Before we begin looking at homes you will need to be prequalified for a mortgage. It is important to know how much you are qualified for and what type of loan you will be utilizing. This information is important to know and is part of any offer we make. I have several qualified and competitive lenders I can recommend or you may choose any you are comfortable with.
Property Search and Showings
Once we know how much you have been pre-approved for, we can determine the budget, criteria, and the towns you want to search in. I will set up a search with your criteria and email a list of properties that meet your requirements. I will also at that time, set up a client portal that will notify you via email immediately of any homes that meet your criteria as they become available on the market.
Once you have identified properties that you would like to see, I recommend an initial drive by to get a feel for the area and/or any detractors that would make further interest in the property unlikely. We will schedule showings on any properties you still have interest in seeing. Many showings require 24 hours notice, so we would schedule accordingly.
A property disclosure is a 4 page document that is typically provided by the seller with answers to commonly asked questions about the property. This document is usually available at the time of showing. We will review these as we look at the properties. The exception would be if a property is bank owned or part of a trust and limited information is available.
It is good to know what type of property we are looking at as we search for that right home. There are mainly three types: The first is a regular conventional sale. The others are:
A short sale means the owners owe more money on the home than it is likely to sell for. Some of these homes are abandoned but most are still occupied. The sellers are working with the bank to sell the property before foreclosure. An offer on a short sale requires seller and bank approval and can be a much longer transaction. While some banks are quicker than others, you should be aware that this process can sometimes take months to complete.
These are properties that were taken over by a bank due to long term default. These properties are mostly vacant and often distressed and will require repair work, which can be substantial. Frequently, the electricity, heat and water are all turned off. A purchase of foreclosed property can be a bit more tricky than a regular property and typically they are sold “as-is.” Therefore, inspections are done for your own knowledge, and frequently, banks will not agree to repair anything revealed in a home inspection.
Many foreclosed properties are purchased with cash or a 203k rehab loan. Since many of these homes have issues that will preclude the use of conventional financing and thus limit potential buyers, you may get a good deal. However, you will need to weigh the extra costs of repairs, inspections and appraisals. If you find you are interested in purchasing a foreclosed home, we can discuss these issues further at that time to make a decision you are comfortable with.
Making An Offer/Negotiations
Once you choose a property, we will discuss the price and terms together and present a written offer to purchase to the agent representing the seller. We will need the pre-approval letter from your lender or proof of funds (if paying cash) and a personal check for your earnest money deposit to submit along with the offer. The seller may may accept the offer, counter the offer or reject the offer. During the period of negotiations, we will go back and forth verbally until both parties agree on a price, and we will amend the contract to reflect the changes. Once all parties agree to the revisions and sign, it is considered a fully executed contract and we move onto the inspection process. Typically, it will take approximately six weeks to close on a property, depending on financing and other contingencies.
The deposit check is made out to and given to the real estate company that represents the seller, the listing company. The funds are held in the company escrow account until the date of the closing, when it will be given to the seller at the closing.
Once we have a fully executed contract, you will typically have 14 days to perform any home inspections that are part of the contract, we can recommend an approved inspector(s) or you can hire any other inspector that you feel comfortable with. All inspections are paid for by the buyer with the exception of septic pumping, which is paid for by the seller. The home inspection may take 2-4 hours, if more than one type of inspection is being done, it is recommended to have them scheduled at the same time for efficiency and the convenience of all parties. Once the inspections are complete and we have the report, we will talk and decide if there are repairs we want the sellers to address. This request is made in writing and like the original contract, the sellers may accept, counter or reject your request. Bear in mind, that repair requests should be based on issues of safe, sound and sanitary condition, not cosmetics. Once repairs, if any, are agreed upon we move onto the commitment and closing.
Every home that has a mortgage will need an appraisal performed on the property by an appraiser chosen by the lender. The purpose of the appraisal is for the bank to be sure the property has a value equal to what they are lending on it. An appraisal is done prior to receiving your mortgage commitment and is an expense of the buyer.
We cannot close without a mortgage commitment. The lender issues the commitment to fund your mortgage once you have made your application and supplied to the lender all the requested documents that they have asked for. Once the review process and appraisal are complete the lender will issue a commitment in writing. If you receive a conditional commitment, it means you have outstanding issues to address before the lender will close the loan with you. The lender will fully apprise you of what is outstanding at that time.
Once we have a firm closing date, meaning the attorneys have scheduled the closing for a specific date and time, you will need to call and switch all of the utilities into your name effective on the closing date. If the house is heated with oil, there will be an adjustment made at closing to compensate the sellers for the oil left in the tank.
Before you close on your house we will schedule a walk through inspection to be sure that all personal property is removed and it is broom swept clean. This inspection will take place right before the closing.
Finally, your lender will issue a “clear to close” and the attorneys will schedule the closing date. If there are funds that need to be brought to the closing, that amount will be provided to you by your attorney with instructions of who it should be payable to. This check must be a bank check. The day of the closing we will meet at the attorneys office to sign the papers. This should take about an hour. Please remember to bring your driver’s license with you to closing. Once all the papers are signed you will receive the keys to your new home!