THE HOME BUYING PROCESS
INTRODUCTION
We understand that the home buying process is more than just a transaction. It is a life changing experience, that is why we are dedicated to providing exceptional, personalized, service for all of our clients. We take great pride in the relationships we build and always work relentlessly on the clients behalf to help them achieve their real estate goals.
CONSULTATION TO ANALYZE NEEDS
During this meeting we will discuss your needs and wants considering location, school district, size, amenities, distance to work, price range and other factors to earnestly pursue the best possible home within your budget. We will then enter your requirements into the MLS system, and from the many listings in its inventory, MLS will display a list of homes tailored just for you.
LOAN APPROVAL PROCESS
Unless you are planning to pay cash, the most important step before beginning your home search is to get a pre-approval. Meet with the lender and get pre-approved for a loan to save time during the home search and to improve your negotiating position. If you need a recommendation for a lender, we can provide one.
HOME SEARCH
View homes and select THE ONE. We will help refine your search in the initial buyers meeting so that you see only those homes that meet your criteria. We are committed to helping you find the one that fits your needs and will work diligently until you find it.
MAKE AN OFFER
We will obtain information about the property you are wanting to purchase, provide you a comparative market analysis (CMA), review market conditions, and decide whether to present a competitive or aggressive offer. We will discuss the offer and gather all the documentation needed to ensure the terms are in your best interest. The process may go back and forth a few times.
UNDER CONTRACT
After both parties sign the final contract, the buyer is responsible for providing earnest and option money that will be deposited with the title company.
SCHEDULE INSPECTIONS, REPAIRS AND INSURANCE
During the negotiated option period (usually 7-10 days) final details are handled and inspections are performed to ensure the property is right for you. We help you negotiate contract details like repairs, price adjustments, choosing a home insurance provider, home warranty and reviewing the Commitment for Title Insurance.
CONTRACT DETAILS
We have a process and checklist we follow to ensure we have good communication with all parties in the transaction and the process runs smoothly.
CLOSING
The buyer wires or brings a certified check for down payment, and photo ID to the closing at the Title Company. Once the lender releases funds to the seller which usually takes about 1 hour after all parties have signed, the buyer becomes the new home owner.
THE RIGHT HOME
We will evaluate your home buying needs in the first meeting to be better prepared and assist you in your home buying search. We are proficient in locating the ideal home for our clients, whether it’s a resale home in the MLS, a For Sale by Owner, Foreclosure, new construction or an off-market property.
RESALE HOMES
We have access to show you any of the homes listed by any brokerage firm in the Austin area. However, we help focus your search based on factors such as location, schools, features, and other criteria. Our goal is to use our market knowledge to save you time and money.
NEW CONSTRUCTION
Many buyers are not aware that the representatives at new construction sales centers represent the sole interests of the builder, not the buyer. A common misunderstanding is that the buyer can get a “better deal” if there is not an agent involved. We deal with local builders and know firsthand where they are most negotiable in order to get the best possible price and terms for you. We will also provide a market analysis to show you how much comparable homes sold for in the area, so that you don’t overpay. Finally, our extensive knowledge of builder reputations, floor plans and lots, as well as schools, neighborhoods, and amenities will help you choose the right home in the right place.
FOR SALE BY OWNER
At any point in time, there are a handful of For Sale by Owner properties on the market. If you happen to drive by a For Sale by Owner and would like to see the property, please give us a call so we can work with the owner to schedule a private showing. We will find the information about the property and provide a market analysis to assist you in making a competitive offer.
FORECLOSURES AND SHORT SALES
Navigating the sea of distressed properties is not for beginners. The process for buying a Foreclosed or Short Sale Home is vastly different. You need an experienced agent on your side, but most of all you need patience. When banks and the government agencies are involved, you cannot dictate the schedule. Before you decide to pursue distressed properties, we should discuss your goals to make sure they are a good fit for you.
OFF – MARKET PROPERTIES
Homeowner’s occasionally chose not to list their property on the Multiple Listing Service. We have dedicated ourselves to networking with other real estate agents and this allows us the opportunity to find those properties that are either off-market or coming soon to the market. This network also affords us the opportunity to schedule showings for properties before they become available to the general public. This strategy is very helpful for our clients that are looking for very specific features in their next property.
OFFER REQUIREMENTS
PRE-APPROVAL LETTER
A pre-approval letter will show the seller that you are able and qualified to purchase their home. Sellers are usually more willing to work with buyers when they know that the buyer is ready willing and able to purchase the home. Getting pre-approved before finding a home will also make it less stressful when a home is found – all the paperwork will already have been submitted to the lender and you will know exactly what you qualify for. There will be no surprises and no delays in closing on your dream home.
EARNEST MONEY
When an offer is submitted you will have to provide earnest money that will be deposited with the title company. The amount is usually 1% of the purchase price of the home. Those monies are credited to you at closing, but given to the seller as liquidated damages if you are not able to close on the property due to failure to perform under the terms of the contract. The earnest money will be made out to the title company and will be deposited within 3 days of the contract being executed.
OPTION MONEY
The option money purchases an option period – a negotiated amount of time to terminate the contract. The option money is generally 10% of the earnest money. We will schedule all inspections during the option period and negotiate either a price adjustment or repairs if needed during that time. If no agreement can be reached on repairs or the price adjustment then you may terminate the contract and receive your earnest money back. The option money will be credited back to you on the closing disclosure when you purchase the home. The option money must be delivered within 3 days of the contract being executed.
INSPECTION MONEY
Once the offer is accepted. We will coordinate inspections with reputable companies. If you have a preferred inspection company, please let us know so that we can coordinate it with them. The cost for inspecting a home varies on size, location, and features. Below is a list of what you can expect.
- General Inspection $400-$600
- Termite $100-$150
- Septic $300-$500
- Pool Inspection $300-$500
- HVAC $75-$150
- Plumbing $75-$500
OPTION PERIOD
HOME INSPECTION
Upon acceptance of your offer, you will typically want to arrange for an inspection of the property. This generally is completed during the option period so that if something is discovered during the inspection (that you cannot live with and the seller is unwilling to fix) you can cancel the contract and have your earnest money refunded.
We will provide you with a list of 2-3 qualified home inspectors that we have used in the past, or you can also choose your own home inspector.
The inspection will take 2-4 hours. Your attendance is optional; however we recommend you attend at least the last half-hour when the inspector reviews the findings with you.
Most homes have a long list of minor cosmetic repairs. Remember, we are mainly looking for major mechanical, safety or structural defects to the property.
NEGOTIATING REPAIRS WITH AMENDMENT
Immediately following the inspection, we will typically complete an amendment to the contract that will include items the inspector discovered that you want repaired by the seller, or a monetary allowance in lieu of repairs. Then we will negotiate on your behalf with the seller for the repairs you want completed.
CHOOSE A HOME INSPECTOR
WHY HIRE AN INSPECTOR
Buying a home is one of the most significant decisions and one of the biggest investments you will ever make, so you need an unbiased professional’s opinion about the physical condition of any property you plan to buy. A home inspection will give you a clear picture of a home’s condition, answer any question you may have, and give you peace of mind.
There are numerous types of inspections. An inspection is meant to evaluate at minimum the structural and mechanical condition of a property. It is not the same as an appraisal, which evaluates the market value of a property.
NEGOTIATING REPAIRS
Once the home inspection is completed and we receive the inspection report, we will review it and put together an amendment.
The amendment will include the following options:
- Ask the seller to complete necessary repairs
- Ask for a reduction in purchase price in lieu of
- Ask for a “cash” compensation in lieu of
- Combination of the above
The seller can respond with one of the following:
- Agree to the requested item(s)
- Counter with a different
- Ignore the amendment
ABOUT FINANCING
When you are ready for shop for a loan, you can work direct with a lender or with a mortgage broker representing many individual lenders. Direct lenders are lending their own money, have in house programs and make the final decision on your application. Mortgage brokers are intermediaries who represent many lenders and loan programs from which to choose. If you have special financing needs or want to shop the market for the best deal, an experienced broker may be able to find the best loan for you.
Along with shopping the source, you’ll also have to shop the total cost of the loan including the interest rate fee points (each point is one percent of the amount you borrow), prepayment penalties, the loan term, and a host of other items.
You should get pre-approved for a loan before shopping for a house. Having a pre-approved letter is crucial when you are ready to make an offer.
Whenever possible, you should choose a lender who works locally. Online lenders and out of state lenders are typically high volume shops that aren’t going to take a personal interest in making sure your loan goes smoothly. On the other hand, a local lender who wants to earn your repeated business and your referrals is going to take care of you.
Choose your lender very carefully because you are relying on them to close your loan on time. You could lose your dream home in they make a mistake.
WHY IS FINANCING IMPORTANT
- It allows you to determine how much your monthly payment will be.
- It helps us to determine what price range to shop
- It gives you an estimate of how much money you will need to bring to
- It allows you to select the best loan package without being under
It also helps us negotiate from a stronger position since sellers will find your offer more attractive knowing that you can secure a mortgage.
CLOSING COSTS
No matter what home you buy there will be costs associated with completing the transaction. Charges can include loan origination fees, rate buy-down discount points, lender’s title insurance, escrow fees, attorney fees, recording fees, appraisal fees, document preparation fees, notary fees, and loan underwriting fees. You may also have to pay “prepaids” which are advanced payments to build your mortgage escrow account that is used to pay your taxes and insurance.
TIP: Sometimes we can negotiate for the seller to pay some of your closing costs.
WHAT OTHER COSTS WILL I INCUR BEFORE CLOSING?
We want to inform you of the costs you will incur during the home buying process. You will write four checks prior to closing. The costs below are an average and will vary with the price, size, and features of your new home.
Option Fee: Generally 10% of earnest money. The option money will be credited back to you on the closing disclosure when you purchase your home.
Payable to the seller after acceptance of your offer. This will be credited toward the sales price. This reserves the right for you to terminate the contract within the option period and receive a refund of your earnest money. Generally, the option fee is approximately 10% of the earnest money.
Earnest Money: Frequently 1% of sale price of home. Earnest money is credited to you at closing, but given to the seller as liquidated damages if you are not able to close on the property due to failure to perform under the terms of the contract.
Inspection ($400-$600) Payable to the inspector at time of inspection, which take place during the option period. It is the buyer’s responsibility to arrange any inspections on the property, but we can work with you to locate reputable inspectors and contractors. We can also assist in scheduling appointments.
Appraisal: Payable to the lender and generally ordered after the option period expires.
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