement on the big issues and come back to the small ones later. If there are disagreements about relative small expenses, be willing to split the difference. In the event that there are difficulties but you’re committed to buying the home, remember: where there’s a will there’s a way, so do not be afraid to think outside the box to make the home yours. The goal is to get all terms of the purchase in writing within the agreement. These terms should then be carefully reviewed & clearly understood by both you & the seller so that you’re on the same page & the negotiations move forward.
WALKTHROUGH WITH CONFIDENCE Whether you are buying an older move-in ready home or a fixer upper, utilities such as electrical & mechanical can be leave a dent in your wallet should any of them not be properly functioning or toward the end of their lifecycle. To name a few, a water heater is an important appliance in all residential homes. Unfortunately, they do not last forever, it's important to know the installation date to determine if it's time to replace it completely or in the near future. Most modern water heaters will display a sticker that shows the installation date; on older models, you can determine the age of your unit by decoding the water heater serial number. Some manufacturers make it easy by incorporating the month & year built into the first 4 digits of the serial number. Verifying the installation date doesn't necessarily prove the age of the water heater but it does help with making an educated home improvement decision. If you are purchasing an older home with an existing furnace make sure to do your research; a furnace often needs replacement after 15 to 20 years, so knowing its age is helpful in determining if a new furnace should be factored into your budget. Newer units may have a manufacturer's date listed somewhere on the furnace as older furnaces require some investigative work, similar to the water heater, by looking at the serial number. It doesn’t take long to figure out that the electrical needs of present day homes far surpass those of homes that were built in the early 1900's & beyond. It is common to find electrical systems that are outdated & can't safely handle today’s electrical standards. If you are looking at older homes you may find that 60 Amp electrical systems are standard & were sufficient for occupants in that era. Currently, 200 Amp/240 Volt service has been the norm for the average single family homes built in the last two decades & at times a 100 Amp/240 Volt service may do – mostly in townhomes, condos, or homes which have natural gas appliances. If needed, make sure to check with an electrical professional to get an estimate on what a service conversion will entail & factor that into your price. Knowing the early warning signs of foundation problems can offset costs of tens of thousands of dollars. The sooner you identify potential problems, the easier — and less expensive — it is to fix them. On the outside, check to see if your foundation is straight by sighting down the length of your foundation wall from each corner. Check for signs of leaning walls or for any horizontal cracks; it is common to find vertical cracks in a foundation especially in older homes, however if the cracks are large (i.e.: width of a finger) it is something to take note of & fix as over time water will get in between your foundation to create more issues and/or basement (if the property has one) water issues. Any bulges in either a block foundation or a poured concrete wall could signal that there is possible shifting in the foundation and/or that the soil around your foundation may be expanding & contracting, putting pressure on walls. There are also other factors to consider with the foundation system besides the perimeter walls, make sure to look for posts & concrete supports in the basement or crawl space(s). Posts should stand straight & be firmly planted underneath the beams they support. Bottoms of posts should rest firmly on concrete piers, if they are not or shifting is present this is a sign of possible future issues. Water or any moisture in the basement or crawl space(s) may indicate poor drainage around the perimeter foundation so make sure that soil slopes away from the foundation to make sure water is draining away from the home as this will cause further damage.
KNOWLEDGE IS HOME BUYING POWER A solid roof above your head is pretty crucial to ensure a leak-free home. Make sure to notice all aspects of a roof when looking at a house; shingle cupping, which happens when the edges of the shingles turn upward & shingle clawing, which is when the edges stay flat & the middle begins to raise are both signs of weathering, with potential leaks on the horizon. Many times shingles covered in moss or algae don't look aesthetically pleasing but it is not a major issue. Some owners may choose to replace the roof just because they don't like the way it looks & newer shingles are algae-resistant, whatever your solution, do not take matters into your own hands by power washing or scraping as it is a good way to chip off all the granules which will make your shingles useless. Roof sagging is something that should be red flag to any potential buyers, as a sagging roof is an indication of possible structural issues. There could be a problem with the decking in the attic or even with the supports in the foundation. This is something that's a lot easier to take care when found early or when localized. Some house problems don’t show up overnight, partially blocked or damaged sewer line often falls into this category. The inspector will run water through the fixtures, but are there for a limited time which might not be long enough for the problem to reveal itself. Inspectors will likely determine the type of drain pipe used & estimate its age. They may also look for trees or stumps near the sewer pipe that could cause damage. However, sewer-pipe scoping (sending a camera down the line) isn’t typically included in a standard inspection but something to look into if your buying an older home. The only ways to face the unknown is to be well-informed in order to make the best educated decision. This starts with gaining an understanding of how a house is put together. Don't be overwhelmed if you aren't a home renovation expert when buying a home & the good new is – you don't have to be! All the above mentioned issues & more will be verified for you via a qualified home inspector of your choosing during the purchase process but it is always good to have a decent understanding & knowledge of knowing what to look for so when you are ready to hire an expert you aren't taken for a ride, both on the scope of work as well as financially. As always confirm all repairs & scope of work needed with a qualified licensed professional in the specific field of service. They will be able to provide you with estimates, best possible solutions & work within your budget to get things done correctly.
EXPECTED BUYER EXPENSES Many times buyers underestimate the upfront costs that are associated with a purchase before & at closing. On top of your down payment, below is a list of costs to factor into your budget when purchasing:
LEGAL & TITLE COSTS Attorney Fees Title Search Fees Survey Fees Recording of Deed & Mortgage Title Insurance
INSPECTION COSTS Home Inspection (General) Wood Destroying Insect Inspection (if not included) Sewer Line Inspection Oil Tank Sweep Inspection (if desired)
MORTGAGE COSTS Application Fees (if any) Lender Attorney Fees (if any) Private Mortgage Insurance (PMI) if putting down less than 20% of purchase price Mortgage Placement Points – Fees charged by lending institution for placing the mortgage. One point equals 1% of the mortgage (i.e. 1 (%) point on a $100,000 mortgage = $1,000
MISCELLANEOUS COSTS Prepaid Real Estate Taxes approx. a quarter (3 months) in advance Homeowner's Insurance - one (1) year prepaid premium Flood Insurance (if applicable) One Percent Fee - on sales of residentially zoned properties over $1,000,000 Prepaid Interest - (Mortgage Amount X Interest Rate X # of Days Until Closing)/365
The above are general guidelines to aid the purchaser in calculating settlement costs & serve as a guide for costs you may incur in your transaction. This information is considered reliable but not guaranteed as accurate or complete & is dependent on each purchaser's situation.
A HOME BUYER'S GLOSSARY... IT’S IMPORTANT TO UNDERSTAND SOME OF THE KEY CONCEPTS AND TERMS. THROUGHOUT THE PURCHASE PROCESS, YOUR TEAM WILL BE AVAILABLE TO EXPLAIN ANY UNFAMILIAR TERMS YOU ENCOUNTER. THAT SAID, HERE IS A SHORT LIST OF TERMS YOU’LL WANT TO BE FAMILIAR WITH:
Abstract Of Ti tl e – A compl ete hi stori cal summary of the publ i c records rel ati ng to the l egal ownershi p of a parti cul ar property f rom the ti me of the f i rst transf er to the present.
Apprai sal – A prof essi onal apprai ser’ s esti mate of the market val ue of a property based on l ocal market data and the recent sal e pri ces of si mi l ar properti es
Adj ustabl e Rate Mortgage (ARM) – Al so known as a vari abl e- rate l oan, an ARM i s one i n whi ch the i nterest rate changes over ti me, rel ati ve to an i ndex l i ke the Treasure i ndex.
Assessed Val ue – The val ue pl aced on a home by muni ci pal assessors f or the purposes of determi ni ng property taxes.
Agreement of Sal e – Al so known as contract of purchase, purchase agreement, or sal es agreement accordi ng to l ocati on or j uri sdi cti on. A contract i n whi ch a sel l er and buyer agree to transact under certai n terms spel l ed out i n wri ti ng and si gned by both parti es.
Cl osi ng – The f i nal steps i n the transf er of property ownershi p. On the Cl osi ng Date, as speci f i ed by the sal es agreement, the buyer i nspects and si gns al l the documents rel ati ng to the transacti on and the f i nal di sbursements are pai d. Al so ref erred to as the Settl ement.
Amorti zati on – The process of reduci ng the pri nci pal debt through a schedul e of f i xed payments at regul ar i nterval s of ti me, wi th an i nterest rate speci f i ed i n a l oan document.
Cl osi ng Costs – The costs to compl ete a real estate transacti on i n addi ti on to the pri ce of the home, may i ncl ude: poi nts, taxes, ti tl e i nsurance, apprai sal f ees and l egal f ees.
Conti ngency – A cl ause i n the purchase contract that descri bes certai n condi ti ons that must be met and agreed upon by both buyer and sel l er bef ore the contract i s bi ndi ng. Counter-offer – An of f er, made i n response to a previ ous of f er, that rej ects al l or part of i t whi l e enabl i ng negoti ati ons to conti nue towards a mutual l y- acceptabl e sal es contract. Conventi onal Mortgage – One that i s not i nsured or guaranteed by the f ederal government. Debt- to- I ncome Rati o – A rati o that measures total debt burden. I t i s cal cul ated by di vi di ng gross monthl y Debt-to-Income Rati o – A rati o that measures total debt burden. I t i s cal cul ated by di vi di ng gross monthl y debt repayments, i ncl udi ng mortgages, by gross monthl y i ncome. Down Payment – The money pai d by the buyer to the l ender at the ti me of the cl osi ng. The amount i s the di f f erence between the sal es pri ce and the mortgage l oan. Requi rements vary by l oan type. Smal l er down payments, l ess than 20%, usual l y requi res mortgage i nsurance. Earnest Money – A deposi t gi ven by the buyer to bi nd a purchase of f er and whi ch i s hel d i n escrow. I f the property sal e i s cl osed, the deposi t i s appl i ed to the purchase pri ce. I f the buyer does not f ul f i l l al l contract obl i gati ons, the deposi t may be f orf ei ted.
Equi ty – The val ue of the property, l ess the l oan bal ance and any outstandi ng l i ens or other debts agai nst the property. Easements – Legal ri ght of access to use of a property by i ndi vi dual s or groups f or speci f i c purposes. Easements may af f ect property val ues and are someti mes part of the deed. Escrow – Funds hel d by a neutral thi rd party ( the escrow agent) unti l certai n condi ti ons of a contract are met and the f unds can be pai d out. Escrow accounts are al so used by l oan servi cers to pay property taxes and homeowner’ s i nsurance. Fi xed-Rate Mortgage – A type of mortgage l oan i n whi ch the i nterest rate does not change duri ng the enti re term of the l oan. Home Inspecti on – Prof essi onal i nspecti on of a home, pai d f or by the buyer, to eval uate the qual i ty and saf ety of i ts pl umbi ng, heati ng, wi ri ng, appl i ances, roof , f oundati on, etc. Homeowner’ s Insurance – A pol i cy that protects you and the l ender f rom f i re or f l ood, a l i abi l i ty such as vi si tor i nj ury, or damage to your personal property. Li en – A cl ai m or charge on property f or payment of a debt. Wi th a mortgage, the l ender has the ri ght to take the ti tl e to your property i f you don’ t make the mortgage payments.
Market Val ue – The amount a wi l l i ng buyer woul d pay a wi l l i ng sel l er f or a home. An apprai sed val ue i s an esti mate of the current f ai r market val ue.
Ti tl e – The ri ght to, and the ownershi p of , property. A Ti tl e or Deed i s someti mes used as proof of ownershi p of l and. Cl ear ti tl e ref ers to a ti tl e that has no l egal def ects.
Mortgage Insurance – Purchased by the buyer to protect the l ender i n the event of def aul t ( typi cal l y f or l oans wi th l ess than 20% down) . Avai l abl e through a government agency l i ke the Federal Housi ng Admi ni strati on ( FHA) or through pri vate mortgage i nsurers ( PMI ) .
Ti tl e Insurance – I nsurance pol i cy that guarantees the accuracy of the ti tl e search and protects l enders and homeowners agai nst l egal probl ems wi th the ti tl e.
Pre-Approval Letter – A l etter f rom a mortgage l ender i ndi cati ng that a buyer qual i f i es f or a mortgage of a speci f i c amount. I t al so shows a home sel l er that you’ re a seri ous buyer. Pri nci pal – The amount of money borrowed f rom a l ender to buy a home, or the amount of the l oan that has not yet been repai d. Does not i ncl ude the i nterest pai d to borrow. Purchase Offer – A detai l ed, wri tten document whi ch makes an of f er to purchase a property, and whi ch may be amended several ti mes i n the process of negoti ati ons. When si gned by al l parti es i nvol ved i n the sal e, the purchase of f er becomes a l egal l y- bi ndi ng sal es agreement. *
Truth-In-Lendi ng Act (TILA) – Federal l aw that requi res di scl osure of a truth- i n- l endi ng statement f or consumer l oans. The statement i ncl udes a summary of the total cost of credi t. Ti tl e Search – A hi stori cal revi ew of al l l egal documents rel ati ng to ownershi p of a property to determi ne i f there have been any f l aws i n pri or transf ers of ownershi p or i f there are any cl ai ms or encumbrances on the ti tl e to the property.
ABOUT ME Lukasz is a licensed real estate agent in New Jersey with experience in buyer & seller representation in all phases of the real estate lifecycle. Â Taking pride in delivering a quality service & determined in making a client's best interest a priority, Lukasz excels in providing the personal attention, consideration, commitment & expertise which benefits his clients in efficiently valuing, marketing and executing on the sale and/or purchase of their home. He continues to further his industry knowledge by focusing his efforts on always improving his approach & cultivating future relationships.
LUKASZ K U K W A Realtor | Associate
Coldwell Banker | Residential Brokerage a. 209 Central Ave. Westfield, NJ 07090 m. 908.591.0900 f. 862.345.3949 o. 908.233.5555
Prior to his transition into real estate fulltime, Lukasz worked as a Financial Analyst for international financial institutions which allowed him to acquire the service skills needed in evaluating real estate opportunities for his clients. Moving to the United States at a young age, his aspirations & drive for personal growth motivates him to always do right by his clients, a trait he attributes to his immigrant upbringing. Lukasz holds a Bachelor's degree in Economics from Rutgers University & is a member of the National Association of Realtors (NAR), the New Jersey Association of Realtors (NJAR), North Central Jersey Association of Realtors (NCJAR),Â Associate of the NAHB Young Professionals & Metropolitan Builders/Contractors Association of New Jersey (METRO) as well as an affiliate of Giveback Homes.
If you have a brokerage relationship with another agency. This is not intended as a solicitation. All information deemed reliable but not guaranteed