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Real Estate Learning Center
HOW TO BUY A HOME IN TODAY'S COMPETITIVE REAL ESTATE ENVIRONMENT
(In Ten Easy Steps)
STEP 1. Build Your Team
You don't have to go it alone. Build a team of proven Real Estate professionals
to help you along the way. Your team should start with a professional Realtor,
a Real Estate Attorney, and a mortgage lender. Along the way you'll add
a Home Inspector, Pest Inspector, Title Company, Surveyor, and Homeowner's
Insurance Agent. All of the professionals have a single goal, which is protecting
your interests in what is probably the largest purchase/investment you will
ever make.
Realtor. A professional Realtor will get to know
you and your home buying goals. In today's competitive environment, your
Realtor is your best bet for finding the home of your dreams, before someone
else snaps it up. If you limit your home search to open houses and "for
sale" signs on lawns, you'll probably be too late. Your Realtor has access
to the multiple listing services and will call you as soon as a home that
meets your criteria hits the market.
Attorney. Your Attorney
will assist you in the Contract negotiations and the Inspection negotiations,
will review your title searches and survey, and will conduct the closing.
Your Attorney will be available to answer your questions and give advice
every step of the way.
Mortgage Lender. When you choose
a lender, you are choosing an individual, not a company. Make sure that
your mortgage representative is available to answer your questions during
the process. Find out if the representative will be involved during the
entire process or if he/she simply turns your file over to a processor.
The professionals above can help you to assemble the rest of your team.
STEP 2. Arrange Financing
Forget "pre-approvals" and "pre-qualification" letters. Anyone can obtain
a "pre-approval" over the Internet and these are virtually meaningless today.
Choose a lender that will be willing to put your file through underwriting
before you choose a home. You will then have a full mortgage commitment
subject only to an appraisal of the property (once chosen).
When you have financing arranged in advance, you are a virtual cash buyer.
This gives you a strong advantage over your competition (other buyers).
STEP 3. Choose A Home
Your Realtor will help you to find the right home and will assist you in
determining a fair offer for the home you choose. Your Realtor will provide
a form contract to be completed with your initial offer and will present
your offer to the Seller. The Realtor will guide you through the initial
negotiations and, once the Seller signs, you have a Contract (subject to
Attorney Review).
Watch out for "For Sale By Owner" (FSBO) homes.
If a Realtor was not involved in the transaction, you don't know if the
Seller's asking price is realistic and you don't know how much to offer.
In addition, the Seller has certain obligations during the sale process,
such as arranging for Smoke Detector Certifications and municipal Certificates
of Occupancy and giving access to the home to the buyer's inspectors. Usually
the Realtor will arrange these for the Seller. Ina FSBO situation, some
of these things may not get done, simply because the Seller doesn't know
they have to be done. Finally, while all Realtor contracts contain an "Attorney
Review" clause, the FSBO contract probably will not. Be sure to contact
your Attorney before signing a FSBO contract.
STEP 4. Attorney
Review
Once the Buyers and Sellers sign the contract the Attorney Review period
begins. There are three business days for you to review the contract with
your Attorney, to decide if changes are advisable, and for your Attorney
to send a "review letter" to the Seller's Attorney. The contract will remain
in "Attorney Review" until all parties have agreed upon the final terms.
Once out of Attorney Review, the contract is binding.
It is best to contact your Attorney prior to signing a Contract. While all
Realtor contracts will contain the required Attorney Review provisions,
some new construction and FSBO contracts will not. Also, you'll want your
Attorney to know the Contract is coming so that he or she will be able to
handle the Contract as soon as it is signed. Note: the Sellers may entertain
other offers on the property while your contract is in Attorney Review.
Make sure your Attorney will be working to complete Attorney Review as quickly
as possible.
STEP 5. Home Inspections
You'll want t have the home inspected by a professional (look for ASHI certified)
home inspector and a pest infestation inspector. Plan to attend the inspections
yourself; you'll learn a lot from talking with the inspector. Your Realtor
will attend the inspection as well. The inspection reports should be forwarded
immediately to your Attorney and you can discuss the report with your Attorney
to determine if any issues should be raised with the Sellers. Your Attorney
will handle these negotiations on your behalf.
Keep in mind that the Contract will give you a limited amount of time to
have the inspections performed and for your Attorney to present your repair
requests. Have the inspections scheduled as soon as Attorney Review is complete
and be sure your Attorney will be available to work with you upon receipt
of the reports.
STEP 6. Survey and Title Search
Your Attorney will order a property survey on your new home as well as a
title search and title insurance. The Attorney will review these items to
make rue that you are buying the home free of all liens and interests of
others. If any title problems exist, your Attorney will work to clear the
problems prior to closing.
STEP 7. Mortgage Review and Follow-Up
Stay in touch with your mortgage professional. Make sure the appraisal has
been performed, and confirm the tentative closing date. Provide all requested
documentation as quickly as possible. Discuss when to "lock" your interest
rates. If you wish, you may review the mortgage commitment with your Attorney.
STEP 8. Pre-Closing Activities
Once your mortgage commitment is in hand, and your Attorney has confirmed
the tentative closing date, there are a few items for you to arrange. Homeowner's
insurance should be arranged and the first year premium paid in advance
of closing. Your mortgage lender will ask to see the policy before setting
the closing date. You'll need to arrange for movers and you should contact
the utility companies to arrange service in your name.
STEP
9. Confirm Your Closing Funds [Also read, Closing
Fees]
The money required at closing will include any additional down payment to
be made as well as all closing costs. While the exact amount needed for
closing will not be known until the day prior to the closing date, you can
ask your Attorney for an estimate. The funds will have to be in the form
of a certified check, bank check, or wire transfer. Make sure that you have
enough money available, and that the funds are located in a bank that will
be able to provide you with certified funds on the day of closing. Ask your
Attorney for further details.
STEP 10. The Closing
Plan on a pre-closing walkthrough on the day of closing. Your Realtor will
arrange this for you. Leave time available to obtain the certified check
for the funds due at closing. Your Attorney will give you the exact amount
required, usually the day prior to closing.
If you are buying jointly, you must both attend the closing. Bring the certified
check, your homeowner's insurance binder and identification. Your Attorney
will let you know if you need to bring anything else.
At the closing you will receive the keys to your new home. Your Attorney
will file the Deed to your home with the County Clerk and will return the
filed Deed to you.
After the closing, it's all yours. You can, finally, move in. Congratulations!
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