Here is the list of the steps in the purchase process:
(Below the list is more detailed information about each step)
1. Get your finances in order
2. Work with a Realtor®
3. Find a lender and pre-qualify for a loan
4. Determine what kind of home you want
5. Talk with us about “wish list” for your property search
6. Visit properties that interest you
7. You find “THE” property and determine the offering price
8. Make an offer
9. Get your offer accepted & open escrow
10. Complete Inspections and other due diligence
11. Close Escrow & “Get the KEYS”
Read more about the Steps below
- Get your finances in order
Find out what your credit scores are. It is best to get debt paid down and figure out what you can do to improve your credit before you begin your real estate search. While you are doing this, you can consult a lender to get a more accurate determination of where you stand financially and the steps you can take toward getting a home loan. Credit Scores help lenders determine if you qualify for home loans and at what interest rate. You can go to www.freecreditreport.com to get a free credit report or subscribe to a free monitoring service like www.CreditKarma.com to get a credit score. (This score will not be exactly the same score that a lender will use to qualify you for a mortgage, but it is a good starting place.) Credit Karma also provides free information on credit factors, recommendations to improve credit and a credit simulator to test what if scenarios.
You will want to have cash saved to use as “earnest money’ when you make an offer to buy, plus cash to pay for home and pest inspections, down payment, and closing costs. In addition, you need cash reserves to cover 2 months of living expenses. The typical down payment is anywhere from 3% to 20% depending on the type of home loan.
- Work with a Realtor®
Rob Fowler is a Realtor® and will be your coach as you move through the process. As a Realtor®, Rob belongs to professional associations that provide education, training and support for the real estate community. Members are governed by rules/ bylaws, and make a commitment to ethical professional behavior.
Rob will help you develop a purchase plan. He will also set up property searches and take you on property tours. He will evaluate properties, negotiate sales price, complete tasks involved in escrow, and prepare you for the close of the deal. You will spend a lot of time with Rob and he will be there to guide you through the decisions you will need to make. This can be intense and sometimes stressful, and he will be dedicated to you throughout the transaction and beyond…
- Find a lender and pre-qualify for a loan
You will want to pre-qualify for a loan before you start your property search. The importance of this cannot be over emphasized. You will want your property search to match what you can comfortably afford to purchase. Otherwise it can be heartbreaking and frustrating to view properties, fall in love with one and then find out that you cannot qualify for a loan to buy it. So save yourself some heartache. If there is uncertainty in your near future with employment, a good lender can walk you through the various scenarios and suggest steps to maximize your credit rating. Rob can point you in the right direction if you need referrals. (NOTE: The amount you can qualify for is not necessarily the same amount of debt you feel comfortable taking on. A home loan is a long term commitment.)
Pre-qualification is essential to getting your offer accepted. The seller will see you as a more desirable buyer when you have your loan commitment and are ready to move forward immediately toward closing the deal. We had clients who did not get pre-qualified with a lender, despite our ongoing recommendation. They found their dream home and lost out to another buyer because they had to get financing in order before they could make their offer. Talk about Disappointment!
Remember you must have two months of financial stability prior to prequalifying for a loan. This means no new major expenses during the entire escrow through closing. Lenders recheck your credit just prior to close of escrow to confirm your qualification.
- Determine the kind of property you want and think about features you would prefer
This is a very personal issue and it is good to carefully evaluate what is important to you. Not only the standard number of bedrooms and bathrooms, but type of property (detached single family vs condo, etc.) type of neighborhood and the types of amenities that support your lifestyle, schools for any kids, the commute to jobs etc. Pretty much how you want to live and spend your time.
- Talk with us about your “wish list” for your property search
This will be the starting point for a Multiple Listing Search (MLS) that Rob will set up for you. The MLS is an internet generated service that will send, to your email, pictures and descriptions of properties that match your chosen criteria. Your first email will have lots of homes that are presently on the MLS. Subsequent emails will have newly listed properties, properties that have had a price change, gone pending or that have sold. All of this information will be helpful to you in deciding what interests you and also what you can afford.
When you start receiving info on properties, Don’t Panic! You will see properties on the search that you will not like. This will also help you fine tune your property search.
- We will take you to visit those properties that interest you
As you view properties, make a list of pros and cons. At the end of the viewings, give your list to Rob so that your property search can be revised to more closely match what you are looking for. As interesting properties appear we can take you to view them. It is this process of viewing and revising that targets your property search to be more in line with what you wish to purchase.
- At some point you will see a property that you will want to make an offer on and you will need to determine the offer price
Now, all the information you have gathered from viewing properties will help you decide what you feel the property is worth to you. Rob will also do some homework to find comparable properties that have sold recently. This information will give you an idea of the fair market value for the property.
- Making an offer
Evaluating the properties you have seen and studying the sales prices of comparable properties will give you an idea of what to offer. Rob has lots of experience and will advise you. Making the right offer begins with Fair Market Value and considers a number of other things:
*How many similar properties are on the market?
* What kind of financing is available (thus making it easy or hard for people to get loans)? The more people that can afford the type of property you are interested in, the more demand there is and if supply is limited, the price will go up.
*What are the qualities of the property you are interested in? If the property is well priced, really desirable and if there are lots of buyers in that price category, it will drive the price up.
*Condition and location of the property as compared to the comps.
*How important is it to you that your offer is accepted. This can be tricky business if there is competition for the property. It is important that you keep your financial goals in mind and stick to them.
Rob is expert in this area and will help you develop strategies to present a strong offer or decide to move on. Knowing what you are willing/able to pay is very important. It is important not to get emotionally attached to a property and pay more for it than it is worth or than you set out to spend.
- Get your offer accepted & open escrow
Being the strongest buyer you can be, will help you get your offer accepted. This relates back to having done your homework financially. Sellers do not want to go down the selling path with someone who has “shaky” ability to finally close the deal. Having a pre-qualification letter from your lender is essential. The fewer contingencies you have the better. Being amenable to the seller’s time constraints also helps.
Your offer should be made contingent on the inspections of the property. You want to know the condition of the property you are buying, and what repairs need to be done. That said, if you are competing with a buyer who does not have this contingency, you may lose the property. But, who wants to buy a property without knowing the condition? This can be an expensive mistake. If there are maintenance/structural problems with the property, you will want to know them, because you probably don’t want to end up owning them!!! The condition of the property can affect what you are willing to pay for the property. It can lead to the owner making needed repairs before the close of sale or reducing the price of the home, or even, making the decision to walk away from the sale.
Once your offer is accepted, Rob will open escrow with a tittle company and you will deposit the earnest money with the title company. The title company provides a title search to make sure there are no liens on the property or clouds on title, so they can insure title. The escrow officer works with both buyer and seller to see that all elements of the contract are satisfied
10. Complete Inspections and other due diligence
Even if the seller has recently had all of the inspections done you may still want to have your own inspector perform them. We strongly recommend you hire professionals & do your own inspections. You will need to get property inspections done by licensed and reputable General Home and Pest Control Inspectors. Sometimes these inspections can lead to further inspections if damage is seen. Other inspectors may include Structural Engineers, Mold Inspectors, General Contractors or specialty contractors for repair estimates. These costs and necessary repairs can affect whether the sale actually goes to completion. We have previous experience with these professionals and can make recommendations of inspectors that have been thorough and honest. Or, if you prefer you can do your own research and find them yourself.
The sellers are also required to provide you disclosures regarding the property. You must resolve any issues with the disclosures and approve them in order to close escrow.
… Then, it’s onto…..
11. Close Escrow & “Get the KEYS”
Once all of the dust has settled after the inspection period and issues are resolved, you must remove your contingencies and commit to closing the deal. Prepare yourself (and your hand) to sign a pile of documents. You can take as much time as you need to understand the documents. Three days after doc signing, the deal gets funded with the proceeds going to the seller and the loan obligation to you. The following day the property transfer gets recorded with the County Recorder. This is when the property actually becomes yours. At this point you can breathe a sigh of relief, as you get the keys to your new home. You are now a Home Owner, Congratulations!!!!!