BASICS TO BUYING PROPERTY
“The best investment
on earth is earth.”
- Louis Glickman
CA$H/CREDITDecide if you will be purchasing outright or obtaining a loan from a bank. If purchasing in cash your agent will need proof of funds to submit with your offer. A lender will ask you to fill out a loan application and ask for two years taxes, one month pay stubs and two months bank statements. You should receive a payment estimate along with an approval. Compare lenders. Ask friends and your agent to recommend a local loan officer they trust.
YOUR FITConsider your life style: think of your morning commutes, where the kids will go to school, if your family will expand, is a big kitchen a must or high ceilings, huge closets or is a yard and garage more important? If this will be your first property think about the purchase that will kick start you into wealth and not just finding your dream home. Could be all your desires are found. If not, only you can determine what to mark off. See link below on budgeting.
CONTRACTMake sure you understand the contract ahead of time before you actually sign it.
Click on the link below to view most standard forms you will sign.
Some developers of new home projects and condos have their own contracts.
SEARCHIt's hard to keep track of various details in different homes. Sometimes the things that stand out are not represented in the listing. Take notes, bring a camera and use smart phone apps that almost in an instant give history of past sales inside the neighborhood and local business information. Use the checklist below to keep track if you find it helpful.
SCOPE OUTNobody wants to move into a home to later find out there is a rooster crowing next door at 5AM every morning. I may be exaggerating because there are noise ordinances to protect you but you get the idea. Visit the street the house you like is on at different hours. Introduce yourself to the neighbors and ask questions. If your shy, ask your agent to break the ice.
NEGOTIATEConsider your life style and what you can afford. Your lender may have approved you for way more the amount your ready to pay. Before you sign to secure a place review the seller disclosure packet on the property, have your agent ask the listing agent the right questions, get a market analysis to feel comfortable with your offer price. Consider how long a property has been on the market and what the seller paid for the home. See link below on seller reporting of property condition.
YOUR OFFERAll that you are expecting from the purchase should be written in the offer including the sales price, how you intend to finance, your down payment, who pays what closing costs, what inspections are performed, timetables, terms of cancellation, any repairs you want, which professional services will be used, when you get physical possession of the property, and how to settle disputes should they occur. Even if you want the sofa included in the sale, make sure its in writing.
ITS OFFICIALAfter contract acceptance your agent will stay on top everyone to make sure your loan, appraisal and other contingencies go smoothly. There are a lot of moving parts in this process so it should be carefully monitored. Any delays should be handled with formal written extensions. Once your loan is approved and the appraisal has been done, you will soon close.
HOME INSPECTIONIf during the inspection process, a problem is discovered that was not disclosed in the disclosure package, your agent needs to have the ability to negotiate a credit for you. If the inspection does not go well or if you change your mind for any reason during that contingency period (unless contract was written ASIS ), you may exit the transaction with no penalty.
INSPECT AGAINOne of the final steps is to perform a final walk through of the property with your agent to make sure all is cleaned out and in “broom clean and free of debris” condition. I've seen refrigerators and chandeliers switched right before settlement. Pay attention. Take this extra step no sooner than 24 hours before the day of closing.
THE CDYou are required to receive 3 days before settlement day, a five page document named the Closing Disclosure (CD). The CD shows all currency transferring between you and the seller including taxes paid to the county and state for the sale, broker commissions, escrow and title fees, the costs of your loan (if you have one). Save the CD for your records forever. Click on the link below for a break down on each line item.
YOU'RE IN THEREOn settlement day the closing agent will present documents for you to sign from many entities including the CD, deed of trust and promissory note - if obtaining a loan, title insurance, IRS notices and any final documents still not finalized. Be sure to bring a picture government issued ID. The Closing on a property is exciting whether it’s your first or your tenth, with preparation, you’ll enjoy the experience even more.