The Ultimate Guide To Purchasing A Home For First Time Buyers

A time comes when you grow weary of paying rent year after year and you’re now ready to take the bold step of owning your own home. You may, however, have no clue whatsoever where to start in this whole process. Investing in real estate through buying a home is no small deal and it’s relatively easy to lose your hard earned money if you make an uninformed move.

First time home buyers have a huge challenge on how to go about this process. The fear of getting it wrong makes some to shy away. Not to worry. Here is an insightful step-by-step guide that can aid you in purchasing the much-desired home you’ve always dreamt of:

1. Carefully Analyse Your Need To Buy A Home

Is owning a home a priority for you? Is renting a better choice for you than buying? Is your drive to buy a home solid and backed up with real facts or is it just a wild desire within you that’s not well calculated and properly analyzed? Is this the right time to make this bold purchase decision? Are there changes you will need to make once you’ve bought the home such as shifting locations and will they affect you?

Considering all these factors and listing out your priorities and how they will be affected by purchasing a home is the first hurdle to jump before making any other move. Buying a house isn’t like making any other purchase, it has a lot to it and calls for a lot of factors to be put into consideration.

2. Source Out A Real Estate Buyer Agent To Assist You In The Process

Once you’ve analyzed your need to purchase a home, the next important thing is to source out a buyer agent. Professional guidance is practically one of the most important things you should have in your home purchase pursuit.

Agents have a better understanding of all the home listings available. You can search for licensed agents online through their websites, customer reviews, publications such as magazines, newspapers, and blogs, recommendations from friends, among many other credible sources.

Source out an agent who will represent you in a trustworthy manner, who is mindful of your best interests, who has a good understanding of the area in which you are interested in purchasing a home, and who sets the offer on the table to sign a buyer broker agreement. The more skilled and well experienced the agent is, the better it is for you.

3. With The Help Of Your Agent, Find Homes That Are Available For Sale

Time to add some meat to the bones by checking the available homes on sale in the market. With the aid of your agent, source out homes that are on sale. Consider each home available in the market whether they be foreclosures, Real Estate Owned (REOs), overpriced homes that have longer days on market, short sales, and fixed uppers.

Do a tour of as many homes as you possibly can and get a feel of the interiors and exteriors. Narrow down your search to the homes that conform to your specifications. Get MLS print-outs from your agent of similar sales within the area. Rate the homes as you view them to help you settle on the final best options.

4. Align Your Finances To Your Purchase Need

Find out the loan programs available by consulting with your agent for the best lender referrals with the highest performance. Find the best sources of mortgage and do a comparison of the fees and rates. Work with the best mortgage broker who has proper communication and is able to meet your expected closing date. Work with the best loan offer that suits you.

Select a loan program with FHA Loans if they are available in your state since they come with competitive interest rates, have low down-payment requirements, and permit home sellers to pay closing costs. Once this is done, acquire a pre-approval letter as evidence to the seller that you’ve been pre-approved to get a loan. This gives you an advantage when negotiating an offer.

Establish a down payment guided by the loan program you selected. The higher it is, the lower the monthly mortgage payments you will make.

5. Make A Smart Offer

Considering already sold homes is a good anchor point to use to make price offers to sellers. Determine whether the market is a seller market where demand for homes is more than supply where sellers have more advantage in price negotiation, or it’s a buyer market which is the opposite. Make the best offer that is reasonable and competitive.

6. Negotiate The Seller’s Counter Offers

Sellers are more likely to make counter offers once you’ve made your offer. Negotiate well with the seller, sticking to the best terms until you come to an agreed price.

7. Time For An Earnest Money Deposit And To Setup Contingencies

Once you agree on the price with the seller, making an earnest money deposit is the next step. This shows your commitment to the transaction process. Deposit the money check with the right party but limit it from being payable to the seller. Have contingencies that guarantee money back in case you cancel the contract.

8. Setup An Escrow

Have an escrow officer prepare escrow instructions. He/she will process transactions which include collection, preparation, and recording of documents, acquiring signatures, and distributing funds.

9. Get An Assessment/ Appraisal

Lenders order for appraisals to ensure that the home value is equivalent to your pay offer.

10. Request For A Homeowner’s Insurance Policy

Do this early enough to get the insurance on time. Some insurance companies don’t insure certain homes such as old houses or those in risky locations. Previous homeowner claims can make it hard to get insurance. You can get a replacement coverage which can do a rebuild if the home is destroyed.

11. Carry Out Inspections

Contract the services of a professional inspector to carry out sewer, pest, chimney, and any other major inspection needed. You can cancel the contract if you discover defects that are unbearable to you.

12. Take Out The Contingencies

Once the loan has been confirmed and the appraisal has been approved, you can remove the contingency under the contract terms and obligations. Failure to do so can result in the seller issuing a Notice to Perform and canceling the contract.

13. Conduct A final Evaluation

This is to ensure the house is in the best condition even after removing of any furniture that was in it. Ensure there are no floor damages, pipe leaks, or other issues. In the event of those, have them addressed before closing the deal.

14. Sign The Loan And Escrow Official Documentation

These documents are large, almost 100 pages. Read them through and sign them as required. This can take you typically up to an hour’s time to do.

15. Deposit The Pending Down Payment

You can now make a deposit of the pending down payment along with the closing costs. You need a certified check that can be paid to escrow.

16. Close Escrow

Once the Recorder’s Office sends a confirmation to the title company that documents are now on record, escrow can then be closed. Your Deed of Trust, Seller Reconveyance, and Property Deed will now appear in public records. The original deed will be mailed later to you.

Once your transaction has been recorded, the title company will send a notice to your agent who will then notify you. Once the recording is fully done, the property now belongs to you.

And there you have it, a detailed step-by-step guide to buying home. If you are a first time home buyer, no need to be afraid or shy away. Follow these steps and you’ll be a happy homeowner in no time. Get home safely!!!

Categories: First Home Buyers

Common Interview Questions To Ask A Real Estate Agent Before Signing A Work Contract

There are numerous real estate agents out there waiting for their next big break to come through. Each of them is anticipating on doing a successful job, make the client happy, and most importantly, make some good money out of it. That’s the whole essence of it. For you as a customer, it is vital to interview a few selected agent before deciding on who to hire.

As you size each of these agents in an interview to see if they are a right fit for you, it’s important for you to know that they also are interviewing you directly or indirectly.  They too are quite selective on the kind of clients they want to work with

When conducting the first interview, you can do it either through a phone call or in a formal setting such as the agent’s office. Some agents will not be comfortable with the idea of being interviewed. Other top agents with a great reputation in the market may not be welcoming to the idea of filling out surveys. It is important that you scale down the questions you ask to cover the most important issues.

With this in mind, let’s take a look at a few questions that you can use to interview potential realty agents:

How Long Have You Been A Realty Agent?

This question is meant to determine whether the agents have proper training and whether they have mentors who they subscribe to for guidance. New agents with no experience are more likely to be focused on what they will deliver to you as a client while agents who’ve been there long enough will describe their learning process over the years while working with other clients.

The more tasks a realty agent has been able to successfully complete within the period of time that he’s been in the industry uniquely distinguishes each agent from the other. The more the work done, the more the skills and competence gained during the process.

Which Marketing Strategy Will You Employ In Order To Meet My Need?

As you ask this question, your aim is to bring the agent inside the parameters of your need and begin focusing on what the agent will do for you in meeting that specific need that you have.

If you are a buyer, you will be interested in knowing how the agent will do a search for the home, how many homes the agent will show you before you find the ultimate house to purchase, if there are other buyers you will be competing against, how he will deal with multiple offers, and whether he himself will present offers.

If you are a seller, you will want to know the specific time period it will take to sell your home, if direct mail campaign will be a proper strategy to use, how advertising will be done, the photography services that will be on offer, and whether marketing will be done online.

Can You Describe Your Average List Price To Sales Price Ratio?

It’s important to understand that the average ratio that the agent uses is highly dependent on the market. A competent buyer’s agent should possess the ability to make a good bargain for a sales price that is below the list price. A potential listing agent should have the ability and skill to negotiate sales prices with a very narrow margin from list prices.

Buyer agent ratios should be below 99% while listing agent ratios should be very close to 100%. There are instances where market value cannot determine the asking price. In such a scenario, ratios don’t matter.

What Are Your Charges For Your Services?

Realty agents have their charges based on percentages, ranging from 1-4% in representation of a single side of transaction, either the buyer or the seller. A listing agent can charge 3.9% for himself and an extra 3.9% for a buyer’s agent for a 7.8% total. Top agents are more likely to have higher charges.

It is important to get clear quotes regarding charges to aid you to make a comparison of the agents you’ll have interviewed and select the best.

What Sets You Apart From Your Competitors?

A potential agent will have an immediate answer for you in response to this question. While each agent has a set of standards which he subscribes to, the response that you should expect for this question is: A brilliant negotiator, assertive, possess good analytical skills, friendly and welcoming, excellent communicator easily accessible via phone or email, honest and ethical.

Such qualities go a long way to define a person and paint a picture of how they will be like as you work with them.

What Assurance Can I Get From You When We Sign A Work Contract?

After signing a buying or listing agreement, you may realize that your expectations are not being met in the agreement. In such a scenario, will the agent agree to the canceling of the agreement? Is there a policy that the agent follows regarding the canceling of agreements? Has there been a previous situation where an agreement he had was canceled? How did he handle that?

Responses to this questions will paint a picture of how smooth or rough the transition will be in case the agreed working terms and agreed business don’t go as planned.

Can You Provide References?

Every agent has references for work done in the past for previous clients. Request the agent to provide you with references, find out whether any of the people acting as a reference have any relation with the agent, and inquire whether you can contact the references and ask a few questions regarding their work experience with the agent.

If the agent has numerous reviews online, you can skip this part of calling references to get confirmations regarding the agent’s performance.

Can I Go Through The Documents That I Am To Sign In Advance Before I Sign Them?

A potential realty agent displays professionalism by availing forms early enough to the client to review and understand before appending their signature. As a buyer, you can request in advance for documents such as Purchase Agreement, Agency Disclosures, Buyer Disclosures, and Buyer Broker Agreement.

As a seller, you can request for Seller Disclosures, Listing Agreement, and Agency Disclosure.

Can You Assist Me In Finding Other Professionals?

The real estate agent should be able to relay to you the network of professionals he works with and offer you a list of trusted vendors such as home inspectors, mortgage brokers, and title companies.

An agent willing to give you referrals to other professionals is a good person to work with.

Are There Any Extra Important Details That I’ve Left Out?

The realty agent will be prompt to inform you of any additional information you may not be aware of. The agent should be able to counsel and guide you appropriately and ensure that you are comfortable with working with him.

With this questions at hand, you can be able to get the views of different agents and have a broad understanding of each of them and how they function. You will then be able to make a well-informed decision based on the feedback you get from these interviews.

Categories: Real Estate Agents