The 3 phases of home buying
1. Hire. A great buyer’s agent is indispensable. They are your buying coach, representing you, and will protect your interests when you make an offer. They can also recommend their network of professionals (lender, home inspector, attorney) for a smooth start-to-finish process. Signing a buyer agency contract ensures that you remain a top priority and clarifies how you will work together. (Why REALTOR®?)
2. Pre-approval. Talk to an expert lender about mortgages and get pre-approved (NOT pre-qualified) so you are clear about how much you are able to spend. Ask your lender for the max purchase price they will approve you for and also what purchase price matches the monthly amount you are comfortable spending on a house. Be prepared to provide to these items to your lender: 2 years tax returns, 2 month’s pay-stubs, 2 month’s bank statements, asset and retirement accounts, and be prepared to provide whatever else may be requested promptly.
3. Connect. Introduce your Lender and Buyer’s Agent. Have your lender send an initial pre-approval letter to your buyer’s agent, so they can work together when it is time to make an offer.
4. Strategize. Sit down with your buyer’s agent to do a thorough review of what your needs, wants and deal breakers are for a home. Let them know where you want to live, your preferred lifestyle, and anything that would make it your dream home. Get your agent to sign you up to receive listings from Multiple Listing Service (or MLS) directly so you get the latest properties right away to check out. Realize that Zillow, Redfin, etc... are all secondary sources of real time property data pulled from the MLS. Don't settle for a secondary source!
5. Show time. Time to look at homes to see which one feels right for you. Your buyer’s agent can set up appointments for any home and give them at least 24 hours to set up appointments so they can give some notice to the owners. Enjoy this process.
6. Offer time. You’ve found the one, or a few. Have your buyer’s agent look at other homes in the area that have sold and are on the market in the area to help you understand value and pricing for the home you like. Then you can create a negotiation strategy based on that. Also, write a check for $1,000.00 made out to the listing agent’s office to go with the offer and have your pre-approval letter ready to match the price of the offer. Go over all contingencies with your buyer’s agent and get their advice, especially in a seller's market where too many contingencies become a disadvantage to winning.
7. Negotiate. Expect to go back and forth a few times with the seller before having your offer accepted. Remember that time is money, so closing dates, financing, home inspection, appliances and other items are all important as well as the price!
Phase II: The executed offer phase
1. Accepted offer. Congratulations! One obstacle overcome. Get a signed copy of your offer and all your documents into your lender as soon as you can! Expect that your $1,000.00 check will be deposited and cashed within 1-3 days.
2. Attorney. Get recommendations from your buyer’s agent and hire a real estate attorney to represent you throughout the purchase. (You can even hire them before you make an offer, so you can move quickly through the rest of the moves to closing). Have your agent make sure that your attorney and lender are connected and have a copy of the offer for reference. Your buyer’s agent will also make sure that your attorney and the seller’s attorney are connected so that they can begin to work together to create the Purchase and Sale agreement (P&S in real "estatese") for signing.
3. Home Inspection. Now, now, now! Get recommendations of good home inspectors from your buyer’s agent (not all inspectors are created equal!). Inspections usually need to be completed by 5-7 days after the offer is signed, so get it scheduled immediately! Make sure your inspector shows you how to maintain and care for your home as you go through the inspection. Ask any questions you have about the home’s condition. If the condition of the property is much worse than expected when you offered, then it is possible to negotiate more with the seller. Your buyer’s agent will help you to determine if the price you are paying matches the value of the house in its current condition. (more about inspections).
4. P&S signing. Have your attorney walk you through the agreement and answer any questions you have about it. Then, time to write the biggest check of your life! Typically 5% of the agreed on price for the property, less the $1,000.00 you already gave with the offer. You will sign the Purchase and Sale agreement first with your agent and then give them the check. They will get everything to the seller’s agent who will have the seller sign and send back a fully signed copy for everyone’s reference. Make sure your lender gets a copy immediately. They will need it for the appraisal and to get started on processing your loan in earnest.
Phase III: The pre-close phase
1. Mortgage Application. Get it completed and all documents into your lender immediately. You are now done with the busiest days in your purchase. Phew. At this point, rather than talk to your agent daily or hourly, you will talk to your agent once a week or so to check in and they will ensure that everything goes smoothly to closing.
2.Moving Prep. Hire a reputable moving company or offer to buy drinks/beer and pizza for all your friends. Also, remember to call or go online with the utility companies to let them know you are moving.
3.Start Packing. Bring home the packing boxes and supplies and get ready to move
4. Appraisal. The listing agent will meet the appraiser at your new home for the appraiser to evaluate the value for the lender. This is a key item for your mortgage, so we keep our fingers crossed that the value comes in at the price agreed on or higher. Your lender should send you a copy of the appraisal and if they don’t please ask for a copy. (Difference between appraisal and inspection).
5. Homeowners Insurance. Call your insurance agent or ask your buyer’s agent for a recommended insurance agent to purchase your homeowner’s insurance. Make sure to provide your lender with proof of Insurance. More info here.
7. Lenders be crazy. While processing your loan, your lender may need additional documentation. Quick turn-around on requested items is crucial. Get them what they want in 24 hours if possible! (No matter how crazy the request may seem sometimes.)
8. Loan commitment. You will receive a commitment letter from your lender when they approve you for the loan. Key item is that this is received before your mortgage contingency date. If not, then make sure that your attorney extends the date. Send your commitment letter to your attorney and agent for review. You will want to make sure that any outstanding conditions are all ones that you are able to take care of quickly and easily. You can normally close 3 days or later after you receive your commitment letter.
9. Closing documents. You will need to bring certified funds to closing, a bank check, so review your loan commitment the day before with your attorney and get the amount you should bring to closing. Also, make sure to bring your driver’s license or other identification and your checkbook just in case anything changes at the last minute. Usually closing takes place at your attorney’s office or the Registry of Deeds. Your attorney will confirm the time and place a few days before closing.
10. Walk Through. Before closing do a walk-through of your new home with your agent. Make sure the home is in approximately the same condition as the last time you saw it and that you are happy to accept it the way it is. Usually walk-through is the night before or morning of the closing.
11. CLOSING. CONGRATULATIONS!! You did it! Sign your life away on your mortgage paperwork and get your keys! Move-in and Settle-in. Remember that your buyer’s agent is still always available to answer questions and help with trusted resources even after you move.
Choose me if you're thinking of buying or selling in the near future so we can make your next move a success.