Purchasing a property can be a scary process, and fortunately we are here to help you through it! Peruse through our home buying guidelines to get a better understanding of what will be required of you throughout this process.
Are you tired of renting from somebody? Do you want to start a family and need a larger home? Do you want to live closer to work? Is the current area you are in no longer suitable? Are you looking to invest your money? Are you an empty nester and looking to downsize? It is important to have a strong understanding of why you want to purchase in order to help you select the most ideal property.
First things first, are you prepared to pay cash or will you be obtaining financing? If you will be obtaining a loan for your purchase, you will need to gather all of your financial documents. Throughout the buying process, you will need to provide to your lender numerous copies of specific documents listed below. Having them in one specific “financial file” makes it extremely easy to access and provide copies when requested.
- Financial Statements
- Bank Accounts
- Any Investments
- Credit Card Statements (with balance owed)
- Outstanding Auto Loans
- Pay Stubs/Income Verification
- Tax Returns (2 years prior)
- Copies of Leases (on any investment properties owned)
- 401K Statements
- Life Insurance, Stocks, Bonds
- Mutual Account Information
- Certificate of Eligibility if a Veteran
The lending institutions can use the information above to provide you with a prequalification form. This can give us a more precise idea of your price range and will be necessary to have prior to submitting an offer on the property of your choice. Remember, now is not the time to be making large purchases or adding to any current debt you may have.
Having an agent that can meet your needs is imperative. Below are a few things you should look for in an agent to ensure your needs are met.
- Find out how familiar the agent is with the area you are interested in.
- How familiar is the agent with the process? For example, how much education/experience do they have in the industry and area?
- How busy is your agent? For example, does he/she have the appropriate time to devote to finding what you are looking for? Too often those agents playing the “numbers game” are willing only to devote as much time as “they” think you should need to find a suitable property or may be spreading themselves too thin.
When moving, it is important that you feel comfortable with where you want to relocate. Drive around the neighborhoods you are interested in to get a better idea of what it would be like to live there. Discuss areas and your specific needs and wants with your agent.
Be willing to commit; most professionals will require you to sign a buyer’s broker agreement, committing to purchase your property through their brokerage. Remember, they are committing to spend their time and expertise on you and will expect to be compensated for their efforts.
After you have a better understanding of the areas you are looking in, narrow down your search. Below are some examples of things people may want to consider when deciding what types of properties would be suitable for them.
- How large are the lots and how close are they to one another?
- Is having a usable backyard important to you?
- Is the proximity of a good school important to you?
- Is the proximity of a hospital important to you?
- Is the proximity of where you work important to you?
- Is the proximity of a grocery store important to you?
- Is an HOA acceptable?
- Is a steep driveway acceptable?
- Are stairs acceptable?
Set up an appointment with your agent to view homes within your parameters!
After you have narrowed down your options, you can meet with your agent to take the next step… MAKE AN OFFER!
- You and your agent will discuss terms for an offer, complete a written offer and present it to the seller. Having an email address will benefit you throughout the process, enabling communication, signature capability and record keeping.
- After the offer has been agreed upon with the seller, escrow will open, and your earnest money will be deposited with the escrow/title company. During this time, the title company will research the property to ensure the title is free and clear of encumbrances.
- Although real estate agents are knowledgeable about how to hold title, it is recommended that you consult an attorney to decipher what best fits your needs. The escrow/title company may provide you with definitions as well.
- Once your contract has been signed by the seller, your inspection period will begin! Depending on your location, the following are the more prominent inspections people like to complete, however this is your time to have any inspection that you may want done or any investigation of attributes of the property with applicable government authorities/agencies. Be sure to get these inspections done in the time allotted in your contract.
- Home Inspection
- Termite Inspection
- Septic Inspection
- Well Inspection
After the inspections are completed, you can move forward, request repairs, or choose to cancel the contract due to your findings. For example, if the bathroom faucet was malfunctioning, the seller could agree to complete the repair, give you a credit towards the price of the home or refuse the repair. You will have the option of accepting the sellers response or electing to cancel the contract. This is to ensure that you understand and accept (or not) the condition of the property. There are different ways to approach these situations which your agent can go over with you.
- Remember time is of the essence in a real estate contract so be sure to stick to the schedule. It will make the process much smoother and easier for everybody involved. If you have any questions about deadlines or anything regarding the process, ASK YOUR AGENT! That is what we are here for!
- After the inspection period comes the appraisal. If you choose to have an appraisal with a cash transaction, the appraisal must be completed during the inspection period. If the home is being financed the home must appraise for at least the sales price. An appraiser is a neutral third party that compares many different factors to provide you (and your lender if there is one) with an opinion of market value by a professional. A lender wants to be sure they are investing their money in a property where the value is supported. Your agent can provide you with a comparative market analysis to help you better understand what your house is worth prior to the appraisal. A market analysis is information the agent provides from the MLS of properties that are ‘comparable’ to the one you are interested in, where an appraisal makes specific monetary adjustments to the values using comparable properties to come up with a value for the home you are purchasing. A market analysis is a less defined analysis of a property’s value. Once the appraisal has been completed and the close of escrow date is on course, you must plan to have the utilities transferred into your name at close of escrow. It is important to have utilities transferred prior to closing, particularly in the winter months where a shut off could end in frozen pipes.
Just a few more steps and it’s time to move in! First up is the final walk through. This is completed 2-3 days prior to close of escrow to verify that nothing has been broken or damaged between inspection and move out time, that all seller repairs that were to be completed have been and that everything stated in the contract is still present (i.e. ceiling fans, appliances, tv mounts, etc.)
The final step before moving in is closing. Escrow documents will be provided by the escrow/title company. You will receive a preliminary settlement statement which will give you a financial breakdown of costs. If financing the transaction, there will be additional documents to be signed for the lending institution at this time. Your closing funds can be a certified bank check or wired electronically to the escrow company. Once these steps have occurred and the escrow company is in receipt of all documents and funds (from buyer and/or lender) the escrow company will record the ownership documents with the county and notify all parties of the confirmation of recording. Now it is time to get your keys from your agent! Enjoy your new property!