1. The Home Buying Process…
Move In!
Make Decision to Purchase
Buyer’s Agent
$$ Settlement
$$ Mortgage Application
Pre-Settlement Inspection
Determine Needs & Desires
Determine Purchasing Power
Contact Utility Company
$$ Pay for Hazard Insurance
Preview Homes
Arrange Termite Inspection
You’ve made the decision to purchase, so you’re here at the top…and you’re consulting with me which is the next step. Our first real step together is the mortgage application, the mortgage approval only takes about 15 minutes, it’s very streamlined. We do this first because we find that buying a home is one of the most stressful events in a person’s life, so we try to take the stress out by getting that mortgage approval right up front. The pre-approval puts you in a really strong position in the home buying process because with an approved loan you’re essentially a cash buyer. This way there’s no risk to the seller that you would get turned down for a loan a few days before closing and that’s worth a lot when your negotiating, especially in this market.
The next step is for us to determine your needs and desires…and we all know there is a big difference between our needs and desires, don’t you agree? And, then we’re going to preview homes. I can preview homes in the morning, evening or during your lunch hour, we can preview homes after work, or on your days off, or Saturdays and Sundays. It’s important in a market like this to be able to preview a home that suits your criteria on short notice.
Then, once you find the home that you like, we’re going to put an offer on it. And, most likely, in that offer, we’re going to put contingencies. Contingencies are big “what ifs” and “buts” I want to buy this house BUT, I want to buy this house but it has to meet my expectations at the home inspection, I want to buy this house, but I have to get out of my lease, I want to buy this house but I want to be sure my house sells. Now, if we find a house that you love, but you don’t like the color of the carpet, or you think it’s dirty, the time to address this with the sellers is when you write the offer, not after the contract has been negotiated because where is your leverage then, don’t you agree? It just creates problems for the buyers and sellers. So when we look for a house, we’re going to look top to bottom and if you’re concerned about anything we will address then, in the offer. Now you will be doing a home inspection later if you desire. Some people like have the home inspection first before they make the offer just so they know what they’re getting into. You can do that, but you have to get permission from the sellers. Now, when you make the offer to purchase, that is the next time you will need a check – the first time being when you make the mortgage application. That is the check that says to the sellers that you want to buy their home and you’re putting your money where your mouth is. So that you’re not just saying I want your house, here’s $500 and it’s obvious you’re willing to walk away from it. The sellers are going to say go ahead and walk away now, but if you say, here Mr. & Mrs. Seller, here’s a check for $10,000 – this shows you’re serious and what is the likelihood of you walking away. When we go to preview homes, have your checkbook with you at all times because you never know when you’re going to find that house you want to make an offer on. In this market there is a lot of pressure on the buyers to make an decision quickly. You don’t have time to think about it for a week, or time to discuss it with other family members, sometimes you don’t even have time to think about it overnight.
Now, at the time of making the offer and writing the contract, it’s customary for the buyers to select a settlement agency. Now remember, that settlement agent doesn’t represent you or the sellers, they represent the contract. If you want someone to represent you the you would have to hire an attorney on your own.
Then, there’s contract acceptance. We present the contract to the sellers and they can do one of three things (1) they can accept it right out and be done with it and you have a house, assuming all contingencies are met, or (2) they can just reject it flat out and say that we’re way off and that they aren’t interested. Maybe they think we’re so way off they’re not even going to counter, or thirdly, they can which is counter. Now, countering may not necessary mean countering on the sales price. It might mean countering on the settlement date, closing costs, or rent backs, or preoccupancy.
Once they accept it the contract is ratified. That’s when everyone’s made all changes and initialed everything. All the sudden, this is when the ticker is going in, so if we’re going to do a home inspection, we have to have certain things done, that is the date and time things start to get done. You’ve got the contract date which is when we make the offer, the ratification date which is when everybody had a meeting of the minds and then the settlement date when we actually get the keys to the house. Unless there are other things worked out like a preoccupancy or a post occupancy.
Now hopefully, during this time your mortgage is being approved. The best way to go would be if the mortgage was approved up here, because as you can see if you’re the seller and you’re reviewing offers and someone needs to get their mortgage approved versus someone who already has their mortgage approved…how would you look at those buyers? So the whole time we’re negotiating think of yourself as the seller. What would make you more desirable than the next buyer?
After everything is done, the contract is accepted, we’ll do a home inspection, if it’s required by the contract. Now the home inspection – be clear – this is not the time to reopen the contract. This is the time to make sure the home isn’t a money pit. You want to make sure the roof isn’t falling apart, the basement isn’t leaking, are they’re any big issues or concerns. During the home inspection the home inspector will show you little nit-picky items, that’s their job. Because you want to know what you’re getting involved in. It’s an education. There going to show you little cracks around the window, that’s like wrinkles on the face of someone who’s been around awhile, it shows character. It’s because there’s a hole, an opening in the wall, it’s nothing major. But, the home inspector will differentiate between really big issues and really small issues.
Now if there are big problems and you’ve got concerns about the house, we can ask the seller to repair them. The seller can say yes, or they can say no, or you can come to some type of agreement. If you don’t have a meeting of the minds, the contract can be declared null and void, you get your earnest money back and everyone goes on their way and we head out looking for another house.
We’ll also have a termite inspection arranged. You have the option of paying for that or you can have the seller pay for that. Usually people ask, “Why would I want to pay for it?” Well, it gives you more control. Maybe you want to have the control of selecting the termite inspector, but then have them pay for it. It’s really up to you. But they have to show you a report that the house is free and clear of wood boring insects.
It is not a big deal if there are termites, it just means that the house is going to be treated for termites. They’re going to get rid of them and make any repairs. So, just because a termite inspection comes back positive, doesn’t mean that you don’t buy the house anymore, it just means that the seller is obligated to make the repairs.
Then 2-3 weeks before settlement, depending when we go to settlement, which may be a week, because you may find a house and go to settlement in a week, you’re going to make sure you obtain hazard insurance or homeowner’s insurance. If you already have renter’s insurance policy or a homeowner’s policy, don’t cancel it, transfer it. Homeowner’s insurance policies are hard to come by these days. So don’t cancel, transfer, Okay?
You’re also going to want to contact the utility companies and make sure all the utilities are transferred into your name the day of settlement. Why? Because when you walk through the house, you’re going to want to be sure that all the utilities work, because how else will you know if the appliances work unless you have power. And, that’s happened, so don’t let it happen to you. Where the seller turns off the utilities before settlement and then the breakers have to be switched. I’ll make sure that is coordinated with the other agent and that utilities are transferred the day of settlement.
Now, if the house is vacant and the utilities are already shut off we’re going to have to make sure there turned on ahead of time so that we can do our pre-inspection walk-through. So, now we have everything ready, the day before settlement we’re going to do the pre-settlement inspection. We’re going to make sure the house is in the same condition as it was the day we wrote the offer, if not better. We’re going to make sure the washer works, the dryer, the stove, the refrigerator and that the house is in broom swept condition. Any items that were on the list are indeed repaired. I will probably already have been there and got the receipts to make sure this has been done.
Now what happens if during the pre-settlement inspection
Contingencies:
Home Inspection
Financing
Other
Select Title CO.
$$ Make Offer to Purchase
Select Settlement Attorney
Mortgage Approval
Appraisal/ Hazard insurance
$$ Accompany Home Inspector (if required)
Contract Acceptance