Step 1- Get Pre-Approved
Pre-approval is crucial to setting the expectations for our search. It will give you a good idea about the “amount” of home you will be looking to purchase, as well as begin to establish the banking relationship that will help the loan application process go much smoother. We work with several excellent mortgage brokers if you need a recommendation. Many are offering incentives to help with our suddenly-higher interest rates.
Step 2- Find Your Dream Home!
We would love to meet with you and discuss that perfect home you have always envisioned. Then we will begin looking through the homes that are currently available. During this time, you will receive email updates on homes that become available. When you find homes that pique your interest, we will schedule a time to view them. If you see a For Sale by Owner property you want to see, let us know and we will handle scheduling that appointment also. When you become very interested in a property, we will send you any extra information you might need: plats, school information, restrictive covenants, etc. We help with the purchase of new construction, too!
Step 3- Submitting the Offer
Once you have chosen a home, we will write up the offer for you and explain the exact details of the contract. Preparing to submit a highly qualified offer requires information and decisions regarding the following items:
1. Seller’s Disclosures- Sellers are required to complete disclosures on their home that will alert us to any known issues. Once you read over them, you will initial them to acknowledge their reporting. We will ask the Seller any follow-up questions you may have.
2. Offer Price- There are many factors to consider when pricing a home! We will share our recommended offer price and show you comparative homes and other details that support that price.
3. Personal Property to be Included in the Sale- Is there an unusual piece of furniture that fits the home perfectly, or do you need that refrigerator included? We can submit a Bill of Sale with your offer that includes the item(s) you want to remain in the home. Just remember these items are of value to the Seller and asking them to leave them for you may be deemed as lowering their net proceeds.
4. Closing Costs- Buyer’s closing costs average approximately 3% of the total purchase price of the home. These costs include lender fees, attorney fees, and prepaid items like mortgage insurance, funding fees, property taxes, property insurance, and inspections. These fees are in addition to your down payment! We can ask the Seller to pay part or all of your Closing Costs as part of the agreement, but keep in mind that this is not preferable or attractive in a multiple offer situation. The Seller will subtract this amount from the offer price when considering your offer because it changes the bottom line. NOTE: Even if the Seller has agreed to pay all of your Closing Costs, THE BUYER is responsible for paying inspectors should either party choose not to move forward on the contract.
5. Earnest Money- Think of this as your deposit and an indication of how serious you are about the purchase. We typically recommend 1% of the purchase price. This money is payable after the contract is ratified and will be deposited with the Closing Attorney (Escrow Agent). It will be securely held by the Escrow Agent to be credited to you as part of your funds due at closing.
6. Closing Date- The two main factors to consider are your timetable for moving and your financing. Cash buyers can generally close in 2-3 weeks, while financing requires 30-45 days.
7. Deeded Name and Closing Attorney- How do you want your home deeded? Whose names will be on the deed? Do you have a specific attorney you want to close with? If not, we have several we can recommend.
8. Home Warranty- Many Buyers choose to purchase, or ask the Seller to purchase for them, a 1-year Home Warranty that goes into effect on the day of closing. There are many different companies with various coverages to suit your needs. They generally cover problems (with limitations) you may have with appliances, plumbing, etc., and require you to use their providers and pay a service fee. We encourage you to explore them to see if it is something you want to include in your purchase.
9. Inspection Period and Due Diligence Termination Fee- The contract provides for an Inspection Period of an agreed-upon length, which allows the buyers to complete any inspections they wish. Based on these results, the buyer can negotiate repairs with the seller, proceed As-Is, or terminate the contract by paying a pre-agreed-upon Termination Fee. This applies even if a home is being sold As-Is (meaning the Seller has indicated up-front that he will not make any repairs). We can help advise what amount of Termination Fee would be appropriate depending on the situation.
10. Contingencies or Addenda- The standard contract includes contingencies for inspections, appraisals, and financing. If any of these are not satisfied as specified by the contract, you usually can void the contract and receive your Earnest Money back. Other contingencies or addenda may need to be added such as a contingency for the sale of your current home or a Bill of Sale for personal property.
Step 4- The Inspection Period
Depending on the terms of your contract, we usually have about 2 weeks to complete inspections for your new home and request repairs. Crabtree and Young always recommends having a general home inspection done, as it can alert you to potential electrical, structural, or plumbing issues, and show you damage to the home you may not have noticed before. We also recommend getting a termite and moisture inspection (which will yield a CL-100 report), and a radon inspection. The cost of a good general home inspection is $350-$500, with the radon inspection usually an additional charge of about $100. Figure about $100 for the termite inspection. These costs can be included in your closing costs, with some inspectors allowing you to delay payment until closing. Just remember, if for some reason the transaction does not close, you will still owe the inspectors for their services.
Once inspections have been completed, we will receive a detailed report, complete with photos, which will help us identify issues that we would like the Seller to agree to resolve before proceeding with the contract. Except in the case of new construction, Buyers need to keep in mind they are purchasing a used commodity, and the inspection report can be brutally honest in revealing the imperfections that may exist. We will assist you in determining what is a significant repair issue and what is more cosmetic in nature. We have an addendum we will submit with your list of requested repairs, and then we will negotiate based on the Seller’s response. If at any time during the inspection period you decide not to proceed with the purchase, you will be required to pay the Termination Fee. Note: this Fee is not due if one of the other contingencies is not met- loan approval, appraisal, etc.
Step 5- Transitioning to Closing
1. The Loan- Once the contract is ratified and you have begun the inspection period, you will also need to formally apply for your loan. Send the ratified contract to your lender and ask what you need to do next. It is imperative that you complete the lender’s requests as soon as possible so we can stay on schedule to close. Also, now that you are officially under contract, the bank will pull your credit. They will check it again right before closing.
It is extremely important that until closing you do not make any large purchases, transfer large amounts of money between accounts, open any new lines of credit, or change jobs!
2. Scheduling Your Move- Depending on your situation, you may be scheduling movers, cleaners, painters, appliance delivery, etc. If you are buying and selling, you will typically need to be out of your current home at least a day before closing and will not be able to occupy your new home until after closing. We can help advise you on those logistics.
3. Changing Over Utilities- A week or so before closing, we will remind you to transfer your utilities. You will want your new services to begin the day of closing.
4. Final Walk Through- A few days before closing, we will schedule a final walk through to insure all repairs have been completed and that the home is in good order before we close.
5. CLOSING! - Before coming to closing, the attorney’s office will provide you with a document called the Closing Disclosure (CD). This document provides the financial details of the transaction. We will explain any details in it with which you have questions. You will need to bring these items to closing:
a. Certified Funds- to cover your portion of the closing costs and down payment. The attorney will advise you of the amount and let you know if they want a cashier’s check or wire. Personal checks are never an acceptable form of payment.
b. Picture ID- usually your driver’s license; this is necessary for anyone on the loan documents or deed.
Congratulations!- You made it to the finish line!!
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