The process of buying a new property should start with planning. Buyer’s need to first think of exactly what they want to achieve. Is this a starter home, or a long term residence ? What size and style best fits their needs. What type of neighborhood are they seeking ? Is there a question of schools ? Are there any special needs with the house ( physical, cultural issues) ? Planning means first doing a careful analysis of what that new property is to provide.
Closely associated with planning is the financial issue. What can the buyer actually afford ? It is important that this be conservative, and not based on “if I can get this ….” type of thinking. The buyer needs to say, “Based on what I earn now, and my normal job growth over the next few years, what can I realistically pay out each month to buy, and maintain, a new home”?
With this knowledge at hand, it’s now time to see what is available. 85% of all homebuyers start their search online. That certainly makes it possible to view a lot of properties and consider many of them. It is important to realize that what is shown online is the result of some enhanced marketing. Pictures make rooms appear larger than they are, and sometimes in better condition. Descriptions always play up the positive features of a home, and ignore problems. Cropping of shots may make lots appear far more spacious than what is revealed upon a visit. Computer generated estimates of value may be quite misleading. If all the houses in the neighborhood show estimated values of $500,000 and the one for sale is asking $600,000, it would appear possibly overpriced. In fact, those other estimates may be way under market.
The process gets into full gear when you start working with a realtor. After discussing the first three activities, above, the agent will likely research, and select, several properties for you to view. You will likely find these are much closer to what you want than what you saw online. This is because the agent knows what the homes actually look like, and if they meet your stated needs. The search continues until you find an appealing property that does what you want. Then your agent can submit an offer on your behalf, negotiation takes place, and hopefully an agreement is reached.
Once the contracts are signed, the transaction enters Escrow. During this time, the buyer must get final approval on their financing. There will be numerous documents to read, and sign. Among them are disclosures of things that are known about the property. Study these carefully. The seller will also get a termite inspection, and this may lead to treatment and repairs on the structure.
It is vital that the buyer obtain an independent inspection of the property. This usually takes several hours, and the inspector will present a comprehensive report of all findings with photos highlighting areas of concern. Read the inspection carefully. The buyer can request repairs be made. The seller can do them, or say no. If they decline to fix the areas of concern, the buyer can exercise a contingency clause and back out of the purchase. Some things are quite minor and the buyer may elect to overlook them. Major problems should always ge addressed before a purchase is complete.
Once all of the contingencies ( inspections, disclosures, repairs, financing ) have been met, the lender will place the money in Escrow, the title to the property is transferred, all proceeds are used to pay off relevant parties ( other lenders, bills due, and the seller ), and the new owners receive the keys and move in.
There are many forms and documents in the process, lots of safeguards, and many decisions along the way. The buyer’s agent works on their behalf to help them understand the steps, process, and cautions.
If you are considering buying a house, and would like to discussion “frustration free” services, give Tim a call today at 949 589-3186.