Deciding to Buy
Purchasing a property is a daunting financial decision – quite possibly the heaviest one you will ever make. Whether you are a first-time home buyer or experienced, this decision requires careful forethought.
Why do you want to buy?
Outgrown your current place? Tired of paying rent? Looking for a rental? Want to live in a different neighborhood? Articulating your goals helps you choose the correct property in the long run.
Has your Income grown?
Building equity and obtaining a return on your initial investment are the best parts of owning real estate. Whether you’re after your dream home, a rental property, or anything in between, property ownership is a sound, stable investment.
Preparing to Buy
Before even browsing available properties, buyers should do their own homework and preparation.
Assembling a File
In order to secure financing for your property of choice, you should compile and organize a file containing all of your key financial documents. Elements include:
Recent Pay Stubs
2 years worth of tax returns
Copies of leases for investment properties
401k statements, life insurance documents, stock, bond, or mutual account information
Your credit score dictates the types and prices of properties you can afford. It’s imperative to check your credit rating with a lending institution so you have a clear picture of what you can afford. Credit reporting agencies like Equifax, Experian, and Trans Union examine and report on your credit rating. I am happy to recommend experienced lenders to help you expedite this process.
Be mindful of your Money!
When looking to purchase a home, it is important to do so from a position of financial stability – you want to make the process smooth and devoid of complication. Put the career changes, large purchases, and other financial instruments aside for a moment.
Choosing a Real Estate Agent
It’s no secret that buying property involves significant financial decisions, an understanding of nuanced issues, and the completion of a large volume of paperwork. Having an expert in your corner helps make the process smoother from start to finish. We are happy to guide you through this challenging process, employing our industry and market knowledge to help you find and acquire the property you desire.
When choosing your real estate agent, consider the following:
Let's Go Shopping
Get in your Car
Find a full time agent, one with experience in completing similar transactions
Conduct some agent interviews - are they knowledgeable in the trade area?
Is the agent available to you nights and weekends? Are you a priority to them?
Inquire about the agent's credential and education history
Does the agent return your calls promptly? Time and attention to detail are of the essence.
Ask about references or a list of recently transacted properties.
Select an agent that makes you feel comfortable - agents need to understand your needs and concerns.
Go out for a drive – get a feel for the pulse and vibe of the neighborhoods, complexes, and subdivisions that interest you. Take a note of the local infrastructure, schools, roads, and amenities; what would it be like to own a property and live in that area? Start by researching what’s available in the communities you fancy.
Narrow your Scope
After researching available properties that interested you, bring a list to your real estate agent. Ask your agent to make appointments to see them – be patient with the scheduling details. Inquire about the long-term resale value in the properties you are considering.
Time to Buy
Once you have a property in mind, use your real estate agent to put together a compelling offer. Discuss the costs and expenses associated with the property with your agent.
Escrow: Inspections and Appraisals
Escrow is a detailed, step-by-step, time-bound process that prepares a property to legally exchange hands between buyer and seller.
Agreement and Deposit
An effective agreement is a legal arrangement between a purchaser and seller.
Keep detailed written records of every part of the transaction. Add and transcribe verbal agreements like counter offers and addendums into written agreements so that both parties can document and sign them. Ensure that your agent prepares adequate copies for you.
Time is of the essence here, stick to the schedule. Every step in the process from here on out has a specified time and date. Follow the timeline to close the contract – meeting requirements on time makes negotiations flow smoothly, preventing any breaches or mishaps. Work with your agent to stay up-to-date on each step.
It might be important to consult an attorney or tax advisor on the best way to hold title. Depending on your method, there are different legal, estate, and tax implications – especially when liquidating on behalf of a title holder that passed away.
Once the seller accepts your offer, you need to have the property inspected by a licensed property inspector within the timeframe agreed upon by the seller in the effective contract to purchase. It is in your best interest to have multiple inspectors take a look at the property, depending on their area of specialization, in order to develop a clear picture of the property’s condition. I can recommend different inspectors that will help you.
After inspection, there are two main outcomes:
Appraisal and Lending
The property checks out, escrow milestones are closed, contingencies removed, and you are one step closer to the close.
The buyer reviews inspection documents and either makes provisions to repair, or renegotiates the terms of the contract (typically price).
As a buyer, you must stay in contact with your lender, who will request additional documents to approve your loan. If the close is conditional upon financing, the lending institution sends out a third party appraiser to determine the value of the property – confirming their investment in your property is precise. The appraiser uses a combination of metrics like square footage, building cost, recent sales of comparable properties, and income level to determine value. Communicate with your lender as 2 weeks remain in the escrow to ensure the timely processing of loan.
Lenders require you to purchase a certain amount of property insurance determined by the lending institution and purchase price. Shop around for the best deals – these tips also apply:
Consider a higher deductible - increasing your deductible by few hundred dollars can make a huge difference in your premium.
Ask your Insurance Agent about discounts - safety features like dead-bolt locks, smoke detectors, alarm systems, storm shutters, or fire-retardant roofing materials might lower your premium.
Insure your house, not the land - in the event of a natural disaster, the land will remain. Subtract the value of the land from your total insurance amount, so that you don't end up paying more than you should.
I am happy to recommend experienced insurance agents for every property type.
If you’ve come this far, a congratulations is in order. But do not forget these last steps:
Final Walk-through Inspection
While this step is a formality, the final inspection takes place the day before or day of the close. You visit the property to verify everything is in working order, in the same condition as the last time you viewed it, certifying everything agreed upon in your purchase is present, and nothing is left behind.
Home Services and Utilities
Get in touch with your agent to obtain useful numbers to activate home services and utilities after the close.
We are ready to help you should something happen at the last moment. The property could break down, or some other minor detail could be wrong – no need to fret. We’ve come across these problems before, and know how to handle them without adding stress to an already difficult process.
The closing agent furnishes a settlement statement, which details the financial transactions completed by the escrow. The buyer, seller, and closing agent all sign this document, validating its accuracy. If you are financing your purchase, take care of all documentation from the lender before the close. If you are brining funds to the transaction, you can either wire the funds into the closing agent’s escrow account, or bring a certified check made out to the closing amount on the settlement to the close. At this point, the seller arranges property keys and other pertinent information and hands them off to the buyer.