Buying a home is not merely an effort that you undertake with your Realtor. The necessary people that will make up a "team" required to close all residential real estate transactions are:
- You
- Your Realtor
- The seller
- The seller's Realtor
- Lender
- Closing agent
- Inspector
- Appraiser
- Insurance company
Your Realtor should have many years of experience. They not only have to know their job inside and out, they have to know the details of everyone's job listed above. Your Realtor is responsible for monitoring all these people and their progress on your file. So you can appreciate how important it is to hire an experienced Realtor in order for you to have a problem-free transaction. The more experience your agent has, the higher the odds are that all the details are being attended to assuring that your purchase will go smoothly.
The following is a general guideline/checklist that will get you through your next real estate purchase:
_____ Locate a Realtor to work with and discuss your wants and needs. Have them give you a sales contract package so you can start to look over the paperwork you will be signing later. When received in advance, you have ample time to look it all over and "digest" it. Questions can be answered ahead of contract signing so time can be saved during that sometimes lengthy process. Instead of signing paperwork that you won't have time to go through thoroughly at that moment (and being left with that uneasy feeling when you sign something you have not read), having pre-read the forms, you will be comfortable signing the now "familiar" contracts when the time comes.
_____ Get pre-qualified with a lender. Your Realtor should be able to recommend a few solid, honest, and competent lenders to you. Realtors work with these people every day. We generally know who offers the best rates and terms for different types of loans. More importantly, we also know who the unsavory lenders are that have high closing costs and who substitute less desirable loan terms to buyers at the last minute (that's a bad thing). Your Realtor is a good place to look for high-quality lender recommendations.
The lender will:
Run your credit report
Calculate all debts
Uncover unique details to your situation
Estimate the amount of money a bank will lend you based on the above.
It is important that you make no major purchases on credit when you are going through the buying process. Do not buy a new car or furniture now. This will affect your credit score and you could be turned down for the loan at the last minute. Wait until your home purchase is complete.
If you are paying cash for the property, you will need to provide documentation proving you have the funds available. A bank statement will be fine.
Another important thing to remember is to keep your money in one place. Moving money between accounts during the loan process will make it difficult for your lender to follow your paper trail and will delay the whole process and create much more work on your part.
Changing jobs usually makes no difference regarding your approval as long as you stay in the same field of work, and/or especially if you will be making more money.
Far better than just pre-qualifying, it is strongly in your best interest to have your lender start processing a loan for you. A "hard qualify" means that the lender has agreed to give you a loan for "x" amount of money, and you just need to locate a property. It could take several weeks. If you find a property where the seller needs to move quickly, your offer will be most attractive to them because you have shaved off some loan processing time and can close when they want to. The closer you are to being "hard qualified", the better your offer looks to the seller. This could mean the seller choosing your offer over someone else's.
_____ Discuss with your Realtor the selection of a closing agent. The closing agent is responsible for and insures the clean transfer of title and takes responsibility for paying off all seller's obligations and clearing seller's title problems (if any) so when the property transfers to your name, there are no ownership questions. They issue a Title Insurance or Owners Policy to you which is your guarantee that if there are any problems later with the title to your new property because of a mistake made by the closing agent, you will be protected. The closing agent receives all the paperwork required of your lender and makes sure all documents are signed correctly. The closing agent's office is where you go to sign your loan documents and receive the keys to your new home.
_____You should take a communities tour to identify the communities you would like to live in. With the financial information and your preferred community list, your Realtor will locate appropriate properties that fit your particular situation.
You view all properties available in those areas that meet your criteria. If nothing is available at the moment, redefine your criteria or have your Realtor watch for new listings to come available so you can be the first to see new properties as they come on the market.
_____When you find a home you desire, ask your Realtor for prices of homes in the area that have sold recently . That will give you an indication of the home being properly priced or not. Believe it or not, some sellers do overprice their homes!
_____ Make an offer to purchase the home you desire. Ask Realtor to explain paperwork and terms in detail. A 1% minimum deposit is usually required to go with the offer. The more deposit you put down with the offer, the more serious a buyer you appear to be to the seller. This helps the seller evaluate you as a favorable buyer. Seller may counter offer your offer-that means that your offer did not work for their particular situation, but with the changes the seller suggests, they will sell you the property.
_____When you and the seller have complete agreement and the contract and all details are completely executed (signed), notify your lender and make formal application for a loan on this property, if you are not already "hard qualified". You will need to gather some documentation and get it to your lender immediately. It is normal for the lender to ask you for money to pay the appraisal at this time, as they will be ordering it immediately.
_____Your Realtor will get a copy of the contract to the pre-selected closing agent so that they may start searching the seller's title-clearing the way for your home ownership. This can take anywhere from 7 to 30 days. It is best to get the closing agent involved as early as possible.
_____ Arrange for any home inspections right away. Your Realtor will advise you of the types of inspections that can be done and recommend a few inspectors. It is up to you to select and pay the inspector. Both the seller and yourself are anxious to know if this deal is going to go through or not. Until inspections are done, properties usually remain on the market for other buyers to look at. You want to remove this property from the market as soon as you can so you do not run the risk of losing it to another buyer. Do inspections as soon as possible. The norm is within the first 3-7 days. It is customary for the buyer and/or their Realtor to be present during inspections.
If the inspections uncover an unacceptable problem for you, now is the time to re-negotiate the contract. If you and the seller cannot come to an agreement on a solution to the inspection problem that concerns you, at this time you may cancel the contract and receive your deposit back.
_____ Check on your lender. Everything going okay? Need anything else? The lender should have arranged with your Realtor for an appraiser to go to the home and estimate its value. It is not customary for a buyer to meet the appraiser.
_____At this point, secure homeowner's insurance . Again, ask your
Realtor for insurance company suggestions as well as comparing those suggestions to your current insurance agent. In the summer months, don't wait until the last minute in Florida to do this. When there is a storm within 72 hours of us, insurance companies will not write a new policy. So get it well in advance so you are not caught 2 days before closing with a storm somewhere within 3 days of your new property and no insurance. You won't be able to close on time. This will cost both you and the seller money in working out the delays. This is one step that will help assure your closing goes off without a problem. Once an insurance agent is selected, notify your Realtor.
Your Realtor will then stay on top of the details your lender needs, stay in contact with the inspectors, make sure the insurance binder gets to the closing agent and the lender, monitor the closing agent, and work with the seller's agent (if any) to arrange a smooth closing and move for both you and the seller.
A competent agent can identify problems ahead of time and make sure they do not become part of your transaction. At this time in the transaction, your Realtor should be keeping the train running smoothly to the station by coordinating everyone involved and making sure everyone involved are doing their jobs. That means your Realtor needs a good deal of experience so they actually know the details of everyone's job to monitor and be able to follow everyone up effectively.
Finally, the inspections went fine, your insurance is in place, and your financing is secured. What next?
_____Your Realtor will have the closing agent send a copy of the closing statement to them so they may check for any errors. The closing statement is a breakdown of all the expenses the buyer and seller are incurring to transfer ownership. Once reviewed, your Realtor or the closing agent will forward the closing statement to you for review.
_____You will secure a cashiers check for the amount on the closing statement you will need to bring to closing.
_____Either the evening before or right before closing, you will "walk through" the property to make sure it has been left as mentioned in the contract by the seller. You are checking that all items have been left that were supposed to have been left in the house and working the way they were on the day of inspection, no damage has been done when seller moved their things out, repairs have been made that were agreed to be made, and the property has been left "broom clean". It is not mandatory in Florida that the seller have the home professionally cleaned when they move. It is required that it be "broom clean". If there are items left either in the home or the yard that will cost you money to dispose of or if the home is left so dirty that it will need to be cleaned, these items will be noted and costs can be withheld from the seller at closing.
Now you are ready to go to the closing.
_____At the closing agents office you will be asked for your driver's license and the funds necessary to close in the form of a cashier's check. You will go over all the costs on the closing statement once again and sign anywhere from 3 to 12 copies of it. You will then sign all the loan documents and transfer documents. The seller is usually there at the same time, but this is not necessary. Seller's quite often sign their paperwork ahead of time-especially if they are leaving town.
Once you have signed all documents required, you are given a copy of everything, a set of keys, and you are now the proud owner of "the American Dream".
The details can seem daunting. However, a good Realtor will take care of most of them and ease you and everyone else involved through this process. The longer your agent has been at their job, the smoother your closing will go. When I am using a Realtor's service in an area other than my own, I always make sure they have at least 12 years of experience behind them. But that is just a general guideline.
For additional guidance, request a copy of our moving guide. It is a "must have" checklist that will help you organize a weekly schedule that will successfully get you from point "A" to point "B" without forgetting important details.
