Here I will outline the process of buying for all first time buyers out there. Of course, there is more to it than I will be able to fully explain here, but you will understand the major components and know what to look for as you buy.
Whether you are buying up to your dream home, moving from renting to owning, or looking for investment property, the combination of long market times, low interest rates, and excess inventory on the market has created the “Perfect Storm” for real estate purchases. Do not wait, at least speak with a lender before you decide to put it off. Worst case, it costs you nothing and you will be better prepared when you do decide to purchase.
1. Initial Buyer Interview- Your realtor should explain a general overview of the buying process. If you have not been pre-approved, ask your realtor to refer you to a quality mortgage Lender. Additionally, consider what you want in your home and moreover, why. Why large rooms are important, why you want an open kitchen leading into the dining room. Is it because you have lots of stuff and need the space? Do you like to entertain and have guests? Great realtors are constantly viewing property and if you can tell them why you want the features that you do, their expertise should narrow the search saving you time and energy.
2. Pre-Approval - Here you will sit down with a lender. Good ones will start bottom up to determine a purchase price that makes you comfortable. Your lifestyle should determine how much you spend on a home ideally, not vice versa. If you like to travel or eat out often that should be taken into account when determining your monthly payment. Once you agree on a monthly payment that is comfortable, your lender will project that out to a purchase price.
3. Needs Analysis - Here you will discuss what you want with your realtor including the why. After compiling a list of your wants and needs I do a search and provide you with listings online. I have never found it useful to send my clients twenty properties to sift through because it can be overwhelming, specifically for those undertaking this process for the first time, so I limit to eight to ten and ask for feedback. Based on the feedback I will refine the search and in the second mailing you will find multiple units you are interested in seeing.
4. Showings- Here is the first time you are out with your realtor viewing property. A good realtor will be consistently asking you questions about your impressions after each showing. The goal is to narrow the wishlist you originally amassed and merge it with what exists in the real world based on price point, area preference, and what is currently for sale.
5. Write Contract and Negotiate until Accepted
6. First Earnest Money Payment- This money is held in escrow until the closing. This amount is counted as part of your down payment and secures the property for you as some form of compensation must be exchanged to make a contract binding.
7. Contingency Period – Three types 1. Inspection - your new home is inspected and a report is generated listing any material defects on the premises 2. Attorney Review – contract, inspection report, and if necessary, condo declarations and bylaws are reviewed by your attorney 3. Mortgage Contingency – Obtain a commitment from your mortgage company stating that they will be able to fund your loan.
8. Balance of Earnest Money – Now that the contingencies have been resolved, you pay the balance of earnest money.
9. Final Walk Through – Here you will view the property just prior to close, looking for any changes since the inspection or work that must be completed, i.e. punch list.
10. Closing- Closings are held at title companies and on average take an hour or two. You will sign mortgage documents and receive the keys to your new home.
Feel free to contact me with questions about anything you have read here. Do not wait. Opportunity is knocking, let the little fella in.
Best,
JLC
