Buying a home can be a delightful yet stressful situation. However, the first-time home buyer has the fear of the unknown. You may have questions about how the whole process works? How do you make an offer? What happens if it is accepted, countered or rejected? Do you have to pay an agent? What sort of expenses can you expect to incur?
You may have started your search on the Internet. 80% of home buyers start their search on the internet. Once you contact an agent to discuss looking for home, they will should speak with you about two things:
- In Missouri they are required to provide you with the Missouri Brokers Disclosure Form. This provides you with information on what capacity each agent works so you have an understanding of who is working for who and what agents can and can not do.
- They will ask you if you have been pre-qualified or how much house you can afford.
This is not a question so that the agent can sell you the maximum house you can afford. It is a question geared to be able to narrow down your search and get you in a home soon. If you have not been to the bank yet, ask your Realtor for suggestions. Realtors tend to stay in touch with those in the finance community and can give you great referrals to great financing options for you. In addition, you want to know what sort of payment you are comfortable with making each month. Again, just because you qualify for a certain amount, doesn't mean that is how much you want to spend. Imagine, finding the home of your dreams, only to find out you can qualify for the loan. You are likely extremely disappointed, depressed and feel you won't find anything else. So get qualified first.
Once you are qualified, and know how much you want to spend sit down with your Agent. Most likely they will ask you to sign a Buyer's Agency agreement. This means you are asking them to work for you in the process. In the State of Missouri, the seller typically pays the buyer's agent a commission, so in most cases you will not be paying for the Buyer's agent to actually work for you. The exception to that is if you happen to find a for sale buy owner home and want your agent to help you with the deal. You agent can try to get the seller to pay some or all of their commission but if the seller won't you need to be prepared to pay the Buyers Agnet. Next your Agent will want to discuss your wants and needs for a home. Focus on items you absolutely must have and those you would like to have. This will help all of you be able to focus your search on the homes that best met your needs.
So now you've found the home you'd like to make an offer on. So what happens. You sit down with the agent and write out a contract. The agent will then present the offer to the listing agent. One thing I find most with first time home buyers is they are not prepared to put down earnest money on the spot. You need to be prepared with your checkbook to write an earnest money check when you write the offer. The amount of earnest money needed varies based on the amount of the offer, but plan on at least 1% of the offer-price. Your check will be deposited once the offer is "finalized". That amount will be applied to your purchase at closing. If the deal falls though on inspections or some other contingency you are normally entitled to your money back.
So your Agent presents the offer to the Listing Agent Now What? The seller will either accept your offer and you are off and running to other things that have to be done. The seller may flat out reject the offer, at this point you can walk away or make another offer. The seller may counter offer. Meaning, they reject your offer, but they will make a deal with you for some different terms. Typically a seller will counter with items such as sale price, closing date or changing some of the dates in the contract.
There are several dates stated in a contract.
The dates listed here are what is standard in the State of Missouri. Normally you have 15 days to obtain financing approval. (Tip: arrange for the home owners insurance during this time period, the cost of that can make or break some financing deals)
There are 20 days to obtain title and review it
There are 10 days to do inspections -- Your agent can give you a list of inspectors to contact and go over with you the types of inspections you may want based on the home you choose. Most home buyers do at least a pest inspection and a home inspection. Pest inspections run about $60.00. A home inspection is based on the size of the home but generally will run between $300-500. Some buyers like to have a radon and mold inspection. If the home has a septic system then a septic inspection may be desired. Depending on the inspector, they may want you to pay at time of inspection or may collect the money at closing. The home inspector will look all over the house, check outlets, lights, appliances, attic, air conditioning, check for gas leaks, bathrooms, plumbing issues, etc. You will then receive a report with anything the inspector finds. You can do one of three things when you get the inspection back.
- You can walk away from the deal
- You can accept the home as is.
- You can submit an inspection notice and request the seller to fix certain items prior to closing.
The seller can do one of 3 things:
- Refuse to fix any of the issues stipulated - You then have the option of taking the home as is or walking away from the deal.
- Agree to fix everything
- Agree to fix just certain items - You then have the option of agreeing to that or walking away from the deal.
There are other items during the process that may be specific to your needs but the financing and inspection contingencies are certainly the most common you will find. Once you are though all the time periods, you are just waiting for closing. A few days or hours before closing you will do a final walk thru on the home you have selected. This is for the purpose of making sure everything the seller said they would fix has been done and there are not any other major items that have changed since the contract was written.
Closing Day!
Closings typically take about 1 hour. There are tons and tons of papers to sign! Many times at closing you may meet the seller face to face for the first time, the sellers agent will be there, the title company representative, you, your agent and your lender.
After closing: MOVE IN! Get to know your Neighbors. Make the House yours.
Most of all ENJOY!!
April Ferrao
Broker
Re/Max Boone Realty
573-356-3148
573-424-2512
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