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Buying Your New Home:
Six Time-saving Tips
1. Research
The first thing to consider when you are looking for a new home
is the location. Each section of a town has its own personality
and amenities. If you have children for example, areas that
offer close proximity to schools, parks and playgrounds will be
most attractive to you. If, on the other hand, you are an
empty-nester, a more urban setting within walking distance of
galleries, restaurants, and shops may be more appealing.
Identifying one or more sections of town that best suit your
lifestyle needs will help focus your search.
2. Needs Analysis
The next step in the buying process is to consider what needs
your family has. Will a two bedroom, one bath work? Or, do you
need an extra bedroom for your home office? What about those
special hobbies you have? Do you need a studio or large garage
space? Take a moment to consider your current space. Is the size
appropriate for your needs? Could you use more or less space,
another bathroom, or perhaps a larger kitchen? If you have
children, you may prefer a house with a large backyard or a
pool. Take a moment to jot down your thoughts. This information
will greatly aid your real estate agent as well as come in handy
as you begin the process of narrowing your selection.
3. Select Your Agent
Finding an agent that understands your unique needs and one that
you enjoy working with will make the process of finding the
right home an enjoyable experience. A referral from a friend or
family member is always a great starting place, but if you are
relocating from another area that may not be an option. If you
are relocating, consider how the agent presents him/herself.
Read what you can from the Website and printed materials.
Consider how you are greeted when you enter their office, and
how you are treated in follow-up email and telephone calls. Is
the agent friendly, prompt, and knowledgeable about the market?
If so, you may have found your perfect match.
Finding your personal agent is more important than you may
realize. Once you find an agent you like, you may be asked to
sign a Buyer’s Agent agreement. This agreement is your assurance
that this agent represents your interest in the real estate
transaction. Your Buyer’s Agent will represent your best
interests throughout all negotiations with the seller and the
paperwork leading up to the close. You want someone you can
trust on your side of the transaction, and someone who you feel
comfortable asking any questions that comes to mind.
4. Get Pre-approved
Paying cash for a new home may be realistic for some, but for
most of us a mortgage loan is a necessity. The ideal mortgage
loan is one that offers the best terms for the least cost in
terms of interest rate. The mortgage business is competitive.
Interest rate can vary widely from one mortgage lender to
another so it is best to shop around.
A preapproval letter from your lender, assures your agent and
the listing broker that you are a serious buyer with the
financial strength to go through with a purchase. It also tells
the owner that your offer is credible and not likely to fall
through because financing cannot be obtained. This letter from a
lender can place you in an advantageous position when an owner
is considering multiple offers.
Preapproval means that a lender has reviewed your credit files
and information provided on the application and that he/she
believes that you can readily qualify for a given loan amount
with one or more of their mortgage programs. The process of
getting preapproved is easy and typically requires completing an
application either in person or online with a mortgage lender.
Your real estate agent can be a great source of mortgage lenders
in your area.
5. Narrowing Your Prospects (pros/cons)
Buying a home is one of the most expensive expenditures most of
us will ever make. For that reason, decisions can be difficult.
Life would be easy if you could take your needs analysis and
simply translate that into your ideal home in the perfect
neighborhood. Reality is that most homes are a compromise of
what you want and what you can afford. Somewhere in the middle
is the perfect home. For this reason, it’s often helpful to list
the pros and cons of each property under consideration on paper
and compare the list to your needs analysis worksheet. This
exercise will help to look at each property logically and weigh
priorities more efficiently. Your real estate agent can be of
tremendous help in narrowing your selection, but at the end of
the day...the decision is yours.
6. Making an Offer
The process of making an offer, especially for first-time home
buyers can be exciting as well as a bit scary. After all, buying
a new home is a sizeable commitment. Your real estate agent will
guide you through the process and answer any questions you may
have along the way.
The first question that will need to be answered is how much are
you willing to offer? While everyone wants to get as much as
they can for their money, no one wants to lose out to another
buyer either. If there are likely to be other buyers competing
for the house, then the seller will likely get full-price offers
or more than the asking price. If, on the other hand, there has
been little interest in the house, the buyer may be able to
purchase the house for less than the asking price. It boils down
to the basic laws of supply and demand. Your agent will be able
to provide you with market information and comparable guidance
to help in your decision.
Once the offer has been completed, your agent will present your
offer to the seller’s agent. The seller’s agent will in turn
present the offer to the owner of the property. In many cases,
counter offers are the norm. The seller has several options
available to him. The seller can accept, reject, or make a
counter offer. In any case, your agent will notify you when
there is a response from the seller. If the seller accepts your
offer, then the closing preparation will begin. If the seller
rejects your offer, you can extend another offer or simply move
on to another property on your list. If the seller makes a
counter offer, it is then up to you whether you accept it,
reject it, or make another counter offer. The negotiation often
takes place over a week to ten days, so you will want to stay in
touch with your agent during this timeframe.
The Closing Process: What to Expect
Terms and Conditions:
Your agent will draft a purchase contract that provides an
opportunity for you to hire your own experts to inspect the
structural, mechanical and environmental condition of the home.
A seller will usually want inspections completed as soon as
possible, so there will be a specific date when inspections are
to be completed. These inspections are for the buyer’s
informational purposes and do not obligate a seller to make
repairs or modifications to the property as a result of these
inspections. As a practical matter, the inspection report is
often used as leverage to negotiate major problems discovered
during the inspection process.
Seller’s Warranty:
In some contracts, the seller will warrant the condition of
specific components of the house such as the heating, air
conditioning, and the roof before the close of escrow. In other
contracts, the components of a home are not guaranteed and sold
‘as is.’
Home warranty plans have become popular with both buyers and
sellers in recent years. These plans are limited insurance
policies offered by sellers to cover major systems and
appliances should defects be found after the close. With new
homes, buyers are typically protected on workmanship for the
first year, mechanical problems for the first two years and
structural defects for up to 10 years. On existing homes, buyers
are usually covered for one year from closing on covered defects
or breakdowns. As with most insurance policies, there are
limitations on individual programs and different levels of
coverage, deductibles and costs.
Inspection & Appraisal:
Inspection:
A condition of many offers is a home inspection and appraisal.
Companies that specialize in home inspections will insure the
house is free of termites, that surveys determining boundaries
are accurate and that the structural, environmental and mechanical integrity is
sound. The inspector will visit the property and determine if
there are material physical defects that would require expensive
repairs or replacements to be undertaken over the next few
years. A typical inspection can take from two to three hours to
complete. Since this inspection is requested and paid for by the
buyer, the buyer may request to be present during the inspection
to ask questions and learn more about the property. As a
condition of the offer, if an inspection reveals significant
mechanical or structural problems, the buyer may rescind or
amend his/her offer to reflect those discoveries.
Appraisal:
An appraisal will be required by the lender to determine value
for property. Your agent or lender can offer you a list of
appraisers in your area. The appraiser will conduct a search of
comparable properties or use a cost plus evaluation to make a
judgment as to the current worth of the property.
Next a title search will need to be undertaken by an abstract
company to ensure the property has clear title. The inspection,
appraisal, and the title search must all be completed and
acceptable to the lender prior to closing.
Insurance Requirements:
Title insurance is purchased with a one-time fee at closing.
This policy protects owners in the event that title to the
property is found to be invalid at some future date. Coverage
protects both the mortgage amount and the value of the down
payment.
Homeowners' insurance provides fire, theft and liability
coverage. Homeowners' policies are required by lenders prior to
closing.
Flood insurance is generally required in high-risk flood-prone
such as the coastal regions. Flood insurance is issued by the
federal government and may be a requirement prior to escrow
closing. Your agent will let you know if the property you have
selected is within a flood-prone zone.
Closing:
Your real estate agent will provide you with the estimated
closing costs and the time and location prior to the day of
closing.
All closing papers including deeds, loan papers, and other
documents will be prepared by closing agents, title companies,
lenders and lawyers. This paperwork reflects the sale agreement
and allows the buyer and the seller to verify their interests
Closing is typically held at a title company or other office
setting where the title is transferred from the seller to the
buyer. The buyer receives keys to the property in exchange for
payment for the home. Your agent will be present throughout the
closing process should you have any questions or require
additional clarification.
Moving Day:
Congratulations! You’ve researched the market, identified your
home needs, located a funding source, selected a home, made and
offer, negotiated an agreement, ordered an inspection, requested
an appraisal, got the necessary insurance, and closed the
transaction. You are officially a home owner.
If you’re like most, even before the boxes are unpacked, you
will be eager to find the names and phone numbers of schools,
utilities, carpet cleaners, babysitters, housekeepers, yard
mowers, repair services, garbage collection, and pet groomers to
get your new home up and running.
At Salado Realty, we’ve made the process a bit easier for you.
We’ve collected many of the contacts you will need on the right
toolbar of our web site. If you don’t find what you need, simply
give us a call at 254-947-9700 or send us an
email, and we’ll be happy to help.
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