The home buying process can be a daunting one. There are so many variables at play that serve to convolute the entire experience to the point where most people would prefer dental surgery to going through the hassle of attempting to buy a home. Where do you even begin? Should you go to the bank, download Zillow onto your phone or hire the agent that your brother-in-law used when he moved a few years ago?
Set your mind at ease, somehow the planets have aligned so that you have come across this webpage and we're going to break the whole thing down for you so that it is simple to understand.
Yes, there is a lot to it but we're going to hold your hand the whole while and if there's anything along the way that's unclear to you just click that little contact us button at the top of the page.
Our purpose here is to be seen as a source of information on the real estate market as a service to you. We want your business and we're happy to answer any questions, so if there is anything that you are unclear on please don't hesitate to drop us a line.
We want your business and we're happy to answer any questions, so if there is anything that you are unclear on please don't hesitate to drop us a line.
The journey of a thousand miles begins with a single step and as it pertains to buying a house, that first step is financial. You need to speak to a financial expert who can run your credit scores and tell you exactly where you stand. There are a number of reasons why this is first, not the least of which is that the majority of people who start out to buy a home don't qualify for a loan, at least at first.
Most everyone has something negative on their credit report that they're not even aware of. Some old cell phone or hospital bill that you haven't thought about in years is likely going to rear it's head when you finally get a look at your actual credit report and by that I don't mean the free credit report websites. Those aren't actually the true credit scores that their commercials would have you believe they are.
To get a true "credit check" done actually lowers the credit score itself and the more times you run it, the lower it gets. Any website that claims otherwise is drawing their information from tax data and other alternate sources and the scores that they provide are really just estimates.
You need a spotless credit report to get a loan and unless you have a couple hundred thousand dollars in cash stuffed in your mattress you're going to need a loan.
Clients often want to know where to go to get a loan. While there are a few things that we recommend to people depending on the situation, for the most part our advise is the same. There is no "best" lender, it all depends on your particular situation.
Banks and mortgage companies are like shoe stores in the sense that whether you go to Foot Locker or you go to The Athlete's Foot, they're both going to have Nikes. What that means as to how it pertains to lenders is this: they all pretty much offer the same product.
While for the most part, all lenders offer the same stuff, they do have different promo packages and those usually change every few months or so. So, while the basic product may be essentially the same, one lender may offer a particular promo package that fits your individual situation a bit better
A few years ago if you came to us about buying a home and I introduced you to a local lender that wasn't willing to give you a loan, we would take you to another and another until we found one that would. However, a few years back some pretty sweeping legislation was passed that has made it so that if one lender is willing to work with you, then pretty much all are and vice-versa.
Since, for the most part lenders are similar save the promo package and for the most part will either work with you or not, who you use ultimately should depend on who you are comfortable working with and who gets the loan to close (because some are better than others in that department as well).
Our advice is if you should happen to know someone in the business then go to them first but in any event shop around at more than one.
Now we've gotten your numbers to where they need to be and decided which bank or mortgage company is the lender for you, you will receive what's called a pre-qualification or a pre-approval letter. This is first thing you'll need to begin your home search. Even if we went out and you fell in love with your dream home that you wanted to put a bid in on right then, we couldn't even legally write your offer without what's called a proof of funds (POF) letter.
A POF can be a pre-qual/pre-approval letter from your lender or a bank statement showing that you have the cash to cover the purchase price of the home. Nobody even wants to talk to you until you have one of these, so if getting qualified is the first step, then this letter is the first step forward.
A pre-qualification letter is a printed statement from a lending institution that essentially says that they have taken a look at you and they are willing to work with you.
A pre-approval letter is for all intents and purposes the same thing as a pre-qualification letter, just to a greater degree. If a pre-qual says that a lender might give you a loan then a pre-approval says that they probably will.
Please take note that neither a pre-qual nor a pre-approval letter actually guarantees that the lender will give you a loan but let's just say that it's looking really good for you if you get this far.
Now that the financial stuff is pretty much done, it's time to find a house! After sitting down with a financial expert you should now have a grasp on not only the loan product that you ultimately have decided on as well as an idea of how much money that you can afford to spend.
Remember, just because you qualify for a certain loan amount doesn't mean that you necessarily need to be spending that much. What you do need is to have a serious conversation with your family as well as your loan officer as to how to properly budget your mortgage payment so that it fits with your individual income and lifestyle.
It's when we have a maximum price range in mind that we can begin to formulate a set of search criteria customized for you. Price certainly isn't the only factor at play but it is one of if not the most pertinent ones, so it makes little sense to start looking for houses before you know how much you can afford to spend on one.
The actual home search begins with what's called an inventory drip. We customize a set of search criteria specifically for you and set it up so that a series of currently listed properties that meet your criteria are delivered to you via email. As new properties are listed that meet that criteria, you will receive those as well as they become available.
The multiple listing service or MLS is what licensed real estate professionals use to communicate with one another which properties that they have for sale. This is hands down the most up to date information available and is what we use to power our search engine software.
As good as the Zillows and Realtor.coms of the world are (and don't misunderstand, they are good for what they are), they're not the MLS. As good as they are, they do not have access to MLS data and therefore are forced to draw from alternate sources like tax data.
At least half the time someone comes to us about a property that they found on one of these real estate apps, the house has been unavailable for months. Again, these are for the most part good tools with good information, the info is just old because people will list stuff there and never update it.
In fact, now that you're a client of ours you can feel free to delete all that from your phone because we have and can offer you access to a similar app with all the bells and whistles that is powered by the MLS!
With the wealth of resources that we provide, it will be more of a process of narrowing down the list than it will be finding potential homes. Once you do have a handful of listings that catch your eye, you get the list to us and we'll schedule a showing appointment to see the insides. It's as simple as that.
A few tips to a successful showing trip. First off, limit your number of showings in a single trip to about a half dozen or so. What happens is you forget what was where and what you liked about what.
Which brings us to the next tip and that is to bring a pen and paper, take notes, take pictures, make videos with your phone and do whatever else you need to help to distinguish the properties so that you can make a credible pros and cons list at the end of the day.
Here's the way this usually plays out, you will find the perfect house sitting in the wrong neighborhood or if this house just had that kitchen. Just go ahead and expect this, we've been at this stuff long enough now to know that it's just part of the process.
Very rarely do you find exactly what you're looking for all at once like that. Almost always there has to be a process of elimination before making an ultimate decision that you and your family will have to come to (and then sleep on).
Buying a home is a big investment, in fact, it's the biggest investment that most people will ever make in their lifetime. This is why it only makes sense to have a professional agent on your side to help you through the process. It's obviously a big decision as to which home that you buy, take your time and do it right!
Alright, so now you've found one that fits the bill. You're confident that this is the one that checks the most boxes on your list and you're ready to move forward and buy. Awesome, that's what this is all about right?
And if you want the thing so badly that you're willing to pay the full asking price then there should be no problem landing the deal. There are variables at play here other than money but rarely will a full price offer be scoffed at.
That being said, most people want to try to negotiate a deal for less than the list price. There are also times where a greater than list offer is the appropriate response such as a multiple-offer situation. What's the right thing for you to do? Obviously, everyone want's a deal but screw around too long and you'll end up watching the thing get bought right out from under you. What is even a fair price?
Making an appropriate opening offer is an integral piece to the art of the deal. For you to even know what kind of an offer that you're making, you have to first know what the house is worth.
This isn't a subjective number either, real estate is a market and like in any other market; subject to supply and demand, so prices fluctuate. A house is only worth what someone is willing to pay for it, the proof of which being in that you see overpriced real estate sit there on the market month after month.
To get a grasp on what the true value of a particular property is you have to do some marketing research. This process is called a Comparative Market Analysis or CMA. The CMA does just that, compares the property in question to other comparable properties in the area that have either recently been sold or are currently for sale.
A detailed CMA can give you a pretty accurate value assessment in dollars and cents. This should be your basis for a opening offer, what we know the property to be worth, not what the seller wants for it.
Regardless of what kind of an offer you make, it's very unlikely that we will be so far apart that the offer gets outright rejected. Rather, it's much more likely to receive a counteroffer if not an outright acceptance.
This is the process and this is also one of the biggest roles that we serve as your representatives. As your agent we enter into what's called a fiduciary relationship, this means that by law we must act within your, the client's best interest.
What this ultimately means is that while at the end of the day we are here to respect your wishes and take whatever coarse of action that you want us to but we will offer our professional expertise to guide you in what we feel in our experience is your best coarse of action.
The counteroffer process can go back and forth multiple times before we either can come together on an agreement or not. This is one of the harder aspects of the process for most people to stomach and for a very understandable reason, if this deal doesn't go through then it's back to square one and the process begins all over again!
As little as everyone involved wants that, you can't let that persuade you. If you want a good deal then you must be willing to walk away from the negotiation table, this is arbitration 101.
This is the point at which you will have to begin coming out of pocket. This is a fact of the process that must be addressed and it is our intention to keep our clients as informed as possible so that there are no surprises when we hit this point. Beyond the expenses associated with the actual loan there are three major additional out of pocket expenses for you to be aware of:
Included as part of your offer is a copy of what's called an EMD or an Earnest Money Deposit check. This is a check, usually certified funds (money deposit or cashier's check), for an amount usually between $500-$1000 depending on the price of the home. This is money that you get back at closing and is simply a sign to the sellers that you are serious about proceeding with the sale.
Depending on the verbiage agreed upon in the contract, you as the buyer may be responsible for the various inspections that you will want to have preformed on the property prior to taking ownership.
Closing Costs incurred may include loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys, taxes, deed-recording fees and credit report charges. Prepaid costs are those that recur over time, such as property taxes and homeowners' insurance.
Now that we have a deal it's time to rent the U-Haul right? Not quite so fast. If we found you a good house and both sides have agreed on a price, all names are are signed on the line and we have a ratified contract, then we still aren't quite ready to move in. Rather, we are ready to move to the next stage of the process and that is the inspections.
The Home Inspection is a process by which we have a professionally licensed third party inspector come in and give the house a checkup. Regardless of how well you and I might look the place over, we're simply never going to catch all of the stuff that professional inspector is going to.
A home inspection is optional and is an out of pocket expense for you. They usually range from about $300-$400 and the inspector will expect to be paid then at the time of service.
While a home inspection is technically optional, we advise all of our clients to get one. In fact, you're a fool not to get one and they are so prominent in the industry at this stage that they have become a standard part of the process.
These guys spend upwards of 3-4 hours looking the house over from top to bottom. From the crawl space to the roof and everything in between is inspected and all findings are drawn up in their inspection report. This needs to be done by a professional for a couple of reasons.
First off, a licensed home inspector will check things that you and I wouldn't even know to look for or how to go about assessing them. They crawl under floors and in attics and give the life expectancies of things like roofs and HVACs.
Again, your home is likely the biggest investment that you will ever make in your lifetime, what is a few hundred bucks to ensure that you're not buying a lemon!
Secondly, depending upon the report's findings, this inspection report is essentially going to be the ammunition that we take to the table in order to re-negotiate the contract.
No seller is going to replace a roof because we say so but if it's coming from a licensed professional that we can all agree is qualified and who is a third party with no skin in the game either way, it's a different story.
The next inspection that has become standard procedure is the moisture and wood destroying insect inspection. This is pretty self explanatory in that they are going to check for termites and water damage.
This is a separate inspection from the home inspection, also done by a professionally licensed third party inspector. These are different inspectors with a different expertise.
While these are two separate inspections, they are uniformly done on almost all home sales. So, we do our best to schedule them at the same time for your convenience and while you don't have to attend these inspections, the inspectors themselves do want to get paid so you'll probably want to at least make an appearance.
This brings us to our next point regarding the moisture/termite inspection and that is that unlike the home inspection, you will likely not have to come out of pocket for that one on site. In fact, we will attempt draw the contract to include verbiage stating that while you (the buyer) will choose the inspection company, it's the seller's responsibility to pay for the inspection itself. However, everything is negotiable and even if you end up getting stuck with the bill, this is a cost that is usually deferred until closing regardless of who pays it.
The Property Inspection Contingency Addendum (PICA) is a document that's included in the contract package. It allows the buyer the ability to opt out of a purchase agreement if they should find material defects in the property.
The property inspection contingency removal addendum (PICRA) - If repairs are requested and an agreement has been reached as to how to address the requests, this document will be completed to advise what repairs will be made or if that no repairs will be made at all.
If the seller fails to respond to the PICRA with proposed repairs, then the seller chooses to either take the house without any repairs or void the contract. The seller can no longer automatically force cancellation of the contract.
You've requested repairs and the seller has agreed to oblige. There's only one way to know for sure that all repairs have been completed to your satisfaction and that is to put your own eyes on them. This is where the final walkthrough comes into play.
The final walkthrough is your opportunity to do some inspecting of your own! The main purpose of this walkthrough is to to confirm the quality of the repair work and that all of the desired issues have been addressed.
The walkthrough is important even if no repairs were requested. The ultimate purpose of the walkthrough is to verify that the house is in the same condition that it was in when you agreed to buy it.
It's for this reason that we attempt to schedule the walkthrough as close to closing as we can, the same day if possible, even for new construction. Just because there wasn't anything wrong with the place the last time that you saw it dosen't mean that there isn't anything wrong with it now and trust me, if the water heater is going to bust on you; it will happen on the day before closing, Murphy's Law.
The final walkthrough is your final chance to walk away. If an issue should rear it's head at the walkthrough, the seller will have a set amount of time to make the new repairs. Should they refuse or fail to do so you have the option to cancel the contract and squash the deal.
This is the big day that all of our preparation has led up to, sitting down at the closing table. Nearly nothing can stop us at this point from making you a homeowner. Barring some fluke occurrence like a last minute underwriting issue or an act of God, you should be receiving your keys today!
The final step in the home buying process is recordation. This is where your deed is recorded at your local city/county courthouse. Most buyers will receive their keys at closing, however; if you are purchasing a bank foreclosure or a government repossession from a seller such as Fannie Mae, Freddie Mac or the VA you will likely have to wait until recordation day to receive them instead. This usually takes about two business days after closing, so if you're scheduled to close on a Friday then moving day will be delayed some. Therefore, you may want to consider moving closing up a couple of days if possible.