12 Steps of Buying a Home,
Your Guide to Buying a Home . . . a twelve step process
By Dawn O’Connor Rowe |
Step 1 – NEEDS ANALYSIS
Congratulations on your decision to purchase a new home. Your first step toward buying your new home will be to analyze your needs. By analyzing your needs you will be able to get a clear picture of exactly what you want your new home to look like and how it should function for you.
First, you should write down why you are looking for a new home. For example, are you currently renting and would like to have a home where you can begin building equity? Maybe you recently married or had a new child and have outgrown your current residence. Or, maybe you have just received a promotion that requires you to move. These factors will all have a bearing on how you approach your home search.
Second, establish a time frame for buying your home. Depending on your reasons for wanting a new home and the current state of the market in the area of town you are looking to buy, you should be able to come up with a rough guideline which you can finalize at a later time.
Lastly, you most likely have a mental picture of what you would like your house to look like and what features are important to you. It's very important to write these ideas down to avoid any ambiguity later in your home search. You should make at least two lists: one should be a list describing your dream home and the other list should be comprised of the features that are an absolute must have in order to buy your desired home. In a perfect world, your new home would fulfill both lists 100 percent. But, it is more likely that you will end up blending the two lists into a schedule of prioritized items as you progress through the buying process. This is a natural and evolutionary process as you get clearer about what you want and what is available.
As your agent I can save you time and money by putting my expertise and network to work for you. I will be able to help you identify and organize your wants and needs and then assist you in realizing how your wants and needs will fit into your home purchase plan. It is my goal to guide you and help you focus on what will be best for you and your family. |
Step 2- PRE APPROVAL AND PRE QUALIFICATION
Now that you have a list of features you want in your new home, you are ready to start looking…well, not quite yet there is one very important starting point. You are going to need to identify what price range to look. There are two ways to go about this. You can be pre qualified or pre approved for a mortgage. Either way you will need to contact a lender.
While they may sound the same there are some key differences between pre qualification and pre approval. Loan pre qualification is a simple process. It takes into account very basic information regarding your financial status and gives you an amount for which you may qualify. This can be done strictly on a verbal level (over the phone) or electronically over the Internet. The pre qualified amount is based solely on the information you provide. Most often, pre qualified buyers usually hold little clout compared to pre approved buyers due to the fact that the information given during the pre qualification process is not thoroughly investigated and therefore may be unreliable. Whereas a pre approved buyer is actually approved for a loan of a certain amount, a pre qualified buyer is only told that they might be approved for a certain amount. With that at hand, it is not too hard to figure out that the pre approval process is much more involved. The lender will take all pertinent information regarding your finances and perform an extensive check on your current financial status. This will ultimately give you the exact amount that you will be eligible for (depending on what type of loan you decide to go with). Being pre approved lets the seller know that you have gone through an extensive financial background check and that there should be no unexpected obstacles to buying the home. It is easy to see how being pre approved would be more attractive to a seller than just being pre qualified.
The type of mortgage you apply for will depend on many factors, but the majority of that decision will be based on your ability to make a monthly installment. If you can only afford a $2000 dollar a month payment, you are not going to go out and buy a $500,000 home, unless you have a large sum of money set aside to make a sizable down payment. Financial planners say that you shouldn't pay more than 28% of your gross income for housing (that includes principal, interest, taxes, and insurance). Depending on your debt to income ratio, that percentage may change.
Once you have determined what you can afford, the next step is to choose a mortgage plan. There are many different mortgages out there, so take some time and explore all of the possible plans for which you qualify. By doing a little research, you could save yourself thousands of dollars in the long run.
As your agent I can be your professional guide through the entire loan process. I am able to counsel you on the advantages and disadvantages of certain types of loans and help you understand the "real" cost of a mortgage.
I will also act as your personal advocate and liaison between you and your lender as you proceed through the approval process and closing by working with your lender on a regular basis as needed. |
Step 3 – NEIGHBORHOOD INFORMATION
Now that you have your list of home needs and wants and you know how much you can afford to spend, it's time to look at some houses…well, we are getting closer, but not quite yet.
Step back for a moment and consider the larger picture. People don't just buy a house, they buy the neighborhood the house just happens to be there. You’ve heard it time and time again…LOCATION, LOCATION, LOCATION. Think about that...if you found the perfect house but it was in a neighborhood that was not to your liking, would you make an offer on it? Most likely the answer would be, "No."
So, you will need to make another list of what type of neighborhood you want to live in. You will most likely want to consider things like how living in the neighborhood will effect your commute time to work, what amenities are offered (swimming pool, tennis courts, park, etc.), and, if you have children who are attending school or soon will be, what is the school district and how close are the schools. You may even want to make two lists just like you did with your home criteria.
As your agent I can save you time and energy by taking the information from your list of needs and wants for your home, your pre approval, and your list of needs and wants for the neighborhood and incorporate them into a broad search profile. I will then narrow down the search to specific areas dictated by the market in which you are looking and help you evaluate your neighborhood options. My experience and knowledge of Sacramento and its surrounding areas in the local market will be an invaluable resource during this step. |
Step 4 – HOME SEARCH
At this point you will have a good idea of what you can afford and what type of neighborhood you will want to live in. Taking that information into consideration you are. . . . ready . . . seT . . .to go . . . embark on your actual home search! If you don't know much about the area you will most likely want to start your search by finding neighborhoods that meet your criteria and then narrowing your search to particular homes in the area.
There are a few ways to go about doing this. You can access local publications highlighting available real estate in the area, you can contact local Neighborhood Associations, visit the local Chamber of Commerce, look on the Internet, and you can even drive through neighborhoods that you feel would meet your needs. Driving around a particular area looking for a home that is for sale is good because you can actually see the house, but it can be very time consuming and very frustrating to find out that many may have pending sales.
As your agent I can save you time, energy and frustration by keeping you up-to-date on available properties that might be of interest to you as well prescreen potential properties for you.
You can eliminate the haphazard searching through papers on the weekends and the Internet and let me bring the listing to you. When you find one that sparks your interest, I can arrange at your convenience for you to walk through the property and see it first hand. |
Step 5 – MAKING THE OFFER
Now that you have found the home you would like to purchase, it's time to make an offer. Taking into account the recent sales of homes in the respective neighborhood which are similar in size, quality, conveniences, and amenities, what are you willing to pay for the home?
Make sure that you have everything down in written form... no verbal agreements. Present the seller with a written document detailing what needs to be done by both parties to execute the transaction. The contract should protect the best interests of all parties involved and should be comprehensive in nature. Once it is accepted by the seller, it may be too late to make any changes, so make sure review your offer thoroughly before submitting it. The contract, though not limited to this list, should include the following:
• A legal description of the property
• The offering price
• The down payment
• Financing arrangements
• A list of fees and who will pay them
• Amount of the deposit
• Inspection rights and possible repair allowances
• The method of conveying the title and who will handle the closing
• A list of appliances and furnishings which will stay with the home
• The settlement date
• Any relevant contingencies
Remember that the legalities of this phase are very important. If you have any questions or concerns, they need to be addressed immediately. After all, I know of no one that has ever said at their closing, "I wish I had asked fewer questions."
As your agent I can save you many headaches by making sure that your contract meets all the legal requirements according to local and national guidelines. I will be able to expertly advise you on how to create an offer that will have the best chance of being accepted. Also, I will ensure your financial position as the buyer by including any necessary contingencies which would protect you if a particular requirement is not met. |
Step 6 - NEGOTIATING THE BUY
Once your offer is made there may need to be some negotiating in order to reach an agreement. Keep in mind that almost everything is negotiable when you are buying a house. This can give you a great deal of leverage in the buying process, that is, if you have adequate information and you use it in an appropriate manner. Some of the things that you may have to negotiate on are:
• The price
• Financing
• Closing costs
• Repairs that need to be done
• Appliances and fixtures
• Landscaping
• Painting
• Occupancy time frame
The key to successful negotiating is keeping in mind that the end result must make both you, the buyer, and the seller happy. Otherwise, negative feelings will persist throughout the remainder of the process and someone may walk away feeling that they were not treated fairly.
As your agent I can save you time and money by representing your best interests and negotiating on your behalf. I strive to represent your interests is the utmost professional and ethical manner. I possess the knowledge and expertise necessary to make sure that your offer is accepted at the best price and terms possible for you. |
Step 7 – ACCEPTED OFFER - OPENING ESCROW
Once you have an accepted offer, a copy of the contract along with your good faith deposit will need to be deposited into an escrow account with the identified title company. An escrow company is an independent “stakeholder” account and is the vehicle by which the interests of all parties to the transaction are protected. The Escrow officer takes instructions based on the terms of the purchase agreement and the lenders requirements. The Escrow officer can hold inspection reports and bills for work preformed as required by the purchase agreement. Other elements of the escrow include hazard (home owners and possibly flood insurance) and title insurance as well as the grant deed from the seller to you. Escrow cannot be completed (close and record) until these items have been satisfied and all parties have signed escrow documents.
As your agent, I am not party to the transaction, but I can assist you and will coordinate all of the details required to close and record on time. I will work with your lender and the escrow officer to make sure the purchase contract is executed as signed. Opening escrow can be a confusing process. I like to anticipate problems and identify solutions to ensure a timely closure. It is my goal to educate you on the process and make it as seamless as possible. |
Step 8 – DISCLOSURES AND INSPECTIONS (WHAT YOU NEED TO KNOW)
After your offer has been accepted, the property will need a thorough examination. In the purchase contract you will sign a document called the buyers’ inspection advisory outlining the various aspects of the home. The seller is obligated to disclose all “known” facts about the home.
Working with your lender, you may need to have a formal appraisal and a survey done for the property designated in the contract. A property inspection, a foundation inspection, and a pest inspection may also need to be completed to make sure that the property is up to the standards set forth in your written agreement. If there are issues or inconsistencies brought to light during this time, it may delay or even nullify the contract depending on the contingencies set forth in the contract. Having these procedures done in a timely and professional manner is a must. Investigate each vendor to make sure that they are reputable and do not have any claims against them.
Homeowners insurance is another very important item that will need to be taken care of at this point. Insurance experts recommend that you obtain insurance equal to the full replacement value of the home. Unless you have insurance coverage on the home, the closing can not proceed.
The seller is also obligated to make to property available for you the buyer to conduct investigations. The seller is not obligated to pay for such investigations or to correct defects discovered during such inspections, but must allow for them to conducted. Possible inspections can include but are not limited to:
• Pest Inspections
• Roof Inspections
• Pool Inspections
• Mold Inspections
• Property Surveys
• Lead Paint
• Sexual Offenders Database
• Sewer Inspections
As your agent, I will help you identify professionals to conduct such investigations. I will also help you understand what the reports say and what implications they may present to the home and or transaction. In addition, I can help oversee the coordination of necessary vendors and serve as your advocate when working with each vendor. I will make sure that vendors have access to the property at the appropriate times to perform their procedures. My experience in this area will be invaluable in making sure that everything is completed on time and in a professional and legal manner. |
Step 9 - PRE CLOSE PREPARATION
As the closing date draws near you will need to be in contact with the escrow and your lender to make sure that all the necessary documents are being prepared. You will also need to confirm that the documents will be delivered to the correct location so they can be reviewed and that they will be ready on the appropriate date. At this point, you should find out what form of payment you will need to bring to the closing for any unpaid fees. Make sure that your payment is made out to the appropriate party.
As your agent, I can coordinate the necessary documentation with your closing officer. I can work with the closing officer as your consultant to insure thoroughness, accuracy, and timeliness. Making sure that each document is ready and available will enable you to have a quick, easy closing. |
Step 10 – ANTICIPATING THE BIG MOVE
In the midst of all the escrow documents, it is easy to forgot about the biggest detail…planning the move. Moving is never easy, but if you make a list and follow some time proven simple guidelines you can lessen the stress of moving. As soon as you have an accepted offer, you will want to start planning. Now is the time to decide how you will physically move…friends or professionals? Storage? or giveaway? …so many details….so little time.
As your agent, I can help you identify vendors and provide you with move in checklists you can use to make sure that everything is done so that the move into your new home is as smooth as possible. |
Step 11 – CLOSING
Closing is where ownership of the home is legally transferred from the seller to the buyer. It is a formal meeting in which most parties involved in the buying/selling process will attend. Closing procedures are usually held at the title company's office. Your closing officer coordinates the document signing and the collection and disbursement of funds.
In order for the closing to go smoothly, each party involved should bring the necessary documentation and be prepared to pay any related fees (closing costs). There may be more than one form of acceptable payment for your closing costs so ask the closing officer which form of payment will be required and to whom it should be paid.
Sellers sometimes pay for a portion or all of the closing costs, depending on local market conditions, terms of the purchase contract, and the seller's cash and timing considerations. Any such concessions should be acknowledged in writing. Most lenders will allow a credit from the seller to the buyer for the non-recurring closing costs. However, they usually won't allow a credit that reduces the amount of the buyer's down payment or any of the buyer's recurring costs, such as expenses for fire insurance premiums, Private Mortgage Insurance (PMI), or property taxes.
As your agent, I can be being present at the closing and read the documents on your behalf and answer any questions or help to resolve any issues that may come up. I will also be available to manage any last minute or unexpected details. |
Step 12 – POST CLOSING
Congratulations on the purchase of your new home! Now that you have taken ownership of the property you will need to arrange to have your local services such as electricity, cable, and phone set up. By this time, you should already be aware of the expenses that are typically associated with owning a home. Neighborhood Association fees, landscaping costs, and annual taxes should be budgeted for throughout the year to keep from getting into a financial bind. |
As your agent, I can help you coordinate the set-up
of local services. I can provide you with lists for such services as water and electricity, as well as others. |
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Please feel free to contact me with any questions.
Dawn O’Connor Rowe, Realtor
Windermere Dunnigan Realtors
4215 Freeport Blvd Sacramento, CA 95822
916.799.4835
Fax 916.451.4666
Email: Dawn@DawnRowe.com
www.DawnRowe.com |
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