Real Estate Basics
Buying a home is one of the most important decision you will ever make as an adult. The process at times can be very stressful, confusing and a whole lot of overwhelming; but with a little knowledge of the basics of real estate coupled with an experienced Realtor your chances of having a smooth and successful real estate transaction go up drastically
Planning is Key
Having a plan set is key to making sure your transaction goes as smooth as possible this means gathering all your paperwork ahead of time such as your W2, past years income taxes etc. and having a clear idea of what your finances are. If you are planning on obtaining a mortgage for your home be prepared to be asked for paperwork from your lender, lawyer and even your realtor.
Planning will also get you to ask yourself the right questions such as:
“What area do I want to live in”
“Is there a certain community I would like to be in”
“What is my budget”
“What features are a must in my new home”
“What are somethings I can do without” (Ex. A pool)
“What is my TIME FRAME for finding a home”
Are your finances in order
It is important to give yourself a realistic goal when searching for a home. Homes and financing go hand in hand and knowing what you can and cannot afford is crucial. There’s no need to go viewing properties asking $500,000 when your budget might be $200,000. This will only discourage you when house hunting. Having a clear understanding on what your budget is will weed out a lot of properties that are not a good fit for you and give you a better understanding of the market.
Luckily for buyers there is a wide range of innovative loan programs available some that require a little amount of a down payment to be given, unfortunately these loans are not for everyone and there are certain requirements that do have to be meet such as:
- Good credit
- Credit cards are paid in a timely manner
- Car loans or other debts you may have are paid on time
This is where you will get a clear idea on what you can afford. According to the National Association of REALTORS (NAR) 9 out of 10 buyers will finance the purchase of their home. The idea in getting a loan is getting one that works for you, which means finding one with the lowest interest and terms.
What is a Pre-Approval Letter
A pre-approval letter simply means you have met with a loan officer and have gone over all the different financing options available to you based on your credit and income. They will then supply you with a letter stating your borrowing power. This becomes extremely important when you get ready to make offers on a home you are interested in because it demonstrates to the Seller your financial strength and ability to be able to go through with the sale.
Let the House Hunting begin!
Every single home available on the market is very unique there are no 2 properties alike even if they happen to be the same model in the same community on the same street. Each home will have it’s own contract terms, different financing options, inspection requirements and closing costs. It is important to keep in mind that no two real estate transactions are ever the same. There are thousands of homes available for sale at any given time on the market from condos, villas, single families and luxury properties the challenge comes is in finding the one that not only suits you and your family but is within your budget.
Understand that homes for sale are always fluctuating. It is actually nearly impossible to create a list of all the homes for sale in a particular area and have it be accurate. Within seconds that list can become irrelevant as new homes come on the market and the ones that where on there become sold or are under contract.
Having a clear idea on the features and benefits you would like in your home will give you the chance to act quickly when you find the perfect home. You’ll need to consider: location, lot size, property taxes, amenities, and square footage.
What happens when you realize all the features and benefits you thought you could get in a home are not in your price range? Then your next step is asking yourself what features are a must and the most important to you such as having a washer and dryer in the home or let’s say you would love a large master suite and are willing to give up having a bigger kitchen. Are you willing to have a longer commute to and from work in order to have a bigger house at a lower price? These are all important question you should have ironed out when looking at homes.
Making an Offer
You’ve found “The One” that one home you can see yourself living in. Now you are ready to put in an offer. The seller has established an asking price along with other terms. At this point you have two options.
- You can offer the seller the full asking price in a contract
- You can offer below what the seller’s asking price is with different terms. Which in turn the seller can either reject your offer or come back with a counter offer.
This is the most complex step in the buying process the negotiation between buyers and sellers. At this point having an experienced agent on your side becomes invaluable. As a real estate agent who has seen numerous homes for sale and one who has a clear understanding of not only the market but the community.
**In the real estate market supply and demand go hand in hand. For example if there are several buyers competing for a particular home the chances that the seller will get the full asking price or even above the sales price are very likely. If the demand on a certain home is low then offering below asking price will probably be in order.
Once the seller has accepted your offer on the home part of the terms include an inspection period which gives the buyers a chance to have a professional come to the home and inspect the structural aspect of the home such as if there are any physical defects that may not be noticeable and what kind of repair and expensive this may incur in order to get the home up to date. There are various inspections that can be done such as a termite inspection, the lender will require an appraisal on the property to determine the value of the home.
However there are homes that will be done with an “AS-IS” contract this simply means you will still be able to perform the inspections but the home will be sold “AS-IS” regardless of what the findings of the inspection may be.
There are various insurances association with the purchase of a home and here are some that you will see:
Title Insurance: This is a one-time fee paid at the time of closing which protects the owner of the property (The Buyer) in the event that the property is found invalid due to title issues.
Homeowners Insurance – Is required by the lender when the down payment is less than 20% of the sales price. In the event that you are paying cash for the home this is not something you would need to worry about.
Flood Insurance – This is required if the home is in a high-risk flood area.
The day of Closing has arrived!
On the day of closing the buyers will have one last opportunity to do a walk-through of the home to assure that nothing has changed since going into contract. Once that has been completed all the parties involved in the transaction will finalize their part of the transaction this usually takes place in an office setting typically at the title companies office selected by the buyer. All the necessary paperwork needed in order to record the loan and transfer the title from the seller to the buyer will take place and the buyer will receive the keys to their new home and the seller will receive payment for the home.
You’ve Done It!