Get Pre-Qualified

• What is a pre-qualification...A pre-qualification means that you have spoken with a lender and have gotten an estimate from them on what they would approve you for. This is useful in the home buying process because when you get an idea of what you can afford so you can focus on properties that are in your price range.
• What is a pre-approval ...A pre-approval, on the other hand, is much more valuable and a must have for serious home buyers. With a pre-approval a lender will have checked your credit and verified your documentation and will approve you for the amout that they are willing to fund. This approval is generally good for a specified amount of time - typically 90 days but can vary with lenders.
• Benefits of a pre-approval...So why do you need a pre-approval? What if you walk into a home that you love and want to make an offer right away? It is a good price, great location, and you know that there will be multiple offers. If you have a pre-approval you can make the offer immediately. You will not need to spend the next couple of days scrambling to get your documentation, find a lender, and get pre-approved. If the home owner has 2 offers, one from someone who is pre-approved and one from someone who is not, then they tend to look more favorably on the pre-approved buyer as there is less risk involved.
• Items you will need ...Long gone are the days when lenders will approve essentially anyone. These days you need to produce documentation to show your income, assets, credit, and employment. Getting items like your tax return, recent pay stubs, bank statements, drivers license, and social security together will help you to get through the process smoother and faster.
• Rate lock...A rate lock means that the lender has agreed to provide you with an agreed upon rate regardless of whether rates have changed between the time of the loan approval and the closing date.
• Why a rate lock...A rate lock will protect you from fluctuations in mortgage rates. If mortgage rates go up and you do not have a rate lock in place this means that you could end up with a higher rate and a higher payment over the life of the loan. On the other hand, rates can also go down which would mean that a rate lock too early could lock you in at a higher rate than you might otherwise have secured. Which brings us to when to lock?
• When to lock...There is no perfect answer to this question. A lot would depend on the state of the economy and where experts predict interest rates are headed. The majority of home buyers wait until they have a ratified contract to lock in their loan. The reason being they do not know how long it will take to buy and close on their home and longer duration rate locks are more expensive (in loan points or a higher interest rate). It is best to speak with your lender and me during the process so we can provide you with the best options for you at that time.

In my experience a pre-approval is never a bad thing for a serious home buyer. If you have any question on the mortgage approval process please call or email me and I would be more than happy to provide additional information

Choose an Agent

At this point you probably have found the neighborhoods that you would like to live in and have a good idea of how much you can afford. The next step is to find a real estate agent that can guide you through the process and get you into your new home. I hope that you will choose me to represent you, but here are some considerations you should take when interviewing an agent.

• Find out their Background... Typically you will want to work with some that has experience. So you would want to know how many years the agent has been in business, if it is their full time job, and some characteristics that set them apart from other agents.
• Get Referrals... It is likely that you have some friends or family that have recently moved. Ask them about who they used and what they liked or did not like about their agent. If you are already working with a Mortgage broker you can ask them for referrals or if they have ever worked with the agent you are considering. If so see if you can get any feedback on how smoothly that transaction went.
• Research the Agent... Do your research. Ask for a list of past clients and whether you can contact them. Search the agent out online to see if they have a web site, testimonials, or reviews. Also, it would be important to interview the agent to see if they have worked in your desired neighborhood.
• Personality and Responsiveness... The ability to communicate and trust your agent is important. This is someone who will be negotiating on your behalf and who you will need to be able to reach when the need arises. Try to pick someone who responds quickly and professionally.

View Homes

Now comes the fun part, it is time to look at homes. Many home buyers start their search online, so it is important to have a place where you can view, save, and have properties sent to you. If you want to search by neighborhood, school district, attendance zone, then I encourage you to try out the home search on my site. Here are some other home search tips:

• Create a Need versus Want Sheet... It is unlikely that you will find the house in your budget that ticks every item on your wish list. We are human and we always aspire to more. So make sure that you set up a list of things that you need and things that you want. Also, some needs can be added later and some cannot. If a pool is on your need list it can be added later, something like a big lot cannot.
• Be wary of information of Zillow, Trulia... Zillow uses syndicated listing data, meaning it may not be fresh and often times shows properties that have sold and are no longer on the market. They make money by selling advertising not real estate. Trulia is the same model as Zillow – in fact they just merged with Zillow so essentially they are one in the same. My suggestions is use them, but a search from the MLS like the one on my site has the most accurate information.
• Set up an online search... This is a big time saver and something you can do on my web site or just let me know what you are looking for and I can do it for you. Property Watch allows you to specify location, price, size, and even keywords and then will email you new listings each morning which match your criteria. If you see one you like you can email or call me and we can go out to view it.
• Take Notes... If you are like most home buyers, you will end up looking at a lot of homes. My suggestion is that after you view a home you write out the things you liked and did not like about a property. Most homes have an MLS fact sheet that you can write on or you can save it to favorites in my site’s home search and add notes. Rate the homes on a scale of 1 to 10. Let your realtor know that feedback so they can find or eliminate similar homes or notify of price changes in homes you really liked.
• Use your imagination... I cannot tell you how many times I have walked through a house and heard “I can’t live with this paint color”. No problem – paint is easy to change. When you are viewing a home look to the structure, the location, and the lot and try not to dwell on the superficial items. Furnishing, clutter, fixtures, and wall colors are all easy to change and once done might added some instant equity to your home.

An important source of information is the owner themselves so talk to them if you can. In many cases that owner will not be around when you view the home, if they are not then you can send your questions through your agent. However you will want to ask question to get a perspective of why they are moving and what the neighborhood is like. I have included some questions below that I have found to be useful for my past clients.

• Why are you/they selling the house?
• Is there anything you would want to know about the house if you were buying?
• What is included in the sale?
• How long has the home been on the market?
• How long have you lived here? Has the property often changed hands?
• Is there a minimum price that the seller will accept? How flexible is the seller on price?
• When will the sellers be moving out?
• Does the property have a history of problems? What is wrong with the house? Leaky pipes? Plumbing issues? Drainage?
• What can you tell me about the local neighborhood? Favorite Restaurants or Shops?

Make an Offer

Whew! After viewing dozens of homes you have finally found the one that you truly love. If you want to make sure that you get the best deal and at the same do not lose our then follow the offer tips that I have made below.

• Make a Good Impression... If the seller has lived in the home for a while then they have likely invested blood, sweat, and tears into the property. The last thing you want to do is diminish what they have done or insult their design choice. Remember there is nothing that says they need to take the highest offer, they can base their decision on a combination of price and emotion.
• Write a Letter... One way to make an impression is to write a letter to go along with your offer letting them know why their home appeals so much to you. Maybe you are about to start and family and they are recent empty-nesters. The thought of you starting in a family where they raised a family might strike a chord and highlight your offer over another.
• Make a Realistic Offer... We all want to get a good deal, but making a low-ball offer that will only insult the seller is not the way to go. Talk to your agent to determine if the selling price is in line with what you would expect for the property and the neighborhood. If so then the amount to start with depends on the market. Get recent comps and look at the selling price compared to the sale price. This is a good gauge on what you might be able to offer. If it is a tight market you might start 5% below the market, in a looser market maybe 10% below. Keep in mind that the seller can accept, counter, or just dismiss your offer. The assistance of an experience realtor is critical here.
• Present a Strong Offer... When a seller accepts an offer they are taking a risk, basically they will remove their home from the market with the anticipation you will be able to purchase the home. There are a number of things to make sure that you have the strongest offer possible. Things like a mortgage pre-approval, large down-payment, few contingencies, an escalation clause (matching highest bid plus some), and ability to close according to their timeline might strengthen your offer. Doing your homework will help you in this part of the process.
• Home inspection... In my opinion a home inspection is a must. Cosmetic differences like paint color are no problem, but a cracked foundation is not something that you want to deal with. A home inspection will provide insight into the condition of the home from the eyes of a professional, which minimizes your risk of major construction down the line. In most cases this is a contingency that you add to the sale agreement, that a home passes inspection. If major items come up you can either withdraw your offer or negotiate the sales price so you can cover those repairs.
• Contingencies... When you make an offer on a home you will have to put up some percentage of the sale price as the Earnest Money. This is a deposit that will be lost if you back out of the deal without cause or without one of your contingencies taking effect. Contingencies are included in the offer and can be things such as: provided financing goes through, provided I first sell my home, or that the property passes the home inspection.
• Multiple Offers... There is a very real possibility that you are not the only person who feel in love with the home. In a hot market a well price home in the right neighborhood would likely get several offers. This is one of the reasons it is not a good idea to low ball and to come in with a strong offer. What I tell people to do when they get into a bidding war is to try to keep emotion out of it if you can. Remember your budget and set a limit over which you will not go. Mentally prepare yourself to walk away if you get to that limit and do not let your emotions get you into a sale price you will later regret.
• Accepted Offer... Once you submit the offer, the potential for action is in the hands of the seller. If they accept the offer in the designated time period then your offer becomes a firm contract as soon as you are notified of their acceptance. It is not yet time to bust out the champagne since there are likely some contingencies, but you can start watching those HGTV shows for design tips.
• Counter Offer... Instead of accepting the offer, the seller might present a counter offer. They might ask for a higher price or some other term. Their counter offer is, once more, a binding agreement so if you accept the counter offer it will turn into a firm contract. Or you can negotiate back and forth until someone accepts or walks away.
• Denied Offer... If there is nothing about your offer that the seller likes then they might just reject it (the same goes for a counter offer). They can either let you know that they choose someone else, that they are not interested, or just let the offer deadline expire. There is nothing that says you cannot submit a new offer, but if they rejected rather than counter offered it is likely that you were pretty far off on price and terms.

What do you need to include in your offer? Most of these items are part of a standard agreement all agents use, but it is still important to know and I have listed them below:

• Address and possibly a legal description of the property
• What you are going to pay for the home
• Terms of the deal – how you will be paying, if the deal is subject to securing financing, other items that are included in the sale of the home (closing costs, furniture, etc…)
• Sellers promise to provide clear title to the property
• The target date for the close of the sale
• The amount of your Earnest Money Deposit – Check, Money Order, Promissory note and how the money will be returned if the offer is rejected
• Method by which bills and takes are to be adjusted or prorated between the buyer and seller
• Provisions on who will pay for Title Insurance, Survey, Termite, and other negotiated Closing Costs
• The type of deed that will be granted
• Specific state requirements, environmental hazard, etc…
• Provision for a walk through right before closing to make sure that property is in the same state as when you purchased it
• A time limit on when the offer will expire
• Contingencies… the additional terms that you set which will allow you to walk away and not lose your Earnest Money Deposit.

Escrow

Congratulations. Escrow means that you are on the home stretch and if all goes well will soon be getting the keys to your new home. This is not to say that there are not potential hurdles to overcome or that the work is done, but you can start chilling the champagne.

In order to help explain the escrow process I have included some of the major milestones you will be going through or will need to make happen.

• Get a Home Appraisal... An appraisal is when an unbiased 3rd party will come in to determine what the value of the home will be. The lender who is financing the purchase will require this so that they are not lending you more money than the home is worth. If the appraisal is less that the financed amount you either come up with cash to make up the difference or the deal falls through. This is the lenders way to minimize risk and avoid an asset loss if the worst happens and they have to repossess the property.
• Secure your Financing... If you were pre-approved then this should not be an issue, but you should check with your lender to make sure that there are no other documents that you need to sign. It is also not a good idea to release this contingency until you are 99.9% sure that the loan will be funded.
• Schedule the Home Inspection... It is also likely that the home will undergo a home inspection during escrow, I highly recommend this in order to make sure you do not immediately face a major repair cost. A home inspection will protect you from nasty and expensive repairs down the road and might allow you to either have the seller make the repairs or take the cost out of the sale price.
• Get Rid of Pests... Make sure that a pest inspection takes place and that if an issue arises that the home is tented to get rid of pests. Once more the last thing you want it to wake up a month after you move in and see termite damage.
• Read the Hazard Report... This report will be acquired on your behalf and will let you know if you are in a flood zone, airport zone, or anything else that can impact or damage you as a homeowner. If you are in a hazard zone it is possible that the lender will require you to take out additional insurance to cover potential damages.
• Review the Seller Disclosures... The seller and the agent are legally required to provide you with a list of any known problems with the home. They typically have a questionnaire to answer, but you can also list specific questions that you have for them. If they fail to disclose a known problem they can be liable for the repair or damage at a future time.
• Get Title Insurance... Clear title will equate to peace of mind. Make sure that there are no liens that will follow the property and not the seller. Also make sure that the seller actually has the right to sell the property. The title search will uncover any potential red flags (tax liens) and the title insurance will make sure that if any title claim occurs in the future you and the lender are protected.
• Take the Final Walk Through... Right before closing you and your agent will take a final walk through the property to make sure that there was no damage done during the escrow period. If there was new damage you will want to make sure it is corrected before you take possession.

Moving In

The keys are in your hands and you now have a new home. It is time to break out the champagne you have been chilling and make plans to head out to the local home improvement store. There are no more hurdles to overcome to take possession of the home, but you still need to go through the process of moving all your possessions. Also – if you intent to make some changes you will want to find a reliable contractor who can make sure that your improvements are done the correct way.

I have included some moving tips as well as some tips on picking the right contractor.

Moving and Packing Preparation

• Keep boxes to 50 lbs or less. Put heavy items in small boxes and light items in big boxes.
• Pack non-breakables tightly in smaller boxes, so they're not too heavy.
• Buy clean newsprint to wrap items, and bubble wrap for padding.
• Pack breakables loosely in plastic storage bins with lots of bubble wrap.
• Rent furniture pads.
• Mark your boxes by room, so you know exactly where everything goes. Color coding or using a number system works great.
• Write "FRAGILE" on all boxes with breakables and stack these boxes on top.

Choosing the Right Contractor

• Determine who is going to be responsible for retrieving the necessary permits and make sure your contractor follows the construction codes.
• Include written warranties. Make sure to note the name, address, and time period that pertain to the warranty.
• Do not hire anyone without a written estimate, contract, contractor's number, and a list of local references.
• Do not limit yourself to a single option. Obtain several bids (three is good), compare them, and then negotiate with the best all around contractor.
• Do not let price determine your actions. One of the bids could be significantly lower; however the contractor might be compromising quality and safety to cut costs.
• Once you have your contract make sure that it contains the following information: the total cost of the work and payment schedule, stipulations for any changes, a description of the work and materials used, start and finish dates, cleanup information, and signatures.