Buyers

Buyers Roadmap

Deciding to Buy
Purchasing a property is most likely the biggest financial decision you will ever make.  Whether this is your first purchase or you are an experienced buyer, this decision must be made carefully.

Why Do You Want To Buy? 
Are you tired of paying rent?  Have you decided to pay your own mortgage and not your landlord’s?  Have you outgrown your current home?  Are you looking for an investment portfolio?  Are you looking for a rental property?  Would you like a larger yard?  Would you rather live in a different area?  Do you want to shorten your commute?  Having a clear sense of your reasons for buying will help you choose the right property.

Has Your Income Grown? 
Property ownership is an excellent investment; whether you are looking for your dream home, a rental property, or to expand your investment portfolio.  Owning real estate is one of the least risky ways to build equity or to obtain a greater return on your initial investment.

Preparation
Before you start shopping for your property, it is a good idea to make some preparations.

Build Your Green File
A green file contains all your important financial documents. You will need it to secure financing for your property.  The typical green file should contain:

• Financial statements
• Bank accounts
• Investments
• Credit cards
• Auto loans
• Recent pay stubs
• Tax returns for two years
• Copies of leases for investment properties
• 401K statements, life insurance, stocks, bonds, and mutual account information.

Check Your Credit Rating 
Your credit score will have a huge impact on what type of property you can buy, and at what price.  It is first recommended to check your credit rating with an experienced lending institution so that we can determine what you can afford.  The lender will research your credit ratings from the three credit reporting agencies Equifax, Experian and Trans Union.  We will be happy to recommend experienced, knowledgeable lenders in the residential, construction, and commercial and investment real estate fields.

Be Careful With Your Finances
Now is not a good time to make sudden career changes or large purchases (ex. furniture, appliances). You want to approach your property purchase from a position of financial stability.

Time to go Shopping! 
Once those preparations are out of the way, it is time to find the right property for you.

Take a Drive
Get to know the neighborhoods, complexes, or subdivisions, which interest you.  Drive around and get a feel for what it would be like to own a property in the area. Start getting a sense of the properties available in those areas.  Discuss your findings with your real estate agent.  He or she should be able to supply you further insight into the area.

Narrow Your Search
Select a few properties that interest you the most.  Together we will view the property and access the features, review comparable properties in the neighborhood potential long term resale value of the property(ies) you are considering.

Time to Buy 
Once you have picked out the property you want to purchase, we will investigate the potential costs and expenses associated with the property and make a sound decision as to the offer we feel that the seller will accept.

The Process, Step-by-Step:

The process may seem a bit overwhelming, but my job is to make the process as seamless as possible.  I am with you every step of the way.  Important dates are noted on a timeline that I provide my clients so we all stay on track.

The Effective Contract and Deposit
An effective agreement is a legal arrangement between a potential purchaser and the property’s seller.

To help with the process at this point it is important to stick to the schedule. Now that you have chosen your offer, you and the seller will be given a timeline to mark every stage in the process of closing the real estate contract.  Meeting the requirements on time ensures a smoother flow of negotiations so that each party involved is not in breach of their agreements.  During the process I will keep you constantly updated, so you will always be prepared for the next step.

The Closing Agent

Either a title company or an attorney will be selected as a closing agent. The closing agent will hold the deposit in escrow and will research the complete recorded history of the property to ensure that the title is free and clear of encumbrances by the date of closing and that all new encumbrances are properly added to the title. Some properties are subject to restrictions which limit various activities such as building or parking restrictions.  There may be recorded easements and encroachments, which limit the rights to use your property.

How to Hold Title

 You may wish to consult an attorney or tax adviser on the best way to hold title.  Different methods of holding title have different legal, estate and tax implications, especially when selling or upon death of the title holder.

Inspections

Once your offer is accepted by the seller, you will need to have a licensed property inspector inspect the property within the time frame that was agreed upon in the effective contract to purchase (Option Period).  You may elect to have different inspectors inspect the property, if you wish to obtain professional opinions from inspectors who specialize in a specific area (e.g. roof, HVAC, structure).  If you are purchasing a commercial property, then you will need to have an environmental audit done on the site for the lending institution. A list of  reputable licensed inspectors that I have had the pleasure of working with for many years is provided to my clients once we reach this point in the transaction.

Depending on the outcome of these inspections, one of two things may happen:

1. Either each milestone is successfully closed and the contingencies will be removed, bringing you one step closer to the close, or
2. The buyer, after reviewing the property and the papers, requests a renegotiation of the terms of contract.  Typically it will be for repairs or money in lieu of repair.

Appraisal and Lending

It is imperative that you keep in close communication with your lender, who will let you know when additional documents are needed to approve your loan application and fund your loan.  If the agreement is conditional upon financing, then the property will be appraised by a licensed appraiser to determine the value for the lending institution, via a third party.  This is done so that the lending institution can confirm their investment in your property is accurate.  Appraisers are specialists in determining the value of properties, based on a combination of square footage measurements, building costs, recent sales of comparable properties, operating income, etc.  When you are within two weeks of closing, double check with your lender to be sure the loan will go through smoothly and on time.

Property Insurance

If you are obtaining a loan, you will be required by your lender to purchase a certain amount of insurance on the property.  The value will depend on the lending institution and the purchase price of the property.  You may be able to save hundreds of dollars a year on homeowners insurance by shopping around for insurance.  You can also save money with these tips.

• Consider a higher deductible. Increasing your deductible by just a few hundred dollars can make a big difference in your premium.
• Ask your insurance agent about discounts. You may be able get a lower premium if your home has safety features such as dead-bolt locks, smoke detectors, an alarm system, storm shutters or fire-retardant roofing materials. Persons over 55 years of age or long-term customers may also be offered discounts.
• Insure your house NOT the land under it. After a disaster, the land is still there. If you do not subtract the value of the land when deciding how much homeowner’s insurance to buy, you will pay more than you should.

Final Walk-Through Inspection
More of a formality than anything else, the final inspection takes place a day before, or the day of the closing. You will visit the property to verify that all is in working order, everything is the same as when you last viewed the property, that there are no extra items left behind, and that everything included in your purchase is still at the property.

Home Services and Utilities
A list of providers for the activation of home services and utilities will be provided to you.  Make sure that contact at least a few weeks before closing.

Be Prepared
If an unforeseen glitch should pop up, I will be here to assist. Something at the property breaks down, or some other minor detail – no need to worry. I have encountered these problems before so we know how to handle them efficiently and in a stress-free manor.

Closing
The closing agent will furnish all parties involved with a settlement statement, Closing Disclosure, which summarizes and details the financial transactions enacted in the process. You and the seller(s) will sign this statement, as well as the closing agent, certifying its accuracy. If you are obtaining financing, you will have to sign all pertinent documentation required by the lending institution.  If you are unable to attend the scheduled closing, arrangements can be made depending on the circumstances and amount of time/days before closing.  If you are bringing funds to the transaction, you can elect to either have the funds wired electronically into the closing agent’s escrow account, or bring a certified bank check to the closing in the amount specified on the settlement statement.  The seller should arrange to have all property keys and any other important information for you at the closing so that you may receive these items at this time.