A Brief Rundown:
- Speak to a mortgage lender and find out how much you can afford.
- Figure out what amenities are a ‘must have’ and which areas best suit you and your price point.
- Tour the homes.
- Make an offer.
- Negotiate price and terms.
- Open escrow.
- Inspect the property.
- Fund the loan.
- Close the deal and get your keys!
The Home Buying Process
Buying a home can be an exciting, but intimidating process. If you are a first-time homebuyer, terms like mortgage insurance, counter offer and escrow can be enough to make you reconsider the upside of renting. However, with a little preparation you can glide through the steps of buying a home with confidence.
Step 1: Get a REALTOR®
Buying and selling real estate is a complex matter. At first it might seem that by checking local picture books or online sites you could quickly find the right home at the right price.
In this maze of forms, financing, inspections, marketing, pricing and negotiating, it makes sense to work with professionals who know the beach community and much more. Powers Realty can help you find a home, negotiate a successful offer, and represent your interests throughout the real estate sales process.
Step 2: Get Loan Pre-approval
"Preapproval" means you have spoken with a loan officer, your credit files have been reviewed and the loan officer believes you can readily qualify for a given loan amount with one or more specific mortgage programs. Based on this information, the lender will provide a preapproval letter, which shows your borrowing power. You can visit as many lenders as you like and get several preapprovals, but keep in mind that each one carries with it a new credit check, which will show up on future credit reports.
Although not a final loan commitment, the preapproval letter can be shown to listing brokers when bidding on a home. It demonstrates your financial strength and shows that you have the ability to go through with a purchase.
Plus, you will know what you can afford and won’t waste time looking at homes that are above your price range!
Step 3: Look at Homes
A home is more than just a collection of bedrooms and bathrooms. Several properties -- each with four bedrooms, three baths, and the same price -- may well represent radically different designs, commuting distances, lot sizes, tax costs, interior dimensions, and exterior finishes.
It’s important to list the features and benefits you want in a home. Consider such things as pricing, location, size, amenities (extras such as a pool or extra-large kitchen) and design (one floor or two, traditional or modern, etc.).
Next, it's important to consider your priorities. If you can't get a home at your price with all the features you want, then what features are most important?
Lastly, consider your needs in several years. If you'll need a larger home, maybe now is the time to buy a bigger house rather than moving or expanding in the future.
Step 4: Choose a Home
No aspect of the home buying process is more complex and personal than negotiating between buyers and sellers. This is the point where the value of Powers Realty is clearly evident because we know the community, have seen thousands of homes for sale, knows local values and has spent years negotiating real estate transactions.
Step 5: Make an Offer
While much attention is spent on price, an offer to buy includes both the price and terms. In some cases, terms can represent thousands of dollars in additional value for buyers -- or additional costs. Terms are extremely important and should be carefully reviewed.
In practice, the offer depends on the basic laws of supply and demand: If many buyers are competing for homes, then sellers will likely get higher-price offers. If demand is weak, then offers below the asking price may be in order.
How do you make an offer? In a typical situation, you will complete an offer that Powers Realty will present to the owner and the owner's representative. The owner, in turn, may accept the offer, reject it or make a counter-offer.
Because counter-offers are common (any change in an offer can be considered a "counter-offer"), it's important for buyers to remain in close contact with Powers Realty during the negotiation process so that any proposed changes can be quickly reviewed.
It is customary to give an earnest money deposit of around 3% of the home’s price within a few days of the accepted offer. You will get this reimbursed if the home inspection or another contingency fails, or will go towards your down payment when closing.
Step 7: Escrow
Escrow, in short, makes sure that everyone does what they say they will do in order to close the transaction.
Typically, the escrow officer at the escrow company will provide a Buyer's Estimated Closing Statement. The Estimated Closing Cost Statement will itemize your costs and credits and estimate the total monies due.
Step 8: Inspections
Powers Realty can recommend a home inspector that we trust or you can find an accredited and qualified inspector yourself. The home inspection will look at all facets of the home. You can hire additional in-depth inspections for such things as the roof, sewer lines, fireplace, foundation, plumbing, and electric.
*Contingency Period - The contingency period allows you time in contract to collect more information without forfeiting your deposit. The time frame ranges from between 10 to 18 calendar days and is typical in most purchase contracts. During this period, Powers Realty will help you:
- Review and approve the Seller's Real Estate Transfer Disclosure Statement
- Review and approve the Preliminary Title Report
- Contract for physical inspections
- Order, review, and approve requested or required inspections
Step 9: Insurance
Before you will be allowed to close the loan and officially take ownership of your new home, you will have to buy homeowner's insurance. A typical home insurance policy protects against theft, fire and liability, and earthquake damage. If you do not already have an insurance provider, Powers Realty or the lender can refer you to local agents.
Step 10: Closing
The closing process is increasingly computerized and automated. In many cases, buyers and sellers don't need to attend a specific event; signed paperwork can be sent to the closing agent via overnight delivery.
Before closing, buyers typically have a final opportunity to walk through the property to assure that its condition has not materially changed since the purchase agreement was signed.
Buyers will get the title to the property, lenders have their loans recorded in the public records and state governments collect their transfer taxes. The seller receives their funds and the keys are handed over to the buyer!
Call Powers Realty at (310) 944-5313