The Real Estate Process for Residential Buyers
Buying a home seems like a simple enough task, but often it proves to be anything but. It can be an overwhelming and emotionally draining experience. Understanding the real estate process can help ease the stress and provide for a more rewarding transaction. Follow the outline below and before you know it, you'll be unpacking in your new home!
1) Find a Licensed REALTORâ - Many people try to navigate the real estate buying process on their own; however, there is no substitute for a good, experienced real estate professional to make sure you find the property that best meets your needs at the best possible price.
2) Schedule a Sit-Down with the Lender - If the property purchased is to be mortgaged, the sooner you know how much money is available for use in the transaction, the better. Obtain a pre-approval letter from the lender to include with any offer you make.
3) Secure an Attorney - Delaware is an "attorney state," so all real estate transactions must be carried out through a Delaware licensed lawyer. An attorney may be chosen now or once a property has been chosen, but if you decide upon a lawyer early on, you have someone to approach with your legal questions. Real estate agents are not legally or ethically permitted to dispense legal advice.
4) Review Properties - Study the listing facts sheets sent by your REALTORâ. Do your own research online through websites such as www.remax.com, www.debbiereed.com and www.realtor.com as well, and tell your agent which listings you like and why. Also, if you would like to visit new developments, inform your agent, and if you happen to "drop in" to a model home or public open house, tell the sales representative there you are working with an agent. If you'd like to see a FSBO (For Sale By Owner), ask your agent to schedule a showing for you.
5) Tour Properties with your REALTORâ - Now the real fun begins! If possible, go on tour to see the homes you most like with your REALTORâ. Take plenty of notes to help keep the various properties straight, even after you've toured five or ten or more of them. Give the homes labels that will bring the place back in focus days later, such as "Purple Shag," "Beautiful Bay Views," or "Funky Smell." Make notes on both the positive and negative elements of each place. Taking photos with a digital camera is another good idea.
6) Narrow Down the Possibilities - Feel free to ask to see a home more than once. Also, don't hesitate to ask your agent to give you time to think about the choices before you make a final decision. Ask your agent for comps, listing histories and days on market for the homes that top your list and use this information to make an informed choice.
7) Choose a Home and Make an Offer! - Your agent will complete an Agreement of Sale which contains information such as the price you are offering for the property, the amount of deposit to accompany the contract, any additional deposits to be collected upon acceptance of the contract, financial information regarding down payment and loan amount, settlement date, and dates related to contingencies. In this electronic age, offers can be made long distance through email, FAX or overnight delivery.
8) The Next Step - Once signed, the Buyer's agent presents the offer, with the deposit check (or a photocopy of it if the buyer is out of town and mailing the check), to the listing agent, who will then present it to the Seller. At this point, the Seller has three choices:
a) Accept the offer as it stands, in which case he or she signs the contract and it is "ratified," or legal.
b) Make a counter-offer, in which case he or she will probably cross out the points which are disagreeable (such as settlement date or price), write in the terms the Seller would like to see, initial these points, sign the contract and, through the agents, return it to the Buyers. In this scenario, the Buyers can then decide to accept the counter-offer, counter back with something else or walk away from the deal.
c) Simply reject the offer with no counter. Now it is the Buyers' choice to find something else or write a completely new offer.
9) Once the Contract is Ratified - OK, so let's say you have a ratified contract. Take a deep breath, drink a glass of champagne and be ready to hit the ground running because now the real work begins. Inspections, an appraisal and a survey need to be scheduled, financing needs to be secured, and all the ducks need to line up in their little row to insure a smooth and successful settlement. Fortunately, you have been wise enough to use the services of a professional REALTORâ, who will help you choreograph your duckies.
10) Submit Deposits - If any additional deposit monies are due, be sure to send a check to your agent within the time parameters designated in your contract.
11) Secure Financing - Apply for a loan and obtain a letter of commitment from your lender. Also, find out what inspections, appraisals, insurance, etc., your lender requires. Inform your lender of the deadline dates in your contract.
12) Schedule a Home Inspection - Some lenders require an inspection conducted by a certified home inspector. Unless the home being purchased is to be torn down and replaced, home inspections are a good idea for anyone purchasing a house. Not all property defects are obvious to the untrained eye. When working with home inspection (or any) contingencies, make certain that the dates specified in the contract are honored. The Buyer gives up his or her right to expect satisfaction at the Seller's expense if the dates are not either honored or revised through an addendum to the contract. This is the meaning of "time is of the essence."
Home inspection contingencies vary, so be sure you understand your contract and how the contingency works before signing! Usually, if a major defect is found, the Buyer has so many days (spelled out in the contract) to let the Seller know IN WRITING what the Buyer expects the Seller to repair. Then, the Seller may choose to:
a) Repair the damage at Seller's cost;
b) Supply a monetary credit to be applied at settlement;
c) Offer the house "as is," giving the Buyer the choice to make the repair at the Buyer's expense or walk away from the deal.
13) Schedule a Septic Inspection - If the property to be purchased has a septic system, have it inspected.
14) Schedule a Well Inspection - Same goes for a well.
15) Schedule a Survey - Most lenders require that either a recent survey of the property be on file, or a new survey be conducted in order to receive a mortgage.
16) Schedule an Appraisal - Mortgage companies and banks also require an independent appraisal be made of the property. If the Buyers have offered more for the property than it is worth for its market, the home will not "appraise," and they will not be able to get the mortgage.
17) Schedule a Radon Inspection - In some areas of the country, a radon inspection is required by lenders as well.
18) Schedule a Pest Inspection - A termite inspection contingency is included in every standard Delaware contract. The termite inspection should be conducted no more than three weeks before closing, to prevent the little buggars from moving in and wreaking havoc between the inspection and settlement dates.
19) Secure Insurance - Call or meet with an insurance agent and get homeowner's insurance lined up for your new home. Be sure to find out if flood insurance is required.
20) Call the Utility Companies and give them your information so service can be transferred to you the day of settlement.
A full service REALTORâ or real estate sales team will be happy to help in lining up the appointments needed for you, provide access to the property to service providers when necessary and manage many of the other details for you. The Debbie Reed Team of RE/MAX Realty Group takes pride in the high level of service it provides to its clients and would be pleased to help you in the acquisition of your dream home at the beach.
The information in this article is general in nature. Each real estate transaction is unique, and the above might not cover your exact scenario. Be sure to consult with a licensed professional real estate agent.