In spite of me always trying my best to explain the buying process to my buyers, I get questions that let me know just how short I have fallen in my explaining! I want my buyers to always have an understanding of what we are doing, and where we are in the process when buying a home.
You know, sort of like knowing that you're going from point A to pint B, and that along the way you will be changing freeways four times, crossing two bridges, and you will be on the road 1 1/5 hrs and will travel 95 miles! There will still be traffic lights and stop sighs along the way, but you have the overall idea of where you'll be and when. Not just that you're going to get in the car and take a trip to place you've never been to, period!
This article is especially written with First Time Buyers in mind. Now that I practice Real Estate I realize that I had no idea of what was going on in a transaction when purchase real estate before I became an agent! None!! I mostly just scanned over the contract telling myself that I would take the time, later, to read it "carefully"!
Here is the BIG PICTURE and some key details of what to expect. Also keep in mind that every transaction is different and things may happen differently in your transaction due to the uniqueness of your circumstances.
A Real Estate purchase transaction has phases, or steps if you will, and timelines as to WHEN they must be completed. But let's look at it from an overall big picture prospective.
FIND A HOUSE YOU LIKE. Okay, that goes without saying!! Okay, and EVEN before you find a house you would have met with a lender or loan broker to be pre-approved for a loan. This way you know how much you can buy. You would not want to waste your time seeing homes you could not afford, right?? Right! This house of course would be in an area you like. Always check out the neighborhood to make sure you like it and that you will feel safe and comfortable living there before you waste your time and maybe even the opportunity to put an offer on a better house and area.
MAKE THE OFFER. The offer will be based in part by how much you like the house and on comps of other similar homes that have sold in the area.
ORDER INSPECTIONS. This is done by your agent, not by you personally, to get an independent and professional opinion of the condition of the house in order to really know IF you are going to BUY the house. Inspections should include an Natural Hazards Disclosure Report, in most cases paid for by the seller. This report will tell you of possible surrounding hazards affecting the property, including things such as fire hazards, flooding, earthquakes. Other inspections may be roof, pool, chimney, home, termite, ect. Once you receive a copy of the inspection reports you will have to decide if you still want to house. So, read the reports carefully so you can make an informed decision!
APPRAISAL - this is required by the lender, and ordered by the person that is getting you the loan.
ESCROW - in short is the process by which a 3rd party, Escrow or Title Company, opens escrow ONCE you are in contract. They make sure all parties meet all conditions of the contract before property and money change hands. They impartially carry out the written instructions given by the principals.
FEES are all the associated fees related to the purchase. You should ask for an ESTIMATED BUYER'S CLOSING COSTS to give you an idea of that the fees will be. You can always estimate your closing costs to be about 3% of the purchase price. These fees will include fees associated with your loan, appraisal, inspections, transfer taxes, home owner's insurance, escrow fees, interest paid in advance, title insurance, and escrow company fees, ect.
THE PURCHASE CONTRACT - which contains the provision noted above.
Read your contract a couple of times and you will get a good sense of what to expect and you will feel much better about the transaction process. It contains the TERMS of the agreement, such as purchase PRICE, how fast you will close escrow, in most cases 30 days, how long you will take to do your inspections and get your loan, what type of loan you're getting. The contract is the document that escrow will use to carry out a successful completion of escrow. If changes in terms occur during the transaction Addendums can be added if agreed to by both parties.
The contract also states what happens if things are not done in a timely manner. The contract gives a buyer a certain amount of time, either by default or by adding it in, to perform inspections, get your loan, sell a current house, or whatever the case may be.
If you are not able to perform a particular item within the specified amount given, you can either ask for an extension or cancel the contract if do not foresee being able to perform. Once you perform your inspections and such, the seller's agent will ask you (through your agent) to remove your contingencies - meaning that you are now satisfied with that aspect of the purchase and will not cancel the contract based on any of those conditions without losing your deposit.
Each item in the contract is clearly numbered. So say you are having difficulties getting your loan approved. You'd go right to the item in the contract that contains your loan contingency and you will know what options you have.
Close of Escrow happens when all instructions in the contract have been carried out by the parties. Once escrow, AND THE LENDER, have received all requirements, escrow or your agent will let you know how much money you will need at closing when signing your documents.
Once your documents have been signed and reviewed by the lender, the lender will fund the loan (sends escrow the funds), and the property normally records the next day in the County where it is located.
Upon recording you are the owner and get keys!
If you have ANY questions regarding this article or to begin your Dream Home Search with me, contact me at once! Addie@SellingBH.com * 209-277-8346.
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