NOW THAT YOU HAVE DECIDED TO BUY...WHATS
NEXT??
The Process: Read through following information that I have prepared for you. It
will answer some of your questions (and create some new ones). This information
should help the home buying process go smoother and allow me to serve you
better. After reading this, give me a call so we can begin to get you familiar
with your needs and the Real Estate market.
STEP #1: CHOOSING YOUR HOME
A. Two things will help determine what price home you could buy:
1) What monthly payment you qualify for (this will allow me to suggest a
price range you
should be looking at.
2) What monthly payment is feasible for you. Remember that you are making an
investment. The monthly payment on a home could be more than a rent payment:
however, you are investing your money, not throwing it away. Also, the actual
amount of interest you are paying is less than you think because of tax
benefits.
B. When choosing location of your home, keep in mind:
1) Where you work.
2) Schools.
3) Neighborhood Characteristics
4) Home in relationship to major roads.
C. Evaluate what you NEED in a home verses what you would LIKE to have. Most
people want a lot more home than they can afford. You will probably have to make
some compromises. Make a list of what is really important to you in your new
home.
D. When is the best time for you to move? Consider:
1) Convenience
2) Rental Leases
3) Personal Obligations
4) Interest rates and seasonal price fluctuations
E. Open Houses (IMPORTANT)
If you see an Open House that you would like to go through, you may want to call
me, or your buyers agent. If you go through it without your Buyers Agent, you
may be denied Buyers Representation. The Listing Agent holding the open may be
allowed to be the agent in the transaction for both you and the seller... if you
decide to buy that home. Remember: The Listing Agent must legally represent the
seller and therefore cannot represent your best interests. The Listing Agent may
not let me (or any other Agent) provide you with free representation to assist
you in purchasing that home. The term is "procuring cause", meaning
the Listing Agent found you (the buyer) by his/her own advertising, and the
Multiple Listing Service (MLS) was not involved. Therefore, since the MLS was
not involved, the listing agent does not have to let any other agent in the
transaction. At that point, if you want Buyers Representation on that home, you
may have to pay for it yourself. This is allowed and accepted by the Minnesota
Association of Realtors. Most Listing Agents are flexible and will allow the
buyer to contact their Buyer Agent for representation, but the Listing Agent
does not have to if you walk through their open house. You may loose your
opportunity for FREE Buyer representation if you go to an Open House or contact
a Listing Agent direct without contacting your Buyers Agent first.
My Advice: If it is inconvenient for you to call me on a particular "open
house"; then, as you enter the home, tell the agent you have a Buyers Agent
(give him/her my name) and ask if it would be OK to view the home without me.
Most Listing Agents won't have a problem with this, and you protect your right
to Buyers Representation if you purchase that home. When you sign in, use my
name instead of yours.
STEP #2: MAKING AN OFFER
Each Realtor does their job differently. I want you to feel comfortable with the
fact that I'm going to be as concerned about finding the right home for you as
you are. The right home may be the first one you look at, or you may see several
before finding the right one. I will give you my professional opinion on the
homes you see. However, remember you will be living there not me!! When you find
a home you would like to buy, we then write a purchase agreement. This is an
offer to the seller and has many negotiable terms.
A. Earnest Money
B. Purchase Price
C. Personal property in the home that you wish
to be included in the sale
D. Taxes due this year
E. Closing date
A. Earnest Money
This is money paid by you when the offer is presented (usually in the form of a
personal check). It represents a sincere offer from you to purchase the home. If
the offer is accepted, the money is placed in a trust account. At closing the
money is used as part of your down payment costs. If there is a legal reason why
the sale does not take place, the earnest money shall be returned to you.
Example:
1) If the home does not appraise
2) If you do not qualify for your loan.
3) We find something wrong with the property that was not properly disclosed.
If you should change your mind about buying the home with no legal reason, the
money is given to the sellers for personal losses... or the sellers may return
it to you. It's their choice, they don't have to give you the money back. Your
not buying their home could be a costly inconvenience to them.
IMPORTANT: I always recommend buyers have homes professionally inspected. To
your advantage I will write a "contingency" on the purchase agreement
to allow for a proper inspection. If the home does not pass this inspection, the
purchase agreement will become null and void at the buyers discretion. This may
provide a "safety net" for your earnest money to be returned if the
home does not check out. This is an example of a service your Buying Agent will
recommend in the buyers best interest... something a Listing Agent (representing
the seller) probably would not recommend. The amount of earnest money is
negotiable. A good example is $1,000 on a home of $100,000
B. Purchase Price:
I will provide you with "Comps" or comparable homes sold in the area.
This should help you place a value on the property you're purchasing. The
typical belief of many buyers is that they can buy the home for less than the
asking price. This is not always true. It may depend upon:
1) Is the home priced at a fair market value? (Chances are, the Listing Agent
provided "Comps" to the seller, similar to what I provided to you)
2) Is the seller willing to accept less than what he believes is fair market?
This will depend on:
a. LENGTH of time the home has been on the
market
b. NUMBER of showings and previous offers
c. URGENCY for home to be sold (Vacant, etc)
Note: The price is not as important to the seller as what the "net"
dollar amount they will end up with. Items in your offer that would affect this
would be:
1. The type of financing you will be using (Seller
paid fees required with some loans)
2. What portion of the taxes, special assessments
and work orders you are asking them to pay
3. What personal items you may have asked for
4. The risk, if any, involved in selling their home to
you (Are you pre-approved? Is the offer
contingent on you selling a home first?)
C. Personal Property
You have the right to ask for any personal property in the home and the seller
has the right to say NO! It is in your best interest to be reasonable when
asking for their personal property. Also, even if the seller agrees to personal
property, your mortgage company may not allow personal property to be listed on
a Real Estate Purchase Agreement. It's best to check with your individual
Mortgage Company. Typical negotiable personal property items are: (Also,
typically allowed on a purchase agreement addendum)
1. Refrigerator
2. Stove and Oven (built-ins are always included)
3. Window Coverings
4. Fireplace Equipment
5. Washer and dryers are usually not included, but I
will usually ask for them in the purchase
agreement .
D. Taxes due
Rule of thumb is they pay for the taxes due for the months that they own the
home and you pay for the months that you own the home (prorate).
E. Closing date:
We try and make the closing date agreeable to both parties. If you are flexible
with your move-in date, I suggest you coordinate the closing of the home you're
buying to the closing of the sellers new home they are buying. The easier you
make it for them, the more apt they will be to accept your offer.
STEP #3: THE OFFER
After the Purchase Agreement is written, I will present the offer to the Listing
Agent and the Seller. It's important that you are available by phone during the
offer presentation, in case we need to clarify items of interest. Once the offer
is presented, the seller and Listing Agent will:
1. Accept the offer as written (Home is sold)
2. Reject the offer (the offer is too low, the seller is
offended)
3. Counter the offer*
* If countered, I will contact you by phone and you will have three options:
1. Accept their changes (Home is sold)
2. Make new changes
3. Decide that you will not come to terms (Last
Resort)
Note: Again, it's important for you to be available by phone during the offer
presentation. I will have the Seller/Sellers and the Listing Agent brought
together to present your offer and we try to complete all negotiations during
that meeting. Our plan is to come to an agreement... or the buyer moves on to
the next home, and the seller moves on to the next buyer.
REMEMBER: A PURCHASE AGREEMENT IS A LEGALLY BINDING CONTRACT. IF YOU DO NOT
UNDERSTAND ANY PART OF IT - PLEASE ASK ME!!!!
STEP #4: APPLYING FOR YOUR LOAN
If your offer is accepted, you will need to apply for your loan within 5 working
days. Choosing a Mortgage Company is your choice. I work with a few mortgage
companies that have given me excellent service, interest rates and points.
Points: (Mortgage Placement Fee) A cost to the buyer or seller on FHA, VA or
CONV loans. Points are 1% of the loan amount and are used to buy down the
interest rate on your mortgage. (i.e. interest rate at 8 1/4% at 0 points, or
interest rate at 8% at 1 point). Some items covered by the Mortgage company:
A. HOME APPRAISAL: Soon after you notify your mortgage company of the sale, they
will arrange for an appraisal. This assures the bank is not loaning too much for
the home and they may possibly check for some safety concerns as well.
B. HOMEOWNERS POLICY:/ also known as Hazard Insurance (PROPERTY INSURANCE) You
need a homeowners policy to cover (at minimum) the mortgage you will owe. By
closing, you will need a paid receipt and binder for a one year policy from your
insurance agent.
C. CLOSING COSTS:
You will get an estimation of your closing costs at the loan application. You
will be informed of a more exact amount needed before closing and this must be
paid by a CERTIFIED CHECK. The estimate will
include:
1. Down payment
2. Interest due (if any)
3. Two (or more) months tax escrow
4. Two months (or more) insurance escrow
5. All closing costs involved with the lender
STEP #5: GET READY FOR THE MOVE
A: MAKE ARRANGEMENTS FOR YOUR PHONE SERVICE TO BE HOOKED UP.
B: CALL TO CHANGE UTILITIES TO YOUR NAME, GIVE DATE OF POSSESSION.
STEP #6 THE CLOSING
I will be present on your behalf at the closing. I will let you know the time
and location. It will be during business hours, which may require you to take
time off from your work.
A. YOU WILL NEED TO BRING:
1. CERTIFIED CHECK made payable to the closing company for down payment and
closing costs
2. Insurance Binder and paid receipt
3. Any other items your mortgage company or
closing company notified you of
4. Photo ID
5. Last 10 years of residence written down on
separate piece of paper to hand in
6. One healthy hand for signing!!
B. AFTER THE CLOSING:
1. Change your address
2. Notify friends and relatives
3. Post Office
4. Drivers License
5. Banks (Checks)
6. Any creditors
7. Report Homestead taxes
C. HAVE FUN MOVING!!!!!
D. ENJOY YOUR NEW HOME!!!!!!