So you have decided to buy a new home, whether this is your first home or you are upgrading to a different home this can be a very exciting time, or a very stressful time in your life. How the experience affects your life can rest entirely with how well you are prepared and choosing knowledgeable people to help you.
1: Arm yourself with knowledge
This is what you are doing right now. Reading information on the home buying process and understanding the steps involved. This will help you ask the right questions of the right people and help you choose the people that you feel have the best knowledge to help you achieve your goal.
2: Pre-approved Mortgage
In different real estate markets, being a pre-approved home buyer can get preferred treatment when negotiating with a seller. The reason for this is the seller knows that as a pre-approved buyer you are financially qualified to purchase the home and the seller knows you are serious about buying the home. This can also eliminate the stress of being turned down for financing when you find the house of your dreams. By getting a pre-approval you know ahead of time what you are qualified for versus seeing a house and getting your hopes up only to find out that you can't afford it. It keeps everything in perspective so you don't set yourself up for disappointment.
3: The Realtor
This is a very important step. Remember that you are now bringing another person into your life who is going to help you make one of the biggest decisions you are going to make. This person in some cases is going to know more about you than some of your family members. It has to be someone you can feel you can trust and who you feel understands your needs. You are going into a partnership with the realtor. You need to know that this person is experienced and knowledgeable. The realtor deals with many things on your behalf from finding the house you want in the area you want to dealing with problems that come up during the process. When selecting an agent don't be afraid to ask for references. Having a duo instead of an individual agent also has its benefits, so if one agent is not available at a certain time usually the other agent is. The last step is signing the agent up as a buyers' agent. This means the agent you are working with is representing you exclusively. This is very important to ensure that you know the agent has your best interests in mind and not the sellers.
4: Home buyer's consultation
A home buyer's consultation is when you and the agent sit down and map out exactly what is expected along the way. This should be am open communication between you and the agent where you both explain your expectations. Things you should cover are:
- What type of house you are looking for such as the number of bedrooms & baths a garage or size of lot. What areas you are looking for and what price range you are comfortable with or have been pre-approved for. Also what is your time line one month to six months etc.. It generally takes 30 to 45 days from purchase to closing.
- What is your availability to look at houses and what are your expectations for the agents' availability and how often you expect to hear from the agent. Remember communication with the agent does not always have to be in person, it can be in the form of phone calls and emails to keep you informed.
- Get copies of all the paperwork you will be have to sign throughout the process from the agent and have the agent explain what the forms are for.
- Have your agent explain buyer brokerage vs. seller's representation, and sign a buyer broker agreement.
5: Viewing homes
This is the fun part, so keep it fun. Limit the number of homes you're looking at in a day, if you look at too many homes they begin to run together and you won't be able to remember one form another. Making a checklist will help you track the houses you look at and also help you narrow down the houses after your visit. If you have seen two houses and one was better than house two, eliminate house #2. Also communicate with your agent. Let your agent know what houses you liked versus what houses you didn't like and why. Going out and looking one time with your agent will help you both understand exactly what you're looking for. Call your agent, and get the agent to research any advertised properties that look interesting to you. Remember the agent works for you and that's what agents get paid for. If you see a "for-sale-by-owner", ask your agent to contact the seller before you do, to see if he/she will cooperate (pay a commission) with a buyers' agent.
6: Picking the right home
Usually there are one or two houses that you are interested in. Have your agent do whatever research is necessary to help you make the decision. Remember the decision is yours and usually ends up being a fairly simple decision to make. You can also call the local chambers of commerce for any statistics you might be interested in. Local zoning and planning offices are a good source for future road plans, etc. Once you have decided on one home have your agents do a comparative market analysis on that property. This involves determining "fair market value" by looking at what other buyers were willing to pay for properties similar to yours in the same neighborhood or area.
7: Offer & negotiation
This is a two step process.
Step one in making an offer on a property, is deciding ahead of time how much you are willing to pay for the property and at what terms. Your agent has already supplied you with what the fair market value is. Now you have to decide a few things like what is your offering price; how much deposit you will offer; what personal property you wish to have convey (everything is negotiable); what is your planned closing date; and what inspections you plan to have conducted.
Step two is negotiating with the seller. A couple things to remember are that the seller is trying to sell their house and get the best price they can for it so try and put yourself in their shoes. Also do not take anything personally. Decide ahead of time what's not negotiable to you, and be willing to give a little on the things that are negotiable. Your agent should be able to give you tons of advice about how to structure your offer. Once your offer has been presented, the seller has three options, they will accept your offer, reject your offer or counter your offer. If your offer has been countered this can go back and forth many times. It's important for all parties to keep their cool and focus on the goal.
8: Inspections & remove conditions
In your offer if you have asked for time to be allowed to have inspections conducted on the property, you should have written what is called a conditional offer. This means the offer is conditional upon the items stipulated. Conditional offers can include upon financing, inspections, the receipt of acceptable condo estoppels certificates, the sale of property, and many other conditions. This is a contract so it is important that all deadlines be met and that all conditions are removed exactly the way the contract describes. Your agents are responsible for making sure this is done correctly.
9: The Lawyer
For ever person that has lawyer there are 4 people who do not. If you do not have an lawyer your realtor or mortgage broker can recommend one that specializes in real estate transactions at a very reasonable price.
10: The Walk-through
A walk through is your last chance to find any problems with the property and have the seller correct them. The main items you are checking for are electrical systems, plumbing, appliances, heating and air conditioning. Most sales agreements will give the buyer the right to one pre-closing inspection, and if you read the contract carefully, the items mentioned need to be in working order at the time of closing.
If your purchase is for a new-home the builder will generally do a walk-through with you approximately one to two weeks prior to closing, resulting in a "punch-out list." Hopefully, they will get everything on the punch-out list completed prior to settlement. If not, most new-home contracts allow the builder to complete whatever minor items have been noted in a "reasonable" period of time.
If your purchase is for an existing home you are checking for any items the seller previously agreed to fix or replace. If this is not the case and something is found to be defective or missing, you have several options: The seller can remedy the problem prior to closing; the seller can credit you the amount of money it would take to hire someone to remedy the problem; or the seller can promise to correct the problem and place into escrow with the attorney the amount of money you will need to pay someone else if the seller does not perform as promised.
11: Your Closing Day
This is the big day you have been waiting for. This is when you will be signing all of the mortgage documentation, which can be overwhelming. You can request blank copies of the documents you will be signing in advance so that you can carefully review them. Your lawyer should be able to explain every document to you and what you are signing. If there is something you don't understand, don't sign until your lawyer has helped you understand everything. At this time you will have to present the down payment and closing-cost funds you are expected to pay. This check must be certified; personal cheques usually are not accepted.
12: Moving day
Moving day can be a very exciting day but usually ends up being a very stressful day, it can be the hardest step in the home-buying process. With a little bit of planning and organization you can make it a much smoother move. Try and make arrangements with a moving company as soon as you can. Get at least two quotes in order to get competitive pricing. The moving company will usually come to your home so they can get an idea of how much they will be moving and the distance involved. Other things to do include changing your address with the post office, your banks, and any creditors at least 30 days in advance to avoid late payments. Try and call to verify receipt of the address change whenever possible. You also have to call to order your utility hook-ups approximately 10 days prior to your move. One thing to remember is that with the new automated phone systems the utility companies will keep you on the phone for a long time so plan ahead for this.
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