The Buying Process
When we start to work together I have found that it’s sort of a learning together process. Your first step is the pre-approval;
Before you begin to search in earnest you really want to know your buying power. Avoid being disappointed. Start with a reputable lender who can tell you what you can buy, comfortably, and what your monthly payments will look like. (Don’t forget you’ll get an adjustment to your taxes also.) You want a “Pre-Approval” letter from them at this point.
Find a reputable lender. This can be a broker or direct lender. I look for a lender who can work quickly and efficiently to be sure your deal closes on time. They need to be accessible to me and willing to change your “Pre-Approval” letter quickly to match an offer you might want to make. Be careful, credit unions and big banks often aren’t alway flexible. I have a list of lenders I trust and work with regularly I can share with you.
We work together to see different neighborhoods, learn what you can buy for your money and get educated together. I am learning about your tastes and wants, you are learning about what will work for you, within your budget. Pretty soon, you know what’s out there and you will narrow down your search.
We set up automatic searches that tell you and me when something comes up that fits your criteria. I watch these carefully as should you. We act quickly if you know a property looks like a good fit. We work as a team here!
Once we find the “right” home we agree on the terms, write up the offer and position ourselves with our best offer. Relationships, knowledge of the market and honest business practices work in our favor here.
We will work together to negotiate, when necessary, and decide how to “play our hand”. I recommend, you make the decisions.
My offer has been accepted… what’s next?
Good Faith Deposit
(within 3 days of acceptance) The deposit amount offered must be released to escrow after acceptance. Please arrange to have the funds directly sent to escrow – by check or wire.
Verification of Funds
(within 7 days of acceptance) You will need to provide verification of funds (down payment or cash deal) to the seller. This can be a “Verification of Funds” statement from your banker, or a copy of a bank account with the funds available (with account number removed).
Physical – You will arrange for a physical inspection by a certified inspector who will inspect the property on your behalf. It is expected that you be present, if at all possible, for the inspection. The fee is paid at that time. (I will be there for the entire inspection) You will receive a written report. This is a good time to get to know the property and to identify any issues relevant to the sale and upkeep. If you do not wish to have an inspection you may waive it.
Other – If the physical inspection indicates some other inspections suggested you may want to arrange for further inspections. All must be done before the Contingency Removal Date (usually within 17 days). I have inspectors I can recommend.
Appraisal – Your lender will provide a Good Faith Estimate for you. After you have satisfied yourself with a physical inspection, and are ready to move forward, you should contact your lender who will then request an appraisal. You may be asked to pay for the appraisal up front.
Loan – You will be working closely with your lender to provide all necessary items quickly. You and your lender will need to be comfortable that you can get your loan approved before the Contingency Removal Date. (Note that FHA loans require the property to be in well maintained condition. They might require some repair/modification prior to closing.)
Termite – Depending upon the contract agreement, a termite inspection will normally be done. IF any “Section 1 – meaning ACTIVE” work is required it must be done before the close of escrow. If the contract does not address termite the appraisal can also identify termite issues and they will need to be resolved before close of escrow.
You will need to arrange for homeowners/fire insurance for the property prior to the close of escrow. Escrow pays the first year on your behalf as part of escrow fees. I do have referrals for you if needed.
You might want to consider a Home Warranty plan for at least the first year. Sometimes the seller pays for this, many times not. You can pay for your own – approx $300-$600 depending on size and coverage.
Preliminary Title – you will receive a copy of the preliminary title information, for review, prior to the issuance of title insurance. I will review this as you should also.
Natural Hazard Report – A thorough report will be provided regarding the known natural hazards in the area. Review carefully.
Earthquake and Local Area Disclosures – Additional information about safety and any known local area disclosures.
Disclosures – the Seller will provide all disclosures regarding the condition of the property and any known issues or repairs.
Removal of Contingencies
(Generally 17 Days from Acceptance for all but loan which is usually 21 days) You will have the agreed upon number of days to satisfy yourself that the property is in the condition you expected, that you can arrange for financing or cash, that the home appraised for the expected amount, that you have received and reviewed all disclosures. You will be asked to remove these contingencies in writing. Once this is completed, you will be committed to the deal.
Walk Through – Three days before close we will want to walk through and then sign off that the property is in the expected condition.
At the End of Escrow
You will be signing loan documents with the lender a few days before the close of escrow. They often ask for a few more items (conditions) to be provided at the last minute! Once loan docs are signed the lender will “fund” the loan, the escrow company will “record” the title and deed the next day. Once that is done, we get the call that “it’s recorded” and the property is yours!
On the close of escrow day we will meet and you will be given the keys. You might consider “re-keying” the doors.