First time buyer, upgrading, downsizing, 2nd home,
Being prepared every step of the way limits unforeseen challenges.
Let’s get started!
STARTS WITH FINANCES
Determine how much you can afford. Rule of thumb, home price shouldn’t be more than 3X your salary, and payments shouldn’t be more than 28% of your monthly gross income. Be sure to obtain a credit report to ensure there are no surprises.
Obtain offers from at least three mortgage lenders prior to choosing one. By doing so you’ll get the best rate, narrow down a mortgage structure that makes sense for you and build a relationship with a lender you can trust.
PRO TIP! Be sure to talk about closing costs. Mortgage Brokers are often more flexible and are more competitive than banks.
Must Haves and Nice to Haves
Finding a home that checks all of your boxes can be challenging. The best plan is to brainstorm a list of the absolute must haves (i.e. 3 bedrooms, 2 bathrooms, proximity to work, preferred school district, etc.), and which features are simply nice to haves (wine fridge, heated floors).
Find the Right Agent
(Psst… We know a good one!) The job of a real estate agent is to best represent your interests through every step of the home buying process. Your agent should listen to your needs and understand the market in which you are interested in purchasing a home. They should be experts in negotiation, transaction forms, finance options, and have an understanding of technology and how it can enhance your home purchasing experience. We suggest coming up with a list of questions that are important to you, then meet with at least three agents and score them on how well they answered your questions. Always remember, your agent works for you.
PRO TIP! Most agents already know what you’re going to ask and have a canned answer. Think of a question that will actually allow you to see them in action. For example, say you only want to cut their listing fee in half because that’s how much value you place on their work. Uncomfortable question, sure, but the way an agent responds to this will give you a great idea of how they negotiate, and will force them to elaborate on where they’ll be of most value to you.
This is the second-best part of buying a home! Reference the must have checklist you created and try to withhold judgment until you have toured a home in its entirety. If the home doesn’t meet your must have criteria, quickly pass. However, don't dismiss or be intimidated by potential homes because of superficial issues that could easily be remedied as this could be a great way to gain instant equity.
Make an Intelligent Data Driven Offer
You've fallen in love with a property that meets your needs, now let's make an offer! Here’s where it can get tricky as you don’t want to low ball and risk losing the house to another buyer, but you also do not want to overpay. We’ll work with you to design an offer that’s within your comfort zone and is competitive. We’ll get creative in setting your offer apart from others.
Purchase contracts typically include an earnest money deposit. It shows you, as a buyer, are committed to purchasing this home. Most earnest money deposits are refundable. Your offer should contain contingencies that will return your earnest money deposit to you if the contract is canceled. Usually, the contingency periods will specify a time period for performance.
Negotiate Counter Offers
It’s normal for a seller to send a counter offer, we suggest you expect this to happen. It doesn't mean your offer offended the seller or that we did anything wrong. Rather think of it as the gateway to acceptance. Even if we offered list price, the seller might have other points that were not adequately addressed to their satisfaction.
Woohoo, congrats! You’re halfway through the home purchasing experience!
Setting Up Escrow
Escrow is a non-bias third party who manages the receipt, exchange, and distribution of the items (deposit documents, funds, or other things of value) needed to transfer or finance real estate from the seller to the buyer. We’ll open escrow and title, if the listing agent hasn't already done so.
Home Owners Insurance
Your lender will likely require the name of the agency providing you with home owners insurance. You’ll want some time to shop around before closing. Basic insurance typically covers fire, theft, storm damage and liability should someone get injured on your property. You can also add on riders for things like expensive jewelry, furniture, home office equipment, and choose to get additional flood insurance if your home is in a flood-prone region. Let us know if you’d like some referrals.
Typically, purchase offers are contingent on a home inspection and other contingencies. This is our time to validate the home is in as a good of shape as it appears. Home inspectors will check for signs of structural damage or things that may need fixing. Both you and the seller will receive a report on the home inspector’s findings. We can then decide if you want to ask the seller to fix anything on the property before closing the sale.
PRO TIP! If we believe the home you’re interested in purchasing will have multiple offers, we should consider doing a pre-inspection. This means you have a home inspector evaluate the home before we make an offer.
Your lender will arrange for an appraiser to provide an independent estimate of the value of the house you’re buying. The appraiser will be a third-party company not directly associated with your lender. The appraisal will let all parties involved in the sale that you are paying a fair price for the home.
The purpose of the final walk-through is to ensure the property is in the same condition as when you last viewed it. If you discover exposed damage to the hardwood floors, for example, after the seller has removed the rugs, this is the time to ask for some sort of compensation. Do not pass up doing a final walk-through. You might be tempted to forgo this formality, but those who choose that option often regret that decision.
At closing, you’ll sign all of the paperwork (property deed, reconveyance, deed of trust, title, loan documents and more) required to complete your new home purchase. Bring a certified check payable to escrow to cover the rest of the down payment and closing costs. You cannot deposit cash. Personal checks are acceptable if there is adequate time to clear prior to closing. The title company will notify us when it records the deed. It typically takes a couple of days for your loan to be funded after the paperwork is returned to the lender. Once the check is delivered to the seller, you are ready to move into your new home!
Congratulations on your new home!! We’re happy to have assisted you in this journey! This a great time to purge through all of your stuff. Let us know if you need a recommendation for some great local charities to donate items you no longer need and for any references to moving companies. If you’re planning to do a little remodeling or upgrading we know some talented general contractors and the best stores for all of your home needs!