The Home Buying Process Archives

Step 6: Closing

January 6, 2021February 25, 2020 by tbiasiotta

It has been around 30-45 days since your offer was accepted and is now time to finalize the purchase. Your lender and title company are working together to properly prepare the final paperwork to transfer the title into your name. You will meet with the title company (usually one hour) where you will sign the final loan documents and submit your down payment.

Once you and the seller have each signed the final documents, the title company will file the deed in the respective county. Once the deed has transferred, the home is officially yours! You will receive the keys according to the purchase agreement.

Your agent at this point will release the lockbox code (with permission from the seller) or meet you to officially deliver you the keys.

Congratulations! You are officially a homeowner!

Step 5: Due Diligence

January 6, 2021February 25, 2020 by tbiasiotta

So your offer was accepted! Now what!? Now is the time for due diligence and loan application.

1.) Home Inspection – Shortly after written acceptance of your offer, it is important to contact a home inspector and schedule the inspection within 5-10 days or according to your contract. You will need to coordinate the time with your real estate agent. It is recommended that you are present at the home inspection. This can take 1-3 hours depending on the size or scope of the inspection. This will be at your expense, the inspector can vary in cost but is usually between $300-$500. The buyer is always encouraged to have a home inspection to verify the condition of the property.

After the inspection, you have the choice to

Remove inspection contingency and move forward
Negotiate a price reduction, repairs, or a credit due to items on the inspection report. All of these items must be mutually agreed upon
Release of contract due to condition

What happens if we choose to back out of the contract after the inspection? You will need to come to an agreement with the seller to part ways, in most cases you are entitled to your earnest money deposit.

2.) Submit Earnest Money – Typically this is a written check made out to the Real Estate Brokerage in the amount of 1% of the purchase price. This is collected at the time the offer is written or within four days of acceptance or after inspections. Earnest money is a good faith deposit to prove you are a serious buyer, this will be credited towards your down payment at closing.

3.) Loan Application – At this time you will contact your lender and let them know you have an accepted purchase agreement. You or your agent will submit the contract to your loan officer and get the process started on obtaining the loan on your home. At this time, the lender may ask you to pay the loan application fee, which is typically under $500, but contact your lender for the exact amount. You also will begin to look for homeowner’s insurance as it is required to have purchased a policy prior to closing on the home.

4.) Title Search – Handled by the title company to verify the property title is in good standing without any liens or encumbrances.

5.) Appraisal – This will be ordered through your lender and coordinated between the listing agent and seller for the appraiser to walk through the property. You are not required to be present but will receive a copy of the report once it is complete. The appraisal process is used to verify the home’s value and prove to the bank that the home is worth the loan you are obtaining.

6.) Final Loan Approval – The loan is now out of underwriting and the lender is working with the title company to prepare for closing. At this time you will have one final walkthrough prior to closing to verify the condition of the home. It is important at this time to schedule and transfer the utilities for the date you are scheduled to take possession.

You are now ready to head to closing!

Step 4: Write an Offer

January 6, 2021February 25, 2020 by tbiasiotta

So you found the home you love, great! The next step is to write an offer and submit a purchase agreement. Does it cost you anything to write or submit an offer? Nope, it’s free, so write away! The first costs come after an offer is accepted which would include earnest money, inspections, and an application fee which you will discuss with your agent.

The sales contract (or purchase agreement) is a 5-7 page document that can be completed in-person or electronically. The agent will walk you through the terms of the contract and make suggestions to prepare the best offer for you.

Some items to consider when writing an offer are:

Whose name will the home be in?
What price are you offering?
What type of inspections do you want to perform?
How much earnest money deposit will you put down?
Who is the Title Company?
Closing date (typically 30-45 days from the time the offer is accepted)

After the documents are properly prepared, your agent will submit the offer with your pre-approval letter to the listing agent and will negotiate your terms on your behalf. Sometimes the negotiations can move as quickly as a few hours and other times could last several days depending on each seller.

Who is the listing agent? The listing agent is referring to the real estate agent representing the seller in the transaction. They have an agreement with the seller to work on their behalf and market the property for offers to purchase.

What if there are multiple offers on the property? In a competitive market, it’s not uncommon for a seller to receive multiple offers on a property. If this happens, a listing agent will typically call for each buyer to submit their HIGHEST AND BEST offer usually with a deadline. At that time a buyer can revise their offer, keep their offer the same, or withdraw their offer. The seller will move forward with the offer that best fits their needs and will evaluate all terms including price, inspections, type of loan, or cash.

Once the buyer and seller have agreed on the terms, the agent may ask for final initials or signatures if there have been any changes to the original offer. Once you have a signed contract from both parties, you are officially under contract to purchase the home!

Step 3: Viewing Homes

February 28, 2020February 25, 2020 by tbiasiotta

So now the fun begins…..You want to see some houses right? It will help to determine a list of criteria and rank them in order of importance. Items to consider are price range, area, bedrooms, baths, amenities, etc…). You will want to share your list of criteria with your Realtor so they can have a good understanding of what homes to look for. You will then be set up on the MLS (multiple listing service) search to receive notifications of any new homes for sale. This is the fastest and most reliable way to view any new listings as they hit the market.

What is the MLS? A multiple listing service (MLS) is a service used by a group of real estate brokers. They band together to create an MLS that allows each of them to see one another’s listings of properties for sale. Under this arrangement, both the listing and selling broker benefit by consolidating and sharing information, and by sharing commissions.

We also recommend and encourage the buyer to monitor sites like Realtor.com, Trulia, Zillow, etc… and then send the home info to your Realtor via email or text with any that you may be interested in.

How long does it take to get showings scheduled? Typically 24-48 hour notice is required to set up showings on an occupied home (to allow the owner proper notice to prep). At times, vacant homes can be viewed the same day if the agent’s and buyer’s schedule allows.

When you are walking through homes it is important to keep some items in mind:

Condition of the house (Age of roof, mechanicals, windows and foundation)
Review the Residential Property Disclosure Form (required by the state of Ohio to be filled out by the sellers to disclose any known defects with the home)
Neighborhood and location
Functionality of layout
School system (if applicable)

Once you have found the right house for you, the next step is to write an offer!

Step 2: Selecting a Real Estate Professional

January 6, 2021February 25, 2020 by tbiasiotta

Finding a real estate agent should begin around the same time you are looking to get pre-approved. It is important to have proper representation throughout the home buying process. Your agent will be known as the ‘Buyer’s Agent’ in the transaction. They are obligated to have your best interest throughout the transaction and will work on your behalf.

What does a buyer’s agent do for me?

Learns and understands what you are looking for in a home
Schedules and coordinates showings
Writes, submits, and negotiates offers on your behalf
Provides market knowledge and educates you throughout the entire home buying process

You can search for your agent by asking your friends, family or colleagues for referrals or visiting local open houses. Also, a simple google search for reviews would do. It is important to work with someone that you can trust. It is a good idea to speak with a few agents before deciding who to work with. You want your buyer’s agent to have knowledge of the industry, experience, proper communication, and have a good rapport working together. Real estate can often be a time-sensitive industry and it is important to have a responsive agent working on your behalf. You want to make sure your real estate agent is working under a real estate brokerage, has access to the MLS, and is a designated Realtor.

Do I have to pay my buyer’s agent? No! The buyer’s agent commission will be paid by the seller at closing. Typically the only charge is an administration fee that is to be paid to the brokerage. This can range from $200-$400 depending on the brokerage ($250 for JAMM Real Estate Company).

Once you have selected your agent, you are now able to move to the next step of touring homes!

Step 1: Pre-Approval

January 6, 2021February 25, 2020 by tbiasiotta

One of the first steps to purchasing a home is to determine how much you can afford. You will begin by contacting your local bank or lending institution. Here you will tell the bank that you are interested in purchasing a home and would like to get pre-approved. They will ask to run your credit, verify income and check the background of your finances.

Some items the lender may ask of you:

Provide prior two years of tax returns
Provide most recent bank statements
Provide your most recent pay stubs
Run your credit report

Your purchasing power is determined by how much of a monthly payment you can afford. They will look at your monthly debt obligations (min credit card payments, car payment, student loans, etc..) to your monthly income. Some other very important items to consider are your credit score, income, and amount of cash available for the down payment.

Typical questions for your loan officer:

What is the interest rate?
What are your estimated closing costs?
How long is a typical closing?
What type of loan do I qualify for? (Conventional, FHA, VA, FHA 203K Rehab)

Once the lender has completed their pre-approval process, they will generate a pre-approval letter outlining the terms of the loan. This will include your max purchase price, amount of down payment, type of loan, and interest rate. This letter will be emailed to you via a PDF and will have to be submitted with any written offers. It is a good idea to email a copy of your letter to your Realtor.

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