Congratulations on taking your first steps on purchasing your first home. These are very exciting, and confusing times. With all the information being thrown your way it can be overwhelming. My job as your Realtor is to explain the process, educate you, and simplify this experience. By knowing what is coming up next you will gain confidence and become more comfortable taking action once you walk into the house you would like to own.
Included in this link are some tools to help you better understand the purchase process. Let’s get started!
Sequence of events
1. Buyer Power- It is no fun to walk into your dream house only to find out we will not qualify for the loan to purchase this home. That is why establishing your buyer power is #1 here. We must decide how much of a monthly payment we can really afford. Remember, there is more than just the payment to the bank once a month. We have to take into consideration that utilities, taxes, and existing bills must still be paid. Overstretching your limits will put a lot of stress on you and your family. It is important you sit down and go over comfortable monthly pay out before you sit w/ a lender to discuss obtaining a Pre – Approval.
2. Pre Approval- This is vital, especially in this market, that we have a Pre Approval letter from a reputable lender before we start our aggressive search. The bank will take into consideration your credit score, job employment, revolving credit etc. then determine what a bank will lend to you for a purchase. They should be able to give you a fine tuned number on what your monthly payments will look like based on your down payment and various purchase prices. It is always a good idea to ask the lender what they would recommend putting down on the home. We must remember that buyer closing costs are 4% (approx) of the purchase price and these will probably have to be paid at the closing table.
3. Once we figured out where we stand with financing we can begin to explore the market. Here is where the more you give the more you get. Tell me exactly what you guys are looking for. For example area’s, type of home (condo, town house, semi attached, fully detached etc.) Are you willing to so some work on the home (a fixer upper) or are you looking to simply unpack your bags. I always say have 4-5 things that you would love to have in a home and if we can obtain 3-4 of these items at a good price we are ahead of the game. We must remember to have realistic expectations. If you come across another property, forward the MLS number or address and I can provide all the updated info on the home. It does not have to be a Remax property as I have access to all active homes on the market. As a courtesy I would ask if you are encountered by another agent at an open house or out and about to just mention you are currently working with an agent.
4. Once we search and compare and encounter a home that you really like, its time to write out an offer. The document we will use is called a binder, however there is no money binding you to the deal at this stage. This is basically a document that illustrates how much we are offering, who we will use as an attorney, how much down payment at the close, and how much we are going to leave as a deposit in escrow at the signing of contracts once a sale price has been agreed upon and House inspections are concluded (See attached sample binder included). Most attorneys will warrant $10-$20,000 at this point. For example if you are putting a total of $40,000 down on the home you would put $20,000 at contracts and the remaining $20,000 at the closing table.
5. Negotiating a sale price can be emotional for both parties. Our goal is to obtain fair market value for the property at hand. Different situations will determine a homeowner’s flexibility, and the best way to determine this is to make an offer.
6. Once we have negotiated a price between both parties the house is “Under acceptance”. It will reflect this on the Multiple Listings however the homeowner will still be actively showing and listening to offers until we move the property into contract. Before we can do this we must have the house inspected by a professional to determine the overall condition of the home. They will check electric, plumbing, exterior, roofing, termite, mold, etc. If there is a major issue, here is where we can request to have this repaired, or possibly have a credit issued. A good point to remember here: If we negotiated well below asking price a homeowner may be a little more resistant to smaller repairs, and credits. This inspection should be completed as soon as possible after the offer is accepted. The going rate is about $400.00
7. Now we have settled on a price, the house looks like a sound investment; our next step is sitting with your attorney to review contracts that have been sent to him or her from Sellers attorney. If everything looks good you will sign and leave the deposit w/ attorney to put into an escrow account. You are now “under contract” and your offer carries more weight. This status will be reflected on the Multiple listings and buyers understand this deal is serious.
8. Once contracts are executed (signed by both parties) you will call your lender and begin the loan process and move forward on obtaining a mortgage commitment. Your attorney will order a tile search on the property to make sure there are no liens on the property.
9. From contracts to closing we are looking at about a 30-60 day period of time. This will vary as every deal is unique. We may have purchased from a homeowner who warrants a little extra time to find a house, or we may have a deal where they are looking for a quick close. You will have to purchase and pre pay fot the year, your Home Owners insurance.
10. The day before the closing we will do a final walk through to make sure the home is still in the same condition it was when we saw it last.
11. Closing.
