The Home Buying process
In our experience, people don’t choose one home over another because of its size or color. It’s about how you feel when you walk through the front door! Can you see your life happening there? It’s about more than one home or another. It’s about your life, your dreams, and your family .
The first step is getting your financing in place. What does that even mean, you might ask? It’s connecting with a lender that will check out your financial picture, and ensure they can lend you funds. We call this a pre-approval. You’ll need this pre-approval letter for sellers to take your offer seriously.
You have your pre-approval letter,
Now the fun part starts: Home Shopping!
- We’ll arrange to visit the homes you’ve selected, together and in-person, to determine the best fit for you.
- Your CDRE agent will point things out that you’ll want to pay attention to, while reassuring you on things that are less important, & help guide you to the home that best fits your needs.
- Work with your CDRE agent to hone-in on your “wants” and “needs” list. Think about what’s most important to you, such as: the location, floor plan, and other details.
- Preview homes through the Clear Direction Real Estate portal to eliminate those you don’t need to visit in person.
What should I expect when visiting homes?
- Your CDRE agent should accompany you on all home visits, if you visit an open house let that agent know you are represented. You could even provide them your agent’s card, if you’d like.
- Each showing has a set time frame, this is set by your agent and the listing agent based on your availability. It is important to make the most of the time there, such as: making notes about likes and dislikes of each property you see, especially if visiting more than one in a day.
- Buyers often have a gut reaction to a home. First impressions are important, but you can also consult your agent to learn more about home values and possibly to reevaluate your priorities, in the context of what’s available in your price range.
How many homes should I visit?
There is no right answer to this question. Sometimes buyers find their home the first time out, while others look at many homes before they see one that fits their needs. It’s generally a good idea to see at least a few alternatives so you have some points of comparison, but sometimes you just know a place is where you want to live and thats ok too.
What should I look for when visiting homes?
- Look beyond staging and decorative styles to see the important features and fixtures that convey with the house. Paint color and flooring can be changed pretty easy; however, floor plan, location, garage size and yard cannot.
- Check the condition of the home.
- Consider possible home improvements you might want to make so you can research costs.
- Check the outside of the property and the neighborhood. Your CDRE agent has access to neighborhood insights, and data to help inform your decision.
- Locate your commuter route, schools, shops, restaurants, parks and other amenities.
- If the property is a condo, or is located in a homeowners association, find out the fees and rules to see if you can live with them.
- Research property taxes before submitting an offer so you wont be surprised.
Making an Offer
Once you’ve narrowed down your list and have a clear favorite, collaborate with your CDRE agent to put together your offer on a home.
What should I include with my offer?
Your Clear Direction Real Estate agent will have the most recent documents required that comply with state and local laws to present your purchase offer.
Items in the offer:
- Your offer price.
- Terms – such as a request for closing cost help or that the offer is subject to your obtaining financing and a home inspection.
- Desired date of closing.
- Earnest money deposit – your CDRE agent can advise you about how big your earnest money (deposit) should be based on local customs and current conditions.
- Duration of “option period” (Time you have to get the home inspected and renegotiate or walk away).
- The amount of your “option fee” (your forfeited funds to the seller if you walk way during your option period).
- Time limit for your offer.
What are the most common contingencies?
- Financing. Unless you’re paying cash, it’s typical to write your offer with a contingency clause. A financing contingency clause lets you off the hook if you can’t finalize your mortgage within a certain number of days (the verbiage is included in the financing addendum, ask your agent for more details). Even though you have a pre-approval for a loan, it’s smart to protect yourself.
What happens if I face multiple offers?
In a competitive housing market, you may find yourself competing against other buyers. In that case, your Clear Direction Real Estate agent is your best ally in strategizing for your offer to be accepted. With access to real-time market data, your CDRE agent will know how to best position your offer. If there’s more than one offer, the sellers can:
- Accept the best offer.
- Counter all the offers to get a better price and terms.
- Counter one offer that’s close to what they want.
What is a counteroffer?
Sellers can accept your offer as is, or they can make a counteroffer with an adjustment to some or all of your terms. You can accept or reject the counteroffer and make your own counteroffer. The contract is final once you and the sellers have agreed to all the terms & signed the contract.
Your Clear Direction Real Estate agent is essential when negotiating the terms of your purchase.
Executing a Contract
The crucial period between an offer and a final contract is an important time to stay in close contact with your Clear Direction Real Estate agent, so that you’re equipped with all the information you need to make smart decisions.
What should I expect to see in the contract?
Ask your CDRE agent to explain the key points in your multi-page contract, such as:
- Accuracy of information, including the correct spelling of your name and the property address
- The effective date of the contract, this is important because your contingencies have time limits.
- A list of contingencies, such as that the sale depends on financing, appraisal, satisfactory home inspection, and possibly the sale of your current home.
- Property disclosure information from the seller, depending on your state laws.
- A complete list of what conveys with the property
- A list of required inspections, such as a home inspection and a pest inspection
- Information about when you can move in.
- In some cases, such as if your offer is contingent on the sale of your home, the seller may add a “kick-out” clause, which means that the seller could accept another offer if one is made before your home is sold.
How do I know when to negotiate and when to let go?
Your Clear Direction Real Estate agent can guide you, but you also need to decide how much you want a particular property, and what you’re willing to accept to get it. You may want to let go when:
- A bidding war drives the price up too high for your comfort and budget.
- The appraised value of the home is below your offer & you are not prepared to pay personally (when you don’t have the extra funds) any higher than the appraisal value.
- A home inspection finds defects that would be too expensive to repair.
- The sellers are unwilling to make reasonable repairs, or unwilling to offer reasonable concessions.
- You learn about homeowners association rules that you can’t live with.
What are common contract pitfalls I should avoid?
Your CDRE agent will help you watch out for:
- Unrealistic deadlines: You’ll need time to arrange a home inspection and receive the report, as well as arrange financing.
- Missing deadlines means you lose your chance to end the contract and keep your deposit (earnest money).
- Items that don’t convey with the property: if you’re not sure, ask your agent to confirm.
- Communications from your lender. You lender should openly communicate and keep you in the loop as you move through the process.
Did you know? According to the National Association of REALTORS®, the most common reasons for contracts to fail or to be delayed are home inspection problems, financing problems or an appraisal issue. Your Clear Direction Real Estate agent will help you navigate the complexities of the real estate contract.
The Home Inspection
As soon your offer is accepted (executed contract), you should schedule your home inspection. If you’re buying in a busy season, it may take time to find an available inspector, you may also rely on your Clear Direction Real Estate agent to recommend trusted home inspectors.
What is a home inspection?
Your home inspector will check an enormous list (more than 1,000 items) of systems, appliances and structures in your new home to evaluate its condition. You’ll get a written report that identifies potential problems and future maintenance issues. It’s up to you to decide whether the report means you want to walk away from a house or ask the sellers to make repairs. You can also have an “information only” inspection, which means you’re buying the house as is, but want to know its condition. Keep in mind the inspector’s job is to pick apart the property, however the inspector is a generalist, not a specialist (think dentist versus orthodontist).
What’s included on a home inspection?
In General the inspector will check:
- Structural conditions such as the foundation, beams and floors.
- Roof condition.
- Mechanical systems such as heat and air conditioning.
- Appliances – to make sure they’re working.
- Plumbing – for leaks, rust and water pressure.
- Electrical systems such as grounded outlets and code violations.
- Safety issues such as stairs, handrails, mold or chimney maintenance.
*Some inspection companies offer other services for an additional fee. Be sure verify the options being offered.
What should I watch for during the home inspection?
It’s a good idea for you to attend the home inspection, this allows you the opportunity to learn about home so you can see any potential problems yourself before buying. The inspector can answer questions as you go. So, if there’s anything you don’t understand, or are worried about if something could be a problem, just ask.
I’ve got the home inspection report, now what?
While you and your CDRE agent can decide whether to negotiate on anything in the inspection report, you can ask the inspector the following questions:
- Are the items you’ve flagged major or minor issues?
- What needs to be done to resolve any flagged issues?
- Can you give me an estimate of the cost of any repairs?
- Do I need another inspection, such as by an electrician or a structural engineer?
- Are there things I need to do after I move in?
Your experienced CDRE real estate agent can be the best adviser to help you understand the implications of the home inspection.
Get a Home Warranty
Some home sellers pay for a home warranty that covers them while their home is on the market and conveys to the buyers after the sale. You can ask your real estate agent for advice about negotiating for the sellers to pay for a warranty or buying one yourself.
What is a home warranty?
A home warranty policy, which typically lasts for one year and is renewable, provides coverage for some of your home’s systems and appliances. In return for the annual fee, the company will cover repair costs and arrange for contractors. You’ll pay a deductible fee and possibly service fees if you need to use the warranty.
Should I get a home warranty?
If you’re buying an existing home, with older appliances and HVAC units, a home warranty could be a good idea for your peace-of-mind about unexpected repairs. If you’re a first-time buyer a good home warranty could be particularly important, ask us for recommendations. If you have a fully funded emergency fund, & you’re handy or know good contractors, you may not need a home warranty. Your Clear Direction Real Estate agent can also be a good source of recommendations for contractors. If you’re buying a newly built home, structural defects are usually under warranty by the builder (some items up to 10 years and other items are typically covered for six months to two years), so you don’t usually need a home warranty in that case.
What should I look for in a home warranty?
To choose a good home warranty, you and your Clear Direction Real Estate agent should review:
- The home warranty company’s license with your state’s real estate commission.
- The fine print – that’s where you’ll find exclusions and limitations.
- What’s covered versus what’s not covered.
- The coverage limits – your repairs will only be paid for up to a specific amount or level.
- Service fees and deductibles.
- How quickly service and claims are handled.
- How contractors are vetted and what happens if you use your own.
- Coverage differences between a basic warranty and enhanced warranty.
- Online reviews.
You can always ask your Clear Direction Real Estate agent for home warranty company recommendations.
While you may feel jittery before your closing, your CDRE agent and your lender should have you fully prepared for the day.
What should I do before the closing?
As your closing nears, you should:
- Stay in close touch with your Clear Direction Real Estate agent, lender and title company.
- Avoid lowering your credit score with a new credit application or late payments.
- Confirm that your contract contingencies are resolved, including the home inspection, an appraisal and your financing.
- Finalize your homeowner’s insurance policy.
- Gather your down payment and closing cost funds in an accessible account.
- Review your Closing Disclosure form, which you’ll receive at least three days before your settlement, and ask questions if you don’t understand something.
- Arrange a wire transfer or get a cashier’s check for the funds you need for the settlement.
- Schedule a final walk-through of your new home before your closing (check on the condition).
What can I expect at the closing?
In a word: Paperwork! Plan for a few hours for closing.
What to bring to the closing:
- A government-issued photo ID.
- Your cashier’s check or wire transfer confirmation.
- Your checkbook for miscellaneous funds that weren’t included on your closing estimate.
What paperwork is required to close?
You’ll be signing numerous documents, including a repeat of the documents you signed when you applied for your loan. The most important documents you’ll sign are:
- Promissory Note to repay the mortgage.
- Deed of Trust, which gives the lender the right to foreclose if you don’t repay the loan.
- What’s covered and what’s not.
- Initial Escrow Disclosure, which outlines the funds on deposit for your property taxes and homeowner’s insurance bills.
- Right to Cancel form, which states that you have three business days to cancel the transaction.
- Keep a copy of all the signed documents in a safe place.
- Avoid lowering your credit score with a new credit application or late payments.
- Change your address.
- Change the locks and security codes on your home.
- Review your due dates and new budget.
Congratulations! You’ve got the keys to your new home! Stay in touch with your Clear Direction Real Estate agent for future recommendations and service.