The Step By Step Guide To Buying A Home

The Step By Step Guide To Buying A Home

Microsoft Word - The Home Buyer’s Step by Step Guide.docx

The Step by Step Guide to Buying a Home

From start to closing…


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Patrick Preacher, REALTOR®

864-483-2590

patrick@guestgrouphomes.com

Find a REALTOR® to Help You

Whatever you do, don't try to go it alone. Buying a home is not as easy as it looks. You will benefit from professional assistance, and it's a free service for you as a buyer. Not to mention, agents often see all the new listings before they are available online.

  • As a REALTOR®, I will represent you and have a fiduciary responsibility to look out for your best interests.

  • You may be asked to sign a buyer's agreement, but it is the seller who pays the commission. I know it sounds odd that a seller would pay your agent, but that's generally how it works.  This agreement binds your REALTOR® to providing you the highest level of skill, care, confidentiality, service, and professionalism.  It also is an agreement that you are now working with me as your REALTOR® exclusively.  That is important.  If you're touring homes and discussing options with more than one agent at a time, you don't really have an agent that can fully, truly, and confidently help you because he/she isn't getting your full attention.  How will I know you didn't like the tri-level style home you saw last weekend if you didn't see it with me?  Another good thing to keep in mind is that agents do not get paid until closing.  Using multiple agents throughout the home buying process results in one agent getting paid at closing, and numerous agents having provided you with services for free. 

  • I love working with buyers because the process should be educational (I'm a former teacher), fun, rewarding, and exciting.  This is one of the the biggest purchases you'll make, but it doesn't have to be one of the most stressful.  We will take things one step at a time until, before you know it, you are standing in your new home!  Call, text, or email me today if you're ready to get started on this fun journey!     


Get Your Finances in Order

Line up your financing, set aside a down payment and study the loan programs that are available. By doing your homework, you will know exactly how much you can pay and what it will cost you. Little is more disheartening than to learn in the middle of a transaction you cannot close.

You might ask your real estate agent for a lender referral. Lenders are not allowed to compensate agents for referrals, in case you are wondering. This means your agent will refer only the top lenders who perform well because your agent wants YOU to win.

  • Find a Lender. Check out places to get a mortgage and compare rates and fees. A mortgage broker is different than a bank.  The broker works with numerous lenders and shops various loan products to help you find the right one for you. You should choose a loan product you completely understand. Realize everybody charges about the same rates, so pick a lender you trust, who communicates well and promises to meet your anticipated closing date.  Your REALTOR® may be able to recommend a mortgage broker who has proven successful in the past.

  • Determine a Down Payment. The more you put down, the lower your monthly mortgage payment. There are at least a dozen places to find a down payment, only one of which is your own bank account. Your chosen loan program may stipulate the minimum down payment, but you can always pay more. The higher the down payment, the bigger your equity position.

  • Pick your loan program.Consider FHA Loans. FHA loans carry competitive interest rates, come with minimum down payment requirements and allow sellers to pay some or all of your closing costs. Some first-time home buyer programs utilize FHA loans as part of their financing and also lend you the money for closing costs and / or your down payment.  There are other options as well though, and your mortgage broker is better equipped to discuss these with you.

  • Get a Pre-approval Letter. Showing the seller you are already pre-approved for a loan gives you an edge during offer negotiation.  It also helps you and your REALTOR® narrow down you price range to find the perfect home for you. 

Look at Homes for Sale

This is truly the fun part, the (relatively) non-stressful part of buying a home. Try to withhold judgment until you have toured a home in its entirety. And don't dismiss potential homes because of superficial issues that could easily be remedied by a coat of paint or some landscaping. Go inside and look.

  • Ask your agent to research homes for you before showing them to you. Not every agent will have the time for this extra service, but in some instances, agents will agree. Or an agent might tour homes on his own every week and have already viewed homes that meet your needs.

  • Narrow your search to those homes that fit your exact parameters to find that perfect home. This might be more difficult to accomplish in a market with tight inventory, for example.

  • Ask your agent to give youMLSprint-outs of comparable sales in your targeted neighborhood. With printouts in front of you, you can take notes as your tour. Rate homes on a scale of 1 to 10. This will help to shorten your list to the best homes for you.

  • Consider all homes on the market, including fixer-uppers, and those overpriced homes with longer days on the market. You will find this approach helpful when your choices are slim.

  • Observe open house etiquette. If you go to an open house on Sunday, tell the hosting agent if you are represented by a real estate agent.

  • Tell your agent which online home listings you are interested in previewing and ask for additional input. Your agent can gather more information than the notes provide in MLS by talking to the listing agent, and will get more insight than you could, so don't call the listing agent yourself. Let your agent earn his or her paycheck and do this for you.

Make an Intelligent and Informed Offer

Part of the problem of looking at homes for sale is you are not viewing homes that have sold. Only the sold homes will provide you with adequate comparable sales to know if a home is overpriced, underpriced or just right. Sellers can ask any amount they want, the price needs to be substantiated.

  • Consider writing seller's market offers in seller's markets and buyer's market offers in buyer's markets. Cannot stress the importance of this enough. Your "lowball strategy" picked up from a popular TV show does not work in seller's markets, for example.  There will be multiple buyers for one property, so the low offer just won't cut it.  In a buyer's market however, when there is an abundance of inventory, sellers may have to take a lower offer to make the deal work.  

  • Select a home offer price based on the amount you feel a seller will accept or counter. This price is generally based on the comparable sales, with input from your real estate agent.

  • If you are considering a lowball offer, ask your agent to verify this price for you. You will need to present a reason for the seller to accept this type of offer, and it can't be based on whim.

  • Prepare for multiple offers if the home is considered desirable in a hot location. Don't shy away from multiple offers. Somebody has to win. Why can't that buyer be you?

  • If your offer is rejected, ask your agent to explain why and don't repeat that mistake with your next offer. Also, don't automatically blame your agent. Maybe the problem is you didn't offer enough? If your agent steered you wrong, you need to engage in a frank discussion with that agent.

Negotiate Counter Offers

It is considered normal for a seller to send a counter offer. It doesn't mean your offer offended the seller or that your agent did anything wrong. Some sellers issue a counter offer because they like to have the last word.

  • Expect the seller to issue a counter offer. Even if you offered list price, the seller might have other points that were not adequately addressed to the seller's satisfaction in the offer. A counter offer is not the kiss of death; think of it as the gateway to acceptance.

  • If the seller counters at full price, continue to negotiate. Even if you offered less initially, you might find that continued negotiations could result in the final offering price that is acceptable to both of you. The first counter does not always have to be the last.

  • During offer negotiation, share personal information about your family to give the seller a reason to care about you. Especially if there are other offers, you will want to put your best foot forward and have your offer resonate with the seller on a personal level. No matter what, home sales are emotional and personal.

Make an Earnest Money Deposit

Purchase contracts typically contain a good faith deposit, called an earnest money deposit. It shows a buyer is committed to the transaction when a buyer is willing to place a deposit into escrow. Most earnest money deposits are refundable.

  • When your offer is accepted, deposit your earnest money check with the appropriate party. In South Carolina we typically have 2 days to make the deposit.

  • Do not ever make your check payable to the seller. It should also be made to be held in a trust account either with your closing attorney or your real estate brokerage.

  • Your offer should contain contingencies that will return your earnest money deposit to you if you cancel the contract for certain reasons. Usually, the contingency periods will specify a time period for performance.

Obtain an Appraisal

Most purchase contracts contain a provision for the appraisal, making the appraisal a contingency of the contract. This means if the home does not appraise for the amount you offered to pay, you are not obligated to complete the transaction. The lender will order the appraisal.

  • In most cases, your lender will require an advance payment for the appraisal.  Be in touch with your lender. 

  • If you receive a low appraisal, discuss options with your agent. As a buyer, it is natural for you to want the seller to reduce the price, but that might not be the only solution.

  • Ask for a copy of the appraisal. If you paid for the appraisal, you are entitled to receive it.

Conduct Inspections

The purchase contract gives a buyer a certain number of days to conduct inspections, including a home inspection. You might also consider a pest inspection on the home.  A termite inspection should ALWAYS be done.  If you uncover a major defect that you cannot accept, you are often free to cancel the contract if the defect is considered “contractual.”

  • Hire a reputable home inspector who is licensed.  Your agent will present you with several options they have worked with before, but you are also free to choose your own. 

  • Meet the inspector toward the end of the home inspection. Do not follow the home inspector around, like a Zillow book wrongly suggests, or the home inspector will silently curse you under his or her breath. Let the inspector do the job of inspection in peace then arrive to ask questions and even request to be shown some of the defects the seller has found.  You are paying for this service and it is your right to get all the information you want. 

  • The inspection report will be delivered to both you and your agent.  The defect list is often very long, especially in older homes.  However, it is important to pick out the problems that are most important to you before you submit a repair request. 

Request for Repair

  • If the home inspection turns up significant and unexpected problems, you can sign a request for repair by asking the seller to either address those issues, give you a credit toward closing costs or lower the sales price. Realize the seller might say no and determine whether you can live with that kind of response.

  • Realize no home is perfect, and the inspector will find faults. Don't expect everything on the home inspection report to be fixed nor allowed for in the sales price.

  • Be reasonable. I know this is a tough one because it's subjective to some people, but being reasonable means making rational inquiries. Your agent can guide you.

Do Final Walk-Through

The purpose of the final walk-through inspection is to essentially ensure the property is in the same condition as when you last viewed it. This is also a time to make certain any agreed upon repairs were made. 

  • Do not pass up doing a final walk-through. You might be tempted to forgo this formality, but those who choose that option often regret that decision. You can learn from your own mistakes but learning from others is far preferred.

  • Make sure toilets flush and there is no water leaking from the removal of the refrigerator or washing machine. Turn on all lights, operate all appliances.

  • Inspect the property to make sure it's in the same condition as when you agreed to buy it. This is not a license to demand more repairs unless you find a new defect not previously disclosed.

  • If you find a serious issue, address it now before you close. Due to the urgency of some situations, you might find a fast solution that will not hold up closing. Try to avoid financial arrangements that could change your closing disclosure or your loan docs could need to be redrawn.

Closing!

Your lender will be sure your loan is ready for closing day.  You will receive a closing statement outlining all costs, fees, etc. 3 days prior to closing.  You will also need to wire any closing costs or down payments coming out of your pocket.  Wait for your agent to confirm wiring instructions!  Never wire funds without confirming via phone or text – avoid wire fraud!

You will receive keys at closing and are ready to enjoy your new home (after the fun of moving day!).  Congratulations! 


If you're ready to begin this exciting and rewarding process, don't hesitate to give me a call, text, or shoot me an email.  I'm happy to answer questions, discuss these step more in-depth, and go on the hunt for your dream home!  

Patrick Preacher, REALTOR®

864-483-2590

patrick@guestgrouphomes.com



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