THE HOME BUYING PROCESS
This process can be exhausting if not done carefully. The last thing we want is for you to feel like you are all alone in this, or worse that you are trapped in the wrong house because you didn’t know any better. Our job is to educate you, and make sure you are fully informed. We try take a consulting role, to make sure you have the information you need to make the best decision for you.
1. ACQUIRE A PRE-APPROVAL
A pre-approval letter sets you up for success from the beginning and enhances your negotiating position in this competitive market. Scheduling and viewing homes without a pre-approval often leads to a disappointment for the buyer and seller. As a buyer, it is imperative that your financial house is in order. You should discuss your financial situation with a reputable lender before touring homes. You need to understand what you qualify for and decided at which price point you feel most comfortable. This allows us to do our job quickly and effectively and find you your dream home sooner!
Factors That Influence Your Options
Down Payment – Based on the loan product you use, there are different minimum down payments required. They are: 0% for VA buyers, 3.5% FHA, 5%-15% for Conventional. If you put 20% down, you can avoid any mortgage insurance all together. If you cannot, the loan products differ in how long you will have to have this insurance. VA loans are free from mortgage insurance regardless of down payment. Money can be borrowed from 401K type plans or received as a non-refundable gift from certain family members.
Monthly Payment – it is possible that during the pre-approval period, your lender will tell you how much money you qualify to borrow, this sum may mean monthly payments quite a bit higher than you are comfortable paying. Buying a home should not put you in an uncomfortable financial situation. One thing to keep in mind is that the payments remain mostly fixed over the years. What may seem like a stretch today, may not be difficult in the future. Homeownership sometimes comes with unexpected costs at times, but you don’t want to cheat yourself out of a better home if you can afford it.
*A good rule of thumb: For every 5k increase on purchase price, the monthly payment will increase approximately $25.
Credit – Your credit score determines your ability to qualify for a mortgage and what type of mortgage insurance you will carry. If you have a credit issue, you can discuss the best way to handle that with your lender and see if there is a way to get it resolved quickly.
Talk with mortgage lenders – Not just any lender, but a one you know and trust. If you need recommendations we have several lenders that we do business with regularly. We know who does a good job for our clients, we can send you a list if needed. When speaking with lenders, shop and compare rates and terms. Beware of “pre-qualifications” and obtain a “pre-approval” instead. There is more due diligence done upfront (submitting w-2’s, bank statements etc.) that will set you up for success. Before our first showing appointment, make sure you have made loan application and gotten a full approval with your chosen lender.
2. DESCRIBE YOUR IDEAL HOME
There are three main criteria every buyer uses to find their home: location, price, condition/style. If we are lucky, all three will line up and meet your needs, thought that does not always happen. If adjustments need to be made, they will be made in one of these categories. It is often helpful to prioritize the factors in a list of must have’s and items you’re willing to budge on.
Price – Price is often the most important determining factor, therefore getting your financials ready is the first step.
Location – This could be an area of town, neighborhood, school zone, or proximity to locations of interest.
Condition/Style – Things like square footage, age of home, features, single family home vs condo, upgrades, appearance, etc.
Minimum Acceptable Features – Price and location will often determine this, but you should determine what you are not able to live without for things like: bedrooms, bathrooms, parking. Anything that is a deal breaker for you should be outlined early.
Price & Locations – If you are willing to consider different areas, you may find additional options available for the price you are considering. We can set a maximum price no more than 10% over your comfort number. Anything higher may be a long shot. We can also set a minimum price if you know that homes in the lower price ranges only include options that are unacceptable.
3. BEGIN YOUR SEARCH
Using Zillow or other real estate platforms may mislead you that a property is available when it is fact is under contract and no longer available. There is often a significant delay between updates and Zillow posting the information.
CUSTOMIZED MLS SEARCH
Based on our conversation from the initial consultation, we will set you up with a search from MLS. We input all your parameters into MLS. All properties that meet your criteria will be emailed to you directly. You will be notified of any homes that go under contract, come back on the market, change to pending status or are sold, each day.
SEARCH ON YOUR OWN
It is important for buyers to do their own search online outside of what the Realtor sends you. Each day your mind can change on what you want, including location, price and style of home. You may see something in a location you never thought you’d be open to or notice a condo that catches your eye. If we are only sending you single-family homes based on the locations from your initial consultation, it could be missed. It is very common to change one’s mind throughout the home buying process, we can adjust and update your file accordingly. Should any of your parameters change, be sure to communicate with us as soon as possible.
4. ELIMINATE BY DRIVING BY
Photos cannot tell the entire story. Once you get a list of available homes that meet your parameters, we suggest that you drive by to look at the neighborhood, the neighbors, the lot, what it backs to, etc. It is also a good way to get a good feel for your commute to work, scope out near-by parks and even talk to neighbors to get an honest understanding about the area. You would be surprised how freely people will talk about their opinions.
Finding a home is not a process of selection, rather it is a process of elimination. You may start eliminating homes from the photos on-line. You can whittle it down further by driving by, determining if you like the neighbors/neighborhood and the location of the home.
5. VIEW HOMES
After you eliminate what you don’t like, you will have a smaller list of homes that you want to get in to see. These are the ones that look good on-line, you like the neighborhood/surrounding area, lot size and the way the home looks when you pull up to it. If you only have a couple, that’s ok. It only takes one.
When in person you will be more focused on the impression you get from the home and less about what it is. How does the home feel when you walk in the front door? Is the space what you had in mind? Does the home need anything to make it what you are looking for, and is it worthwhile to consider, or should you take it off the list? Can you see yourself living here? Remember, we don’t need a yes yet unless you know instantly. Instead, we need to know if it is a maybe or a no. If it is a definite no, it’s off the list. We may end up with a couple possibilities and can choose the best from that list.
We’ll make a list of positives and negatives. Do the negatives outweigh the positives? There will likely be something in every home that you would like to change. Is it a big enough issue to rule it out or is it something we could figure out how to address? If it is the floor plan of the home, we can’t easily change that, but if it’s a paint color we can.
6. FIND THE HOME, MAKE THE OFFER
If you quickly rule out every home in the search, there are a couple of things we can do. First, is to continue to wait and watch the market for new homes that become available and be the first to see them. New listings tend to get the most attention. After an extended period of time, if nothing comes on the market that you like it might not exist. This could be a good time to re-evaluate the parameters we have set.
If a home doesn’t feel right, it probably isn’t. It is easy to over analyze a home so much, that you end up talking yourself out of it. Most of the time, you will know if you find the right home. It may be best to wait and watch the market to see what may meet your needs over time. It may also be a good time to evaluate your needs and determine what you can give on.
When we do find the home that checks all the boxes, our journey isn’t quite over yet. This is where the benefit of having an experienced agent becomes clear.
Analyze Comparable Sales – We want to make sure that we are working in your favor to get the best price and terms the market will bear. Knowing what other homes have sold for will help determine that.
Factors to Consider – How long has the home been on the market? What is the condition of the home? Are there any concessions we desire? Is the home vacant or occupied? Is this home likely to sell fast? All of these will be taken into consideration as we determine what we want to offer a seller.
Make the Offer – We will present your offer to the seller or their agent. At this point, our offer can be accepted, rejected, or countered. Everything is up for negotiation including the closing date, title company, binder deposit, etc.