Guide To The Home Buying Process

Home shopping can be both exciting and exhausting, but doing some preparation before you hit the street to look at homes will help out tremendously.

1VIEWING HOMES


It’s time to get out and see some of the homes you’ve been looking at online. We will compile a list of the homes you’ve found, as well as some other options we’ve found on the local Multiple Listing Service (MLS).

Here are some great tips to keep in mind when viewing properties in person:

  • DON’T view too many properties in one day.
  • DON’T be put off by interior decorations – they can be changed.
  • DO bring a notebook, pen and / or digital camera with you as you search.
  • DO keep a folder with flyers or print-outs of the homes we’ve viewed.
  • DON’T hesitate to ask questions.

Questions about the property

When you find a home you really like, you’ll probably have some questions that need to be answered by a professional home inspector.

Questions For Your Realtor

  • When was the home built?
  • How many owners has it had?
  • How does the asking price compare to other houses in the neighborhood?
  • What did the property sell for when the current owner purchased it?
  • What year was it purchased?
  • What are the annual property taxes?
  • What improvements / additions has the homeowner made to the property since purchase?
  • What appliances is the seller offering in the sale?
  • What are the average monthly utility costs? What are the winter and summer highs and lows?

Questions For Your Home Inspector

  • Are there any serious problems with the exterior framing? Is the structural integrity intact?
  • Is the foundation strong, dependable, and well-placed.
  • What about the roof? Is it sound; is there water damage; are there vulnerable areas?
  • If there is a deck, is it structurally sound and well built?
  • What is the age and condition of each major system (plumbing, electrical, heating & cooling)?
  • Are there any signs of damage from water or insects anywhere in the home?
  • Is there adequate insulation?
  • What type of fuel is used for heat?
  • Where is the main water shut-off valve for the house?

2MAKING AN OFFER


When you’ve found a home that you’re interested in, it’s time to make an offer. Your buyer’s agent will draw up a contract with your offering price and necessary contingencies.

You will want to review this document carefully and make sure it states your terms exactly. If the offer is accepted by a seller, this contract will become a legally-binding agreement.

In addition to writing an offer, you will need to provide an earnest money check and a letter from your lender indicating your qualification to purchase.

Earnest Money typically equals 1% – 3% of the property purchase price. You will not be at risk of losing your earnest money as long as you do not default on your contract. The amount will be credited towards the purchase price of your house at closing.

After your agent has presented your offer, the seller will be able to:

  • Accept your offer
  • Reject your offer
  • Counter your offer with some change in price or terms
    • Typical counter offers include modifications to:
      • Purchase price
      • Closing date
      • Possession date
      • Inclusions

When you make an offer on a house, you should be prepared for the negotiations to go back and forth several times before both parties agree to the terms. You might also have to compete with other interested buyers.

When an agreement is reached on all issues and both the seller and the buyer have signed the offer, you have both entered into a legally-binding contract.

3HOME INSPECTION


Your offer is accepted! Now it’s time to get to work. Before we can finalize the purchase of your new home, we need to take a few more steps to make sure your purchase is a sound decision.

Home Inspection / Property Survey

As the buyer, you have the opportunity to hire a professional inspector to evaluate the condition of the home. An inspection clause is included in the written contract given to the seller.

The goal of a home inspection is to give you an objective, independent and comprehensive analysis of the physical condition of your potential new home and check for any safety issues that might otherwise be unknowable.

A professional inspector will check on the structure, construction and mechanical systems of the house. This usually includes checking these areas:

  • Electrical systems
  • Plumbing & waste disposal
  • Water Heater
  • Insulation
  • Ventilation
  • HVAC System
  • Water source and quality
  • Lead Paint
  • Pests
  • Foundation
  • Doors
  • Windows
  • Ceilings
  • Walls
  • Floors
  • Roof
  • Asbestos

You will receive a written report of the inspection that may include an estimate of the cost of any and all suggested repairs. If you are able to attend the inspection, you can ask your inspector about unique features of the property and get his or her opinion on the necessary maintenance for different areas of the property.

Depending on the results of inspection, you will have the opportunity to:

  • Cancel your contract if major problems are discovered
  • Renegotiate the purchase price to account for necessary repairs
  • Negotiate that repairs are made by the seller/contractor before final purchase of the property

4HOME TITLE


Researching the Title

Simply explained, “title” is the right to own, possess, use, control and dispose of property. When you buy a home, you are actually buying the seller’s title to the home. A deed is the written legal evidence that the seller has conveyed their ownership rights to you.

Before the closing meeting when the actual transfer of ownership occurs, an attorney or title specialist generally conducts a title examination. The purpose of the title examination is to discover any problems that might prevent you from getting clear title to the home. Generally, title problems can be cleared up before settlement.

5APPRAISAL


Once inspection repairs are negotiated, it is time to order an appraisal.

An appraisal is a determination of the value of your property made by a state-licensed appraiser. The appraisal of your prospective home is as important as your credit history in obtaining a mortgage. After all, the property you are purchasing serves as collateral for the loan.

Although the primary goal of the appraisal is to justify your lender’s investment, it also protects you from overpaying. Your lender will generally hire the appraiser and will charge you a fee for the service. If the appraisal value is less than your offer price, the terms of your contract may need to be renegotiated. Your purchase contract will be contingent on whether the appraisal comes in at or above the purchase price you and the seller have agreed upon.

6CLOSING


Once all of the contract contingencies are cleared, it’s time for closing!

Closing is the legal transfer of ownership of the home from seller to buyer. It is a formal meeting that most parties involved in the transaction will attend. Closing procedures are usually held at the title company or lawyer’s office. Your closing officer will coordinate the signing of documents and the collection of and disbursement of funds.

In order to ensure a smooth closing you will need to:

  • Obtain a homeowner’s insurance policy and provide this information to your lender and/or closing agent prior to closing.
  • Review the Settlement Statement or HUD-1 that your lender or closing agent will provide you 1 to 2 days before closing. These documents will contain a detailed description of all costs associated with the transaction, including the exact dollar amount you will need to bring to closing. You will need to present this amount in the form of certified funds, such as a cashiers check or money order, to your closing agent at the time of your signing.
  • Verify with your lender and/or closing agent any other items that you need to bring with you such as a valid driver’s license or other form of identification
  • Conduct a walk-through of the property prior to closing. This will give you an opportunity to see that the condition of the house is the same as it was at the time of contract. Additionally you will be able to ensure that any repairs agreed to by the seller, based on the inspection, have been completed.

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