GENERAL HOME BUYING PROCESS
- PREPARE – Like any project or job, preparation is key to a beautiful result. Take some time to talk to a professional expert. Gather stories from friends and family, but remember most people only buy and sell a handful of homes in their lifetimes. Talk to someone who deals with real estate sales day in and day out. To best serve your interests, we recommend an experienced, full-time agent, not a part-time dabbler or someone new to the business.
- Determine your Budget – There is more to homeownership than just your mortgage payment. Include homeowner’s insurance, taxes, maintenance, home owner association/condo fees, utilities, yard maintenance, furniture, appliances, tools, paint, etc.
- Determine What You Want in a Home – Create a list of needs and desires, proximity to work, schools, house of worship, bedrooms, bathrooms, type of home, yard style.
- Gather your documents – W2’s for 2 years, federal tax returns for 2 years if self-employed, pay stubs for at least 1 month and 2 months of bank statements/retirement accounts/savings. The lender will ask you to ‘source’ any large or unusual deposits within the last two statement cycles.
- Check Down Payment Assistance programs and options. If you’re a Teacher, Firefighter, Police Officer or Nurse, you may be eligible for additional financial benefits, contact us for more information.
- Meet with your Realtor – We’ll listen to your criteria, narrow down the areas you’re interested in, identify some possible properties and create a customized strategy. Keep in mind there are going to be trade-offs, so we’ll help prioritize your list and find what’s most important. There are also elements of different properties that you can change to fit your desires, so don’t write off possibilities until we’ve fully explored them. We’ll help you find off-market properties, those hidden gems that no one else can find, identify the up and coming neighborhoods, transit friendly areas, and more.
- Meet with a Lender – We can recommend 3 lenders for you to talk to, you may also want to talk to your bank* and see how their rates and terms stack up. Take the time to chat with them to find your best fit. The lenders will walk you through all your options after reviewing your credit and basic application. They’ll help you determine a price range and will provide a pre-approval letter when needed.
*Large banks like Wells Fargo, Bank of America and credit unions generally take much longer to process loans than mortgage lenders. They can also be difficult to reach as they generally work during business hours only.
- Find a home! – We’ll look at different properties online and in person. We’ll search together until we find the right one, there is no need to rush into any purchasing decision, we’ll work with you until the fit is perfect. When we do find “the one”, we’ll walk you through a market analysis to determine the offering price and confirm the home fits all your needs.
- Submitting an Offer – Every offer is different, although there are standard forms, the terms are different for every transaction. We’ll contact the seller’s agent together and gather any intelligence available before crafting your offer. There are over 40 pages in the average contract and we’ll review each element with you to cover the commitments, contingencies, pricing and offer strategy to help you make the best offer. See also Making an Offer
- Earnest Money Deposit – In addition to the contract and the lender letter, you’ll write a personal check for the deposit, usually about 1-10% of the purchase price. The amount of the EMD depends on the competitiveness of the market – more competitive, higher deposit. The EMD shows the seller that you are committed to buying their property. The funds are held by the settlement company and the check will be deposited within 3 days after ratification. If your offer is not accepted or ratified, the check will not be deposited.
- Contract Ratification – Your offer can be accepted, rejected or countered. Our negotiation skills will help you make the best first offer. In the case of a counter-offer, we help you formulate the best response based on your individual situation. Sometimes in a ‘hot’ market, we may face a competitive situation. We’ll know before submitting if this is the case, and we’ll structure and negotiate your offer so it will best meet your needs. This period of negotiation can be very stressful, but rest assured you have experience and Harvard Business School trained negotiators on your side. We take a collaborative approach to negotiations, but have the ability to bring out The Beastmaster* when needed.
*Ask Amelia Robinette about The Beastmaster
- Home Inspection – We’ll help arrange an inspector to take an in depth look at the property. We’ll attend the inspection and recommend you accompany the inspector as well. Although it’s not required, it’s a great way to familiarize yourself with your new home. The inspector will look at the roof, electrical systems, plumbing, appliances, mechanical systems, and may note for wood destroying insects or other evidence of pests. If warranted, we may recommend a separate pest control company, structural engineer, plumber, electrician, or contractor to perform additional inspections. Home inspections can be done (in some cases) before writing an offer or as part of a contingency in the contract. The home inspection is paid by the buyer directly to the home inspector. If inspector finds issues, we’ll negotiate the repairs or credits to cover the costs.
- Property Appraisal – The lender will order this value assessment of the property. They’ll confirm the value and affirm their willingness to lend the requested loan amount.
- Home Insurance – The buyer will need to purchase a Homeowner’s Insurance policy to satisfy lender requirements as well as protect your investment. Speak to your current insurance carrier about bundled rates, we can also recommend a few different local agents who will be happy to provide you with quotes.
- Contingency Removals – Depending on the structure of your contract, we’ll be dropping contingencies as we move through the process. We’ll keep you informed of each milestone as we move through them.
- Get Ready to Move! – Schedule movers, pick up boxes and start packing.
- Utilities – Contact utility companies and open your new accounts. We recommend you schedule service start the day before settlement. It’s better to have accounts transferred from the seller to your account to avoid any reset fees.
- Settlement Statement, ALTA or HUD-1 Form – At least 3 days before settlement we’ll review the final settlement statement. The lender will let you know the amount of money you’ll need to bring to closing, in the form of a cashier’s check, certified or wired funds.
- Settlement – This is the finish line. You’ll sign a number of papers including your mortgage loan documents and deed transfer documents. The settlement company will ‘record’ the new deed with the local property office (usually court records) and you’re officially a homeowner.
MONEY YOU’LL NEED BEFORE SETTLEMENT
Earnest Money Deposit – 1% to 10% of purchase price
Home Inspection Fee – $500 – $1,250 (depends on size/price of home and what types of inspections you want)
Additional Inspection Fees – $100 – $700
Appraisal Fee – $350 – $1,000 (depends on size/price of home)