RE/MAX Distinctive - Buyer's Guide

The Complete Guide to

BUYING YOUR HOME

ANDREW REAMER President/Owner

703.821.1840 a.reamer@remaxdistinctive.com www.remaxdistinctive.com

RE/MAX Distinctive | 6846 Elm Street, McLean, VA 22101 Each office independently owned and operated.

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MEET ANDREW Andrew Reamer is the Principal Broker and Owner of RE/MAX Distinctive Real Estate Inc. with franchises in McLean, VA, Washington, DC, and Charles Town, WV, and five satellite team offices from Baltimore, MD to Purcellville, VA. Andrew’s organization is comprised of talented and dedicated Realtors who conduct an average $250,000,000 in sales volume and over 690 homeowner relocations each year.

Formerly, Mr. Reamer was the co-founder of a nationwide foreclosure and loss mitigation management firm that was lauded by Inc. 500 magazine as one of the fastest growing companies in the county, overseeing the sale of 15,000 homes annually spanning the United States as a prime contractor for U.S. Housing and Urban Development, the FDIC, and the Department of Justice. Driven by a global mission, Andrew builds strategic partnerships to solve complex problems through creative means. He has come back from the dead, climbed the tallest mountain in Africa, and he takes the stage monthly to play his guitar and entertain the crowd.

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BUYING A HOME: 8 EASY STEPS

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2

3

4

Define Your Goals

Hire a REALTOR®

Get PreApproved

Research Your Options

5

6

7

8

Look for a Property

Decide on a Home

Negotiate an Offer

The Transaction

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1 DEFINE YOUR GOALS Determine W hy You Are Buying a Home Is it a permanent place for you and your family, an investment, or a second home? Whatever the reason, it is important that you buy with an eye on the resale investment potential.

Why has buying a home also become such an investment opportunity?

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No one can predict the future. Over the last

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25 years, the average price of a home has

equity, which can then be used to finance

risen substantially.

other opportunities.

Land has become a decreasing resource,

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It is not always necessary to sell your home

especially in and around major city and

just because you are moving; depending on

cultural hubs, which has created the demand.

the equity created, it may be possible to offset the remaining mortgage by renting

Housing is typically considered to be a stable

out the property.

investment, offering good rates of return.

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Money that pays a mortgage turns into

Low interest rates over the last 10 years have made mortgages affordable.

Investing your time to understand your local market and its influences could pay large dividends.

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2 H I R E A R E A LTO R ® With International Exposure and Local Expertise It is important to work with a Realtor® who is not only committed to working with you, but who is also dedicated to finding you the RIGHT home. When you hire a RE/MAX Distinctive associate, they promise to find you the very best home possible and to solely represent your interests.

R ESPONSIBILI T IES

V IEW ING A N D A SSESSING HOMES

Educate you about the buyer agency and

Viewing homes with you and providing a

professional responsibilities, including complete

comparative analysis.

disclosure, loyalty, confidentiality, compliance, and accountability.

CONSU LTAT ION A N D N EGOT I AT ION Consultation in regards to your written purchase

U N DER STA N DING YOU R N EEDS

offer, with all terms approved by you. Negotiating

Taking the time to understand your priorities

the best possible price and terms for you and

and needs (location, property type, size, must-

taking care of all the documentation details.

haves, local amenities, etc.) even if they change.

SERV ICE PROV IDER S R ESE A RCHING T HE M A R K ET

Helping you explore your financing options

Providing a sophisticated home search process

– referring excellent mortgage professionals

to help you by previewing homes, keeping you

so you can make the best possible mortgage

up-to-date with new homes as they come on the

decision. Assisting you in finding any home-

market, what is selling and for how much, and

related services needed.

knowing what is for sale both inside and outside the Realtor® network.

CLOSING Keeping you fully informed about all activities that lead to the transaction closing.

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5 Steps To The Loan Process 1. APPLICATION AND INTERVIEW •

Types of mortgages are reviewed in-line with your requirements

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Interest rates and terms are discussed

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Credit report is requested

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Personal information is verified

2. UNDERWRITING •

The mortgage package is submitted to an underwriter for approval

3. TITLE COMPANY •

Title is examined

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Title insurance and survey are conducted

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Borrowers to sign documentation

4. LOAN APPROVAL •

Parties are notified of the approval

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Loan documents are completed and sent to the Title Company

5. FUNDING •

Lender reviews the loan package

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Funds are transferred

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3 GET PRE-APPROVED Prior to Your Home Search No matter your prior experience, circumstance, or reason for buying, it is always in your best interest to be pre-qualified for a loan before starting to search for a home. The current rates, approval, and unexpected challenges should be addressed before you have a serious intention of buying.

The pre-approval process involves meeting with a lender and authorizing them to examine your current financial situation and credit history, which results in the amount and rate that you will be able to borrow.

BEN EFI TS OF PR E- QUA LIFIC AT ION •

You won't be disappointed. Knowing what you can afford enables you to plan accordingly, and allows you to understand how much you'll be lent and how much you can actually afford to pay each month.

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You will come across as a serious buyer. As a qualified buyer, you will be taken more seriously when you make an offer on a home.

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A better negotiating position. When your agent presents your offer, it will be more appealing to the seller.

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Less hassle. The transaction goes faster, allowing all the other pieces to come together more easily.

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4 RESEARCH YOUR OPTIONS Determine W hat You Can Af ford and W here Buying and financing a home are closely related, so it's important to review your current financial situation to understand how much you can afford. Discuss with your agent the features and qualities you want and need in your new home: •

PRICE RANGE: What can you afford? This will partially be determined by your financing pre-approval.

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LOCATION: Where do you want to live? City, county, neighborhoods, proximity to friends, relatives, employers?

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AGE: Older, newer?

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STYLE: What type of home do you want? Ranch, 2-story, condo, townhouse?

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SIZE: Square feet, number of bedrooms, bathrooms, lot size, storage space.

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VEHICLE STORAGE: Garage, carport, RV or boat storage?

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SCHOOLS: Is there a particular district or area you prefer?

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AMENITIES: Fireplace, outbuildings, views?

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5 Characteristics of a Good Location 1. A SAFE NEIGHBORHOOD A community with little crime, where neighbors interact and it’s safe to walk freely is most desirable.

2. GOOD SCHOOLS The better the school district, the higher the values of the surrounding homes.

3. CONVENIENCE The easier the access is to area features, the more valuable the home. For homeowners in cities and towns, it is access to shopping, dining, entertainment, and public transit, for beach communities, it’s the beach, and for many, it's access to major road systems.

4. WATER AND VIEWS A home right on a waterway, on a hill with panoramic views, or on the upper floors of a high-rise will always draw buyers.

5. NO INTERMITTENT NOISE A location on a busy street, close to a fire station, hospital, airport, etc. is generally considered a negative. Review each location fully to ensure these noise factors are not missed during your home search.

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Building a House Hunting Checklist In the hunt for a perfect home, it’s easy to forget the important priorities when you see a stunning feature or are overwhelmed by all the choices and homes you have visited. Use this checklist to help stay organized and focused on the important criteria during your search: Do a second walk-through without emotion

Make a comparison chart for each home that you view:

and look beyond the surface:

Overall size

Will your furniture fit?

Positioning of the living spaces

Floor plans are a great way to see the

General size of rooms

flow and how changes can be made. Not

Kitchen style and appliances

available? Measure and draw your own.

Bedrooms

Check out the true storage space – open

Bathrooms

cupboards, doors, attics, basements, and

En-suites

storage cabinets.

Lift up rugs and investigate for damage

Garage space(s) Backyard

on the floor, under furniture, in the back

Landscaping

of cupboards, etc. Look at every detail

Condition of roof/exterior

from floor to ceiling, to including window

Storage space

trims, under sinks, bathroom tiles, etc.

Look outside – understand the

Natural light

landscaping and the layout of other

Do you feel an emotional connection

homes around the home, traffic,

to the home?

parking, noise, etc.

Who are your neighbors?

View the property at different times

How long has the house been on the market?

of the day.

Compare its price to others sold on

Take a moment to envision how you

the market. Is it priced to sell?

would use the space – does it fit your

What is the resale potential?

every day needs?

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5 LOOK FOR A PROPERTY Sur ve ying the Market T HE IN T ER N ET 95% of all buyers start their home search online. However, home search websites are not always up-todate or show all available listings.

PR IN T MEDI A Newspapers and real estate magazines are another way to look for a home. Not every home is listed on the internet and sometimes your search can miss that hidden gem.

YOU R R E A LTOR ® Your agent will assist you with narrowing your search by reviewing your ‘must-haves’ and ‘wouldlikes’ – making recommendations based on their experience and local knowledge. Your agent will also provide tools to familiarize yourself with the market: •

Statistics including time on market, list-to-sell price ratios, and average sales price by area.

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A list of all the homes listed by other agents as well as by owners, plus homes no longer listed but still available.

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A list of sold homes in an area, so you can evaluate asking prices.

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Information on schools, civic groups, shopping, and other ratings.

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A list of homes to drive by to get a feel for neighborhoods and home styles.

PROPERT Y V ISI TS Visit open houses, new home developments, and make appointments to tour the homes you're interested in. Walking through the property and opening doors, closets, and cupboards is the best way to assess a home's true livability

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6 DECIDE ON A HOME After touring a number of homes and deciding on a home, allow your agent's knowledge and expertise to help you with these next steps: •

WHAT TO OFFER: Your agent will guide you through this process, so you’ll have a better idea what the home is really worth in order to make the right offer.

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INSPECTIONS: The amount spent on a whole house inspection is a wise investment, and can save you from problems down the road.

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CONDITIONS: Besides financing and inspection contingencies, there may be other conditions needed in your offer such as closing dates, possession dates, personal property to be included, etc.

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7 NEGOTIATE AN OFFER When you have found the right home, it is time to prepare and draft an offer to purchase. This offer protects and represents your interests, while remaining legally binding on final acceptance. There are many components to an offer, and your Realtor® will negotiate the sale for you with the seller and the seller’s agent. A comfortable buffer between you and the seller is formed.

POIN TS TO CONSIDER IN YOU R N EGOT I AT IONS: •

The condition of the home

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Length of time it’s been on the market

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Buyer activity

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Location

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Urgency of the seller

The seller may accept your initial offer, reject your offer, or present a counter offer. The counter offer may differ from your original offer in respect to price, conditions, the closing date, or any other items.

Offers can be countered back and forth between the parties until one of you accepts or rejects, ending the negotiations altogether.

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8 THE TRANSACTION Prepare for Closing After the sale has been negotiated, your Realtor® will manage the whole process for you, including: •

Ordering Proper Inspections for your review and approval.

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Coordinating any needed documentation.

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Obtaining a Preliminary Title Report for your review to determine the condition of the title.

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Working with your lender to obtain final bank approval for your financing.

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Review closing documents prior to closing.

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Scheduling the closing appointment, at your convenience, and accompanying you to closing.

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Arranging for the transfer of possession.

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Moving Into Your New Home Moving into a new home is an exciting time but it can also be stressful. Whether you are doing it yourself, asking friends for a little help, or hiring professionals, this moving guide will provide you some great insight: •

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Hire a moving company and/or rent a truck.

Book early – especially if you are moving at

and unloaded in case your movers have

the end or beginning of the month.

any questions.

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Be sure to get a written confirmation of

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Post office

De-clutter your present home and donate

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Banks

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Cable/internet

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Phone

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Insurance

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Utility companies

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Credit card companies

Be sure to clearly label on the outside of

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Doctors/dentists/prescriptions

the boxes which room the box is going, and

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Subscriptions

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Purchase boxes and moving supplies.

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Start packing. Begin with items you do not use regularly. Pack room by room.

a quick checklist of the items inside. This

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makes unpacking so much easier.

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Make a list of the items that need extra

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Pack a travel bag with the items your family may need on moving day such as a change of

fragile if needed.

clothes, toiletries, medications, etc.

Make notes and photograph items of

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significant value for insurance purposes.

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For both the new and old home, make a note of all utility meter readings.

attention during moving. Label boxes as •

Change your address:

pricing and the date. items that you no longer use.

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Be present when the truck is being loaded

Arrange for cleaners for the new home and old home. Even if the previous owner hires a

Provide a phone number to your movers

cleaner – that extra touch before you arrive

where you can be reached on moving day.

makes your new home feel fresh and ready.

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Steps to the Home Buying Process

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DE F I NE YO U R G OALS

G ET P R E-AP PROVED

SELECT A REA LTOR

LOO K FO R A HOME

M AK E AN O FFE R / N E G OT I AT I O N S

Examine your financial situation and estimate how much you can afford in a home.

Pre-approval gives you an advantage since the lender has determined that you are a qualified candidate for a mortgage.

Hiring a buyer's agent can make your home buying experience smoother and less stressful.

Make a list of musthaves, would-likes, and deal-breakers to help target your home search.

Work with your agent to put together an offer and if need be, negotiate.

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R EV I EW R E P O RT S

H OME INS P E CTION

HOME A PPRA ISA L

SECUR E FIN AN CI N G

O FFE R ACCE PT E D

Review inspection results for any problems to which you can renegotiate with the seller, or issue request for repairs. Review appraisals with lender to ensure loan is good.

Perform general inspection (pest, home, etc.) to reveal any potential issues or problems prior to purchasing the home.

An appraiser comes to the property to determine its fair market value. The value will determine how much a lender is willing to lend you.

Meet with loan officer to secure your mortgage and provide all the information to verify your personal finances, your capacity to repay the loan, and any liabilities you may have.

Your agent or transaction coordinator will open escrow and order title. Get initial deposit to them.

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H O M E OW NER S I NSU R A NC E

FINA L WA LK -THROUGH

CLOSIN G

Congratulations

Make sure that your homeowners policy has enough coverage for all of your financial assets (home, personal property).

Remove contingencies. Ensure loan is firm and make final deposit.

Lender prepares and sends loan documents to escrow. Do a final home inspection walk-through before closing.

Sign documents to finalize the mortgage, pay the seller, pay closing costs, transfer the title from the seller to you, and make arrangements to legally record the transaction as a public record.

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O N YO UR N EW H O M E !

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Title Insurance FAQ's W H AT IS T I T LE? Title is your right to own or use your property. Title also establishes any limitations on those rights.

W H AT IS T I T LE INSU R A NCE? Title insurance is a policy that protects your investment and property rights. There are two different types of title insurance owner's policy and lender's policy.

1. Owner's Polic y An owner's policy protects your property rights for as long as you or your heirs own the home.

2. Lender's Polic y A lender's policy is usually required by the lender and protects only the lender's financial interests. The buyer typically pays for this policy, but this varies depending on geography. It is recommended that you ask the title company how it is handled in your area.

W H Y SHOU LD I PU RCH A SE OW N ER'S T I T LE INSU R A NCE? Owner's title insurance is the best way to protect your property from future legal claims. A one-time fee that covers you and your heirs for as long as you own your home, this policy also covers potential legal fees for settling claimes against your property rights.

W H AT DOES OW N ER'S T I T LE INSU R A NCE COST ?

The one-time payment is typically costs around 1% of the home's purchase price.

HOW LONG A M I COV ER ED? Your owner's insurance policy lasts for as long as your or your heirs own your property.

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The Mortgage Process

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03

04

Pre-Qualification

Pre-Approval

Shop for a Home

Offer Written

Goals for purchase, income, assets, debts, and credit are discussed to estimate price range and loan terms that are best for you.

Loan application completed; credit history, income, employment, bank accounts verified and evaluated by underwriting.

With pre-approval letter in-hand and price range determined, you are now ready to look for a home with your Realtor.

Terms of an offer, seller credit, closing date, etc. discussed to ensure you are comfortable with the numbers. Earnest money check written at this time.

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06

07

08

Offer Accepted

Reports Ordered

Submit for Final Approval

Closing Disclosure/ Loan Documents

Home inspection completed, paid for by you (the buyer). Requests for any repairs/credits negotiated. Loan terms finalized, rate locked.

Appraisal ordered by lender, charged to you (the buyer). Title report and escrow ordered.

Shop for homeowner's insurance.

Purchase contract, appraisal, title, insurance, and any remaining loan conditions sent to underwriting for review.

Closing disclosure sent; review period of 3 days required. Afterward, the loan documents are drawn and delivered to escrow.

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Settlement Statement

Sign Documents

Final Lender Review

Closing Day

Discloses final numbers including buyer's cash due for closing. Once completed, escrow contacts you with final figures and schedules signing appointment.

Typically occurs 2-3 days prior to closing.

You sign loan documents at the escrow office and provide the funds for closing to escrow via cashier's check or wire.

Signed loan documents returned to lender for review; final verification of employement; all funding conditions reviewed and cleared for closing.

Lender wires loan funds to escrow; escrow releases documents to be recored at local courthouse. Once recorded, transaction is officially closed!

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A Home Buyer’s Glossary When buying a home, it’s important to understand some of the key concepts and terms. Throughout the process, your Realtor® will be available to explain any unfamiliar terms you encounter. That said, here is a short list of terms you’ll want to know: Abstract Of Title – A complete historical summary of the public records relating to the legal ownership of a particular property from the time of the first transfer to the present.

Adjustable Rate Mortgage (ARM) – Also known as a variable-rate loan, an ARM is one in which the interest rate changes over time.

Agreement of Sale – Also known as contract of purchase, purchase agreement, or sales agreement according to location or jurisdiction.

A contract in which a seller and buyer agree to transact under certain terms spelled out in writing and signed by both parties.

the transaction and the final disbursements are paid. Also referred to as the Settlement.

Closing Costs – The costs to complete a real estate transaction in addition to the price of the home, may include: points, taxes, title insurance, appraisal fees and legal fees.

Closing Date – This is usually the date that the legal ownership of the property transfers from the seller to the buyer.

Amortization – The process of reducing the principal debt through a schedule of fixed payments at regular intervals of time, with an interest rate specified in a loan document.

Conditions or "Subjects" – Items that are usually put in place to protect a party’s interests upon selling or buying the property and refer to things that must occur or be in place before the sale closes. Some of these conditions could be “subject to financing approval,” “subject to the buyer’s house selling,” “subject to seller finding suitable housing,” etc.

Appraisal – An appraiser’s estimate of the market value of a property based on local market data and the recent sale prices of similar properties.

Contingency – A clause in the purchase contract that describes certain conditions that must be met and agreed upon by both buyer and seller before the contract is binding.

Assessed Value – The value placed on a home by municipal assessors for the purposes of determining property taxes.

Counter Offer – An offer, made in response to a previous offer, that rejects all or part of it, while enabling negotiations to continue towards a mutually-acceptable sales contract.

Closing – The final steps in the transfer of property ownership. On the Closing Date, as specified by the sales agreement, the buyer inspects and signs all the documents relating to

Conventional Mortgage – One that is not insured or guaranteed by the federal government.

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Debt-to-Income Ratio – A ratio that measures total debt burden. It is calculated by dividing gross monthly debt repayments, including mortgages, by gross monthly income.

Deposit – The amount of money provided from the buyer to the seller as a token of the buyer’s assurance and intention to buy the property involved. The deposit is applied against the purchase price of the home once the sale has closed. Your agent can assist you in proposing a certain and appropriate amount for the deposit.

Disclosures – Disclosure statements, which can come in a variety of forms, are the buyer’s opportunity to learn as much as they can about the property. Seller disclosures range from knowledge of issues with the home. They serve to inform buyers, they can protect the sellers from future legal action. It is the seller’s chance to lay out anything that can negatively affect the value, usefulness or enjoyment of the property.

Down Payment – The money paid by the buyer to the lender at the time of the closing. The amount is the difference between the sales price and the mortgage loan. Requirements vary by loan type.

Down payments less than 20% usually requires mortgage insurance.

Earnest Money – A deposit given by the buyer to bind a purchase offer and which is held in escrow. If the property sale is closed, the deposit is applied to the purchase price. If the buyer does

not fulfill all contract obligations, the deposit may be forfeited.

has the right to take the Title to your property if you don’t make the mortgage payments.

Equity – The value of the property, less the loan balance and any outstanding liens or other debts against the property.

Market Value – The amount a buyer would pay a seller for a home. An appraised value is an estimate of the current fair market value.

from the seller’s current asking price. There is no “normal” amount or percentage that a price will differ from its asking price as the final price will be determined by many factors, including the seller’s motivation and how close the asking price is to actual “market value”.

Easements – Legal right of access to use a property by individuals or groups for specific purposes. Easements may affect property values and are sometimes part of the deed.

Mortgage Insurance – Purchased by the buyer to protect the lender in the event of default (typically for loans with less than 20% down).

Available through a government agency like the Federal Housing Administration (FHA) or through private mortgage insurers (PMI).

Terms – An offer includes certain “terms”, which specify the total price offered and how the financing will be arranged, such as if you will arrange your own with a financial institution or mortgage broker or if you wish to take over the seller’s mortgage (assumability).

Possession and Adjustment Dates – When the buyer takes possession as specified in contract of purchase sale and adjustments are made for prepaid taxes, maintenance fees, etc. They are usually the same date.

Title – The right to, and the ownership of, property. A Title or Deed is sometimes used as proof of ownership of land. Clear title refers to a title that has no legal defects.

Escrow – Funds held by a neutral third party (the escrow agent) until conditions of a contract are met and the funds can be paid out. Escrow accounts are also used by loan services to pay property taxes and homeowners insurance.

Fixed-Rate Mortgage – A type of mortgage loan in which the interest rate does not change during the entire term of the loan.

Home Inspection – Professional inspection of a home, paid for by the buyer, to evaluate the quality and safety of its plumbing, heating, wiring, appliances, roof, foundation, etc.

Home Warranty - Service contract that covers the repair or replacement of home system components and appliances that break down.

Homeowners Insurance – A policy that protects you and the lender from natural disasters, and liabilities such as a visitor injury, or damage to your personal property.

Inclusions and Exclusions – Specifications within the offer that detail the items to be included or excluded from the purchase of the property. Typical inclusions are appliances, window coverings, fixtures, and decorative pieces.

Lien – A claim or charge on property for payment of a debt. With a mortgage, the lender

Possession Date – The date, as specified by the sales agreement, that the buyer can move into the property. Generally, it occurs within a couple days of the Closing Date.

Pre-Approval Letter – A letter from a mortgage lender indicating that a buyer qualifies for a mortgage of a specific amount. It also shows a home seller that you’re a serious buyer.

Principal – The amount of money borrowed from a lender to buy a home, or the amount of the loan that has not yet been repaid. Does not include the interest paid to borrow.

Purchase Contract – A detailed written document which makes an offer to purchase a property, and may be amended several times in the process of negotiations. When signed by all parties involved in the sale, the Purchase Offer becomes a legally-binding sales agreement.* Purchase Price – The amount that the buyer is offering to pay for the property, usually dependent on market conditions and may differ

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Title Insurance – Insurance policy that guarantees the accuracy of the title search and protects lenders and homeowners against legal problems with the title.

Truth-In-Lending Act (TILA) – Federal law that requires disclosure of a Truth-In-Lending statement for consumer loans. The statement includes a summary of the total cost of credit.

Title Search – A historical review of all legal documents relating to ownership of a property to determine if there have been any flaws in prior transfers of ownership or if there are any claims or encumbrances on the title to the property. * The Purchase Offer and contract procedures vary by region.

We would like to thank you for giving us the opportunity to represent you.

At RE/MAX Distinctive, our goal and commitment is to make your home buying process as seamless as possible.

Regardless of your real estate needs, know that we are always here to assist you because we are not just providing a service, we are building a relationship.

Each office is independently owned and operated. Copyright © 2023